From the January issue: The collapse of the commercial real estate market in New York has
sparked a phenomenon that is being widely debated in legal and financial
circles: Is loan-to-own an act of bad faith or simply a smart business
move?
Lenders are increasingly willing to foreclose on defaulted loans for
office towers, malls and multifamily high-rises. But some developers
are crying foul over what they say are “pretextual” defaults, created by
a lender to help third-party investors snap up distressed assets on the
cheap.
These battles — which center on whether lenders are unfairly
colluding with third-party investors on loan sales — have begun to play
out in the courts, including two of the most high-profile cases,
involving 3 Columbus Circle and 510 Madison Avenue. [more]
Loan-to-own: Predatory or practical?
Some developers call the strategy underhanded, but courts aren't so sure
January 11, 2011 10:52AM
By David Jones
