There was another article in todays WSJ about the CMBS market.  Some quick facts from this article:

• More than 11% of $536B of loans packaged into commercial mortgage backed securities are expected to be at least 60 days past due by year end.
• A $4.2B CMBS deal underwritten in 2006 by Goldman Sachs Group, Inc. and Greenwich Capital is expected to see an 11.7% loss, the highest of any 2006 CMBS issue analyzed by Fitch.
• The default rate now is 7%.  Before the real estate bubble burst, it was 1%.

Because of this, about $70B in loans are now in the hands of "special servicers", or companies that represent holders of commercial mortgage backed securities with underlying loans that are in default or imminent default.  Servicers have restructured about $13.7B of these loans which includes extending loan maturities ("extend and pretend") and reducing interest rates.  But some borrowers still end up defaulting.

This continues to loom over the industry and is probably where the next batch of distressed assets emerges from.  Then again, maybe not...

When the weather people are more accurate than the predictors of when and where the distressed assets will emerge from, you know it is a challenge.