There is no need to reprice bank loans that are sitting on the balance sheet, if they are current. That is, even if the land is falling in price, as long as the borrower is making payments, there is no need to mark them down. We generally don’t live in a world where assets (loans, at least) are marked to market.
However, if the borrower defaults, and the bank has to sell the land, it will certainly show a loss if it sells the land for less than the loan.
Bugs is correct – land loans are *typically* very, very conservative. If lenders have been too aggressive on this front, they are going to get seriously slammed.
