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If you don't live in Indiana, you may not be aware of the major, continuously-developing story about the recent changes to Indiana's property tax scheme, which changes have resulted in substantial increases for some residential real estate owners.  For background, click on the The Indianapolis Star, which has covered the issue for a couple weeks.  Today, in an effort to provide some relief, Indiana's governor Mitch Daniels ordered a new assessment in Marion County (Indianapolis), in part to deal with commercial properties that were ignored in the recent reassessment.  Here's that story.

So far, residential property owners have been hit the hardest, but significant tax increases for Indiana commercial property owners appear to be on the horizon, barring a fundamental change in the system.  This begs the question of whether we may see an upsurge in under-performing or non-performing commercial mortgage loans.  An article from the Indianapolis Business Journal suggests this possibility.  In a piece about multifamily properties - Apartment Owners Hammered by Tax Hikes - a local apartment broker thinks that, in some cases, complex owners "will default on their mortgage," in addition to deferring maintenance or improvements.  It stands to reason, for instance, that a 70 percent increase in real estate taxes could trigger some businesses to default on their mortgages.  I will continue to keep an eye on this issue and how commercial lenders may or may not be impacted.  I suspect that, ultimately, we'll see a political solution to the dramatic tax increases before we'll see a significant rise in commercial foreclosures, however.