Even the Banks are Walking Away from Properties

JP Morgan is essentially walking away from its mortgage. Now, unlike most of us individuals, they have a non-recourse note so they aren’t liable for the balance, they just get to give the properties back.

The effect? It further weakens the commercial property market when even banks are deciding that buildings aren’t worth what’s owed, and it means they don’t see any appreciation in value anytime soon.

It makes me wonder if I shouldn’t have tried a non-recourse loan on my house in the 2004-2007. Normally the individual homeowner has no shot at that, because their loan is just too small, and often in the last boom in lending the loan to value ratios was too risky. But if you could have put 20% down, I wonder if someone would have given you a nonrecourse, given the way banks were doing literally anything to get business. After all, is lending to a homeowner on 80% loan to value any worse of a deal or larger risk than financing a pasture in rural Benton County that is going to have two hundred $500,000 homes?

Incidentally, yes, JP Morgan did receive TARP money. $25 Billion, in fact.