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As handy phrases go, extend-and-pretend is hard to beat. It’s a shorthand that is easy to understand and summarizes, whether fairly or not, the approach that lenders have taken to coping with the huge volume of distressed assets produced by the recession and falling real estate values. Whether the phrase is fair or not is subject to debate, says Mark Grinis, partner and global real estate fund leader at Ernst & Young, and a member of the DAI editorial advisory board. When I asked Grinis if extend-and-pretend has helped or hurt the recovery, he pointed out that the approach is not an orthodox, formal policy of lenders but a phrase coined to both describe, and to some extent deride, the practice of extending and modifying loans.

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