NEW YORK - February 16, 2010 - Losses from defaults on commercial real estate loans maturing in the next few years could go as high as $300 billion, threatening to topple nearly 3,000 community banks nationwide, a federal watchdog group has concluded.

Market analysis by the Congressional Oversight Panel (COP), charged with keeping tabs on the government’s Troubled Asset Relief Program (TARP), shows that $1.4 trillion in loans made over the last decade for retail properties, office space, industrial facilities, hotels, and apartments will reach the end of their terms and require refinancing between 2011 and 2014.

According to the panel, the loans most likely to fail are those made at the height of the real estate bubble, when it seemed property values could go nowhere but up. Since that time, commercial property values have fallen more than 40%, and according to the panel, nearly half of the loans coming due are “underwater,” meaning the value of the property is less than the outstanding loan balance, making refinancing particularly difficult to secure.

The panel notes, “Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit.”