The story recounts how some commercial real estate owners have opted to just stop making mortgage payments on someand turn them over to lenders and draws parallels with the trend of "jingle mail" on the residential side.
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.
"We don't do this lightly," said Robert Taubman, chief executive of Taubman Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly Center in, decided earlier this year to stop covering interest payments on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.
Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder.
"Where it's fairly obvious that the gap is large, as it was with the Pier Shops, individual owners are making very tough decisions," he said.
Yves Smith at the Naked Capitalism blog suggests that the tone of the article seems to give commercial real estate owners more of a pass on making these decisions than on individual homeowners who also may be walking away from mortgages.
“The rich are different than you and me.” And the fact that they have more money means their defaults are couched as pure business decisions. But mere homeowners, told to view their house as an, are now castigated if they act as any professional would and cut their losses.
So is there a double standard in place? Are commercial owners being given a pass while homeowners are being lambasted for passing the buck on bad decisions?
It does appeal to my sensibilities to say that all property owners should be held to the same standards. Either we say it's OK for everyone to employ strategic defaults or its not. I don't think homeowners should be judged differently than commercial property owners when it comes to this. And if banks are willing to restructure loans for commercial owners, they should be willing to work with homeowners as well.
Just my two cents.
Here are some otherand notes from the past couple of days.