Foreclosures are surging in an opaque and risky corner of commercial real-estate finance, offering one of the starkest signs yet that turmoil in the property market is worsening, the Wall Street Journal reported. Lenders this year have issued a record number of foreclosure notices for high-risk property loans, according to a Wall Street Journal analysis. Many of these loans are similar to second mortgages and commonly known as mezzanine loans. Mezzanine loans have high interest rates and offer a faster and easier path to foreclose than mortgages. The Wall Street Journal analysis found notices for 62 mezzanine loans and other high-risk loans this year through October. That is more than double the number for all of last year, and likely the highest total ever for a single year, as higher interest rates and rising vacancies punish the property sector. The increase in mezzanine-loan foreclosure announcements — while not large in absolute numbers — matters because it offers a more immediate measure of commercial real-estate distress than mortgage foreclosure rates.
