Terrorism insurance required

Friday, June 14, 2002 | 11:07 a.m.

NEW YORK -- General Motors Corp.'s commercial mortgage servicing unit, which oversees $100 billion of loans, is giving borrowers two weeks to obtain terrorism insurance or risk having their loans considered in default.

GMAC Commercial Mortgage Corp., the No. 1 servicer of loans on office buildings, shopping malls and other properties, sent letters to borrowers explaining it can declare loans in default or force landlords to pay whatever premium GMAC can arrange.

The letters represent the latest skirmish between lenders and building owners over terrorism insurance, which many landlords claim has become too expensive and unavailable after Sept. 11. The U.S. Senate began debate Thursday on a bill to provide a backstop to large insurance claims from future terrorist attacks.

"By doing this GMAC is adding fuel to the fire of necessity to get some action out of Congress quickly," said Deborah Beck, executive vice president of the Real Estate Board of New York, a trade group. "It will be dreadful" if Congress doesn't act, she said.