The next banking crisis: Commercial mortgages

Heard enough bad news about failing residential mortgages to last you a couple of lifetimes?

Tired of headlines about huge losses at Citigroup and Bank of America?

Cheer up. The subprime, alt-A, and prime home mortgage meltdowns are about to be blown off the front page—by the meltdown in commercial mortgages. Commercial mortgages held by U.S. banks have been failing at the fastest rate in 20 years, according to the Wall Street Journal. Losses on loans to finance commercial real estate could hit $30 billion this year.

And you won’t have to hear more about problems at the huge banks that have dominated the crisis so far. The damage from commercial mortgages is worse, as a percentage of loans made, at regional and local banks. How much worse? Well, with three big regional banks, Zions Bancorporation (ZION), Regions Financial (RF), and KeyCorp (KEY) report earnings on July 20, 21, and 22, respectively, investors are about to find out. Read more