New Year, Same Story: Commercial Real Estate Fraud

Credit Suisse and Cushman & Wakefield were recently sued by investors at 4 high end, luxury resorts. The investors allege that Credit Suisse, the lender, and Cushman & Wakefield, the appraiser, conspired to inflate the value of the resort properties which resulted in huge fees for the banks and impossible payment terms for the borrowers. These loans are sometimes referred to as “loan to own.” In other words the lender is saying, in effect: “I’ll loan you the money but the terms will be so difficult for you to pay back, I’ll just gladly take property back.”

There will be a great deal of this litigation in the next few years as investor try to understand what happened to the value of their commercial property investment.

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