"The International Monetary Fund (IMF) stress tested 53 large banking holding companies and published its findings last month. The report concluded that despite restoration of some stability, there remain certain important risks to the U.S. financial system and economy mainly coming from the real estate sectors:
Further increases in nonperforming loans due to high unemployment rate and significant weakness in the real estate sectors
Credit quality in the commercial real estate (CRE) sector - About $1.4 trillion of CRE loans will mature in 2010–14, nearly half of which are 90 days or more past due or “underwater.”
Housing prices - The very high level of underwater mortgages increases the risk of strategic defaults and further losses to banks and mortgage backed security (MBS) investors.
Market perception of sovereign risk, sluggish growth, and mounting fiscal deficits and debt are also identified as major risks to the economy and the financial system.
IMF noted financial institutions will face rollover risks with large loan maturities in 2011–13, which could bring rapidly rising foreclosures and bank losses. The small and medium-sized banks, which are most heavily exposed to the commercial real estate sector, are causing the most concern..."
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