In 2009 the Lembi Group was in financial distress due to a combination of softening rents due to the late 2000s recession (which hurt the effectiveness of its strategy of replacing existing rent-control tenants by attrition and eviction), inability to renew or refinance existing loans due to the Financial crisis of 2007–2010, and a resulting decrease in value and saleability of commercial properties that made it impossible to re-sell buildings to avoid foreclosure. Given the high financial leverage and the group's having initially paid above-market prices, many of their loans were underwater. As of that time the company was attempting to renegotiate approximately $1 billion in loans, and in possible default on another $164 million loan. By the summer of 2009 the company had transferred 51 properties to one lender in lieu of foreclosure, and was in foreclosure proceedings on more than 60 others.