The Wall Street Journal today has a story how as lenders become more demanding when making loans one thing that's returning is recourse.
Despite Mr. Macklowe's experience, these recourse loans -- once a staple of commercial lending -- had largely fallen by the wayside during the past decade as banks found ways to minimize their risk.
Now, with the securities market for commercial loans still anemic, recourse loans are popping up again -- and striking fear in the hearts of developers.
Dale Anne Reiss, global director of real estate for Ernst & Young, recalls the efforts involved in restructuring recourse loans, with some people losing numerous properties including their own homes: "Some of the workouts were extremely painful," she said. "You were tearing apart people's lives."
Yet commercial investors who can't wait out the credit crisis may have little choice but take a deep breath and sign a recourse loan. "Oftentimes, it's either sign personally or you don't get the loan," said Donald Isken, a real-estate attorney at Morris, Nichols, Arsht & Tunnell LLP. "The tide has changed."