Commercial Property Owners Choose to Default

[wildcard]

I guess it's just business after all.

http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html?m od=googlenews_wsj

By KRIS HUDSON And A.D. PRUITT

Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.

Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group Inc. have recently stopped making mortgage payments to put pressure on lenders to restructure debts. In many cases they have walked away, sending keys to properties whose values had fallen far below the mortgage amounts, a process known as "jingle mail." These companies all have piles of cash to make the payments. They are simply opting to default because they believe it makes good business sense.

...

continues at link above with vids.

[Ponce]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house someone with a commercial local don't have to.

[Phoenix]

Simon Property Group


A HUGE Jewish "property management" company that owns a very large number of shopping malls.

[Twisted Titan]

More landlords are expected to follow suit. Of the $1.4 trillion of commercial-real-estate debt coming due by the end of 2014, roughly 52% is attached to properties that are underwater



Oh yes.......... There will be Blood.

[zap]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house


That's not true, I know several guys in the trades who had a couple 2 extra houses, they walked away, Sold the house they were living in, and bought a new house cash, I guess the banks can sue you, but they won't get blood out of a turnip and so many have done it, I don't think it would be cost effective for the banks to go after them.

[Phoenix]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house


That's not true, I know several guys in the trades who had a couple 2 extra houses, they walked away, Sold the house they were living in, and bought a new house cash, I guess the banks can sue you, but they won't get blood out of a turnip and so many have done it, I don't think it would be cost effective for the banks to go after them.


Depends upon the state and the contract if "recourse" (going after the mortgagee for deficiency) is permitted.

[zap]

I guess your right Ca is a non recourse state I think.

[zap]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house


That's not true, I know several guys in the trades who had a couple 2 extra houses, they walked away, Sold the house they were living in, and bought a new house cash, I guess the banks can sue you, but they won't get blood out of a turnip and so many have done it, I don't think it would be cost effective for the banks to go after them.


Depends upon the state and the contract if "recourse" (going after the mortgagee for deficiency) is permitted.


Ya but they still aren't going to get blood out of a turnip, and the homeowner can still play the bankruptcy card.

[BarneyFag]

There are empty Commercial buildings every where and more businesses closing, landlords have a 1/100 of a chance to rent it out. I'm doing work on a new store, because his landlord tried to raise his store rent. He
told them to fuck off and they pleaded that they wouldn't raise his rent, if he would stay. He told them, now you must give me a discounted rent, they said no and he bailed.

His new landlord, gave him 3 months free rent, paid half of the construction costs and paid for moving cost.
Now that is a business man.

[wildcard]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house


That's not true, I know several guys in the trades who had a couple 2 extra houses, they walked away, Sold the house they were living in, and bought a new house cash, I guess the banks can sue you, but they won't get blood out of a turnip and so many have done it, I don't think it would be cost effective for the banks to go after them.


Depends upon the state and the contract if "recourse" (going after the mortgagee for deficiency) is permitted.


Ya but they still aren't going to get blood out of a turnip, and the homeowner can still play the bankruptcy card.


Throughout history debtor's prison rears it's ugly head about this time.

[Phoenix]

Throughout history debtor's prison rears it's ugly head about this time.


Fortunately - this time - the debtors have plenty of guns and ammunition.

[PatColo]

Banking industry officials and others have argued that homeowners have a moral obligation to pay their debts even when it seems to make good business sense to default.

Yahoo tech-ticker, video auto-plays inside:

It's Okay To Walk Away: Let's End The "Morality" Double-Standard On Mortgage Defaults (http://finance.yahoo.com/tech-ticker/it%27s-okay-to-walk-away-let%27s-end-the-%22morality%22-double-standard-on-mortgage-defaults-535365.html?source=patrick.net#yfi_tt_main)

Posted Aug 25, 2010 10:36am EDT by Henry Blodget in Recession, Housing
Related: mac, vno, spg, xhb, vnq, tol, len

More and more commercial real-estate companies are doing what many indebted homeowners would like to do: Walk away from mortgages on properties that are now worth a lot less than they paid for them.

Today's Wall Street Journal highlights three major developers - Macerich, Vornado Realty Trust and Simon Property Group - that have recently decided to default on mortgages.

When companies do this, no one bats an eye--it's just "smart business."

When ordinary homeowners think about doing it, meanwhile, the mortgage industry and government begin moaning that a mortgage is more than a business contract. It's a social contract, in which homeowners have a "moral obligation" to pay.

That's bunk. An individual mortgage is no different than a corporate mortgage. If corporations are allowed to walk away from mortgage obligations without feeling shame and guilt, then individuals should be able to do so, too.

The contract homeowners sign when they take out a mortgage spells out exactly what happens if the homeowner stops making payments on the loan. The lender has the right to foreclose on the house, taking the homeowner's downpayment with it. In addition, the borrower's credit rating will usually get destroyed, and, in some states, the lender can come after his or her other assets to recoup the capital the lender has lost.

Those are big penalties. They provide a major incentive for the borrower to continue making his or payments. And that's why the lender, a corporation, put them in the contract.

Importantly, the lender voluntarily entered into the contract--and it did so because it thought doing so was a smart business decision. That it actually turned out to be a lousy business decision is not the homeowner's fault. It's the lender's fault. And the borrower, who is already feeling plenty of pain his or herself, should not have to bear the burden of guilt and shame on top of everything else.

Thinking about walking away from your mortgage? Here's what you should consider > (http://http%3A//www.businessinsider.com/how-to-walk-away-from-your-mortgage-2010-1)

[Twisted Titan]

Importantly, the lender voluntarily entered into the contract--and it did so because it thought doing so was a smart business decision. That it actually turned out to be a lousy business decision is not the homeowner's fault. It's the lender's fault. And the borrower, who is already feeling plenty of pain his or herself, should not have to bear the burden of guilt and shame on top of everything else.



Cats out the bag now..........

[Silver Rocket Bitches!]

The article forgot to mention.........where you would have to pay the back what they loose when they sell your house


That's not true, I know several guys in the trades who had a couple 2 extra houses, they walked away, Sold the house they were living in, and bought a new house cash, I guess the banks can sue you, but they won't get blood out of a turnip and so many have done it, I don't think it would be cost effective for the banks to go after them.


Depends upon the state and the contract if "recourse" (going after the mortgagee for deficiency) is permitted.


Ya but they still aren't going to get blood out of a turnip, and the homeowner can still play the bankruptcy card.


Throughout history debtor's prison rears it's ugly head about this time.


Pseudo debtor's prison is already here for several states....

It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county.

In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man "to indefinite incarceration" until he came up with $300 toward a lumber yard debt.

http://www.startribune.com/local/95692619.html