Putting morality aside, most commercial loans are non-recourse and have been for many years. further, most commercial loans baloon after 5-7 years which requires a newe appraisal and for the owner to cough up, in cash, the reduced appraised value of the property. Falling prices of commercial real estate combined with reduced cash flow from a recession is a double whammy that can result in millions of dollars needing to be coughed up just to hang onto an asset that is falling in value. This is why most owners of commercial real estate give the keys back to the lender in a market like we have now. Morality back in: if the game is non-recourse, is the owner the problem or the lenders the problem? As long as my tax dollars are not used to prop up the lenders,I say let them eat it.They knew the rules when they made the loan.
