Morgan Stanley Just Walks Away From Five San Fran Office Towers

[girl gone mad]

Posted for those who still believe it's unethical for an underwater homeowner to walk away from his or her mortgage. Clearly, the big banks do not feel the same sense of moral obligation.

Morgan Stanley Just Walks Away From Five San Fran Office Towers
http://www.businessinsider.com/morgan-stanley-just-walks-away-from-five-san-fran-office-towers-2009-12">The Business Insider

Morgan Stanley is handing five San Francisco office buildings back the lenders who financed their acquisition.

The properties were purchased from the Blackstone Group near the top of the market. Their values are now thought to have declined as much as 50%, according to Bloomberg. Basically, it looks like Morgan Stanley is acting like many homeowners with underwater mortgages—and just walking away.

Officially Morgan Stanley says this isn’t a default or a foreclosure. “This isn’t a default or foreclosure situation,” Morgan Stanley spokeswoman Alyson Barnes told Bloomberg. “We are going to give them the properties to get out of the loan obligation.”

But unofficially, there’s not much separating this from jingle mail.

[slackmaster]

1. It's certainly not unethical to walk away from a mortgage

The consequences of doing so are clearly spelled out in the contract that the borrower and the lender sign. That generally includes the lender filing a derogatory report with one or more of the major credit reporting agencies.

Whether you are talking about a home or a commercial property of any size, it comes down to a business decision.

[Ruby the Liberal]

2. Of course when an individual does this, they can incur a tax liability

for the bank's losses.

[chill_wind]

3. Slightly OT, but is Laura Tyson still a Board Director?

Every time I see Morgan Stanley, I think of Tyson. Every time I think of Tyson, I think of the O Team Economic Transition Team and the Bailout Bunch. And PERAB. Every time I think of the Bailout Bunch's no-strings "street wouldn't like it" bailout arm-twisting, I need a drink.

edit to add: Maddow Busts Morgan Stanley Board Member for lack of transparancy.

http://www.huffingtonpost.com/david-sirota/maddow-busts-morgan-stanl_b_153355.html

[chill_wind]

4. Ugh.

I just answered my own question.

http://www.morganstanley.com/about/company/governance/board.html