On the other side of that building is a large painted X, which is one half of a blue coin. When you obtain the blue coin the X disappears for the rest of the game. However, during the ending cutscenes, the X appears on the wall either way!
Yeah, the M on the wall changes to an L after you defeat Bowser Jr. Kind of like how Peach was trapped inside the stained-glass window in SM64, Luigi is trapped inside the paint on the wall.