SAN DIEGO-Many economic factors are making it harder to get aloan, and while the economy is seeing some recovery, “We’ve got along way to go,” with many problems still plaguing the market, saidJudy Hoffman, COO of Trigild, whomoderated a panel on distressed debt at a recentCREW San Diego lunchtime program. Hoffman said theCMBS loan default rate is at 10%, the bank-loan default rate is at3.5%, $1.5 trillion in commercial loans will mature between 2012and 2017, and property values are down 35% from the height of themarket, factors that slow recovery appreciably.

Panelist Debra Shannon, a SVP withCalifornia Bank & Trust, said there areseveral types of sellers in the market, and “it is important tounderstand what is motivating the seller so you can make the bestdeal with them.” However, she added that FDIC rules can stymie theprocess, since the agency would rather see problem debts worked outthan sold.

Valuing assets in the current volatile market is also difficult,according to Mo Vakill, a partner withDeloitte & Touche. Defining value can beproblematic because observable market transactions used invaluations are often lesser amounts than what a seller is hoping togain. Also, the FDIC enters into unique arrangements with each bankthat is purchasing assets, depending in part upon the riskinvolved.