by Calculated Risk on 8/27/2008 01:52:00 PM

Terry Pristin at the NY Times has an interesting article on apartment buildings in New York: Fear of Defaults After a Flurry of Apartment House Sales (hat tip Brian)

As we've discussed before, the CRE version of stated income loans involved lending on overly optimistic pro forma income projections (aka wishful thinking):

Most investors, like most lenders, thought that values would keep escalating, said the broker, who did not want his name published in order to protect his business relationships. But, he added, underwriting standards were very casual. “Back then, you could write down anything, and people would believe you,” he said.

And just like for residential, some CRE lenders made some bad choices:

“As the financiers got farther and farther away from New York, everything looked like Manhattan below 96th Street to them,” [Harold M. Shultz, a senior fellow at the Citizens Housing and Planning Council] said. “They all got caught up in the bubble mentality.”

Sounds like more defaults to me.