Here's a very simple example of the problem: - landlord gets a loan on a building, say 10 shops at $100 - 3 of them go under and are empty, total income still $

Here's a very simple example of the problem: - landlord gets a loan on a building, say 10 shops at $100 - 3 of them go under and are empty, total income still $700, 3 empty ones still valued at $100 - if he rents out those 3 for $50, the bank will revalue everything at $50. This means he will need to refinance at a reduced asset value, which means either the loan isn't refinanced or at a higher risk (rate).