In the hotel debt world, there is a new post-COVID term. It is called jingle mail. It means when a hotel owner has a non-recourse loan and they stop trying to fight the pandemic and mail the keys back to the lender/bank and walk away. When the lender picks up the envelope, it jingles because there are keys inside it. That is happening all over the US with hotel loans because of the devastation COVID has caused to the hotel and travel industry

This is happening not just on hotels, but also on other commercial real estate segments like office and retail etc. Non-recourse commercial loans became a mainstream lending option probably 25+ years ago. The great news for borrowers is it is non-recourse but the bad news for lenders, is that the borrower can just walk away from the debt and there is little the lender can do about it.

In a year like 2020 and probably most of 2021, many borrowers, don’t want to fund the loses and just decide to walk away instead.  So, among the many new buzz words created due to COVID, one of the newest is, jingle mail. If you are a lender, the last thing you want to do is pick up an envelope with a bulge in it that jingles. KT