REALTOR® Magazine-Daily News-More Home Owners Walk Away
For instance, on Thursday, financial services firm Morgan Stanley announced that it is turning five San Francisco office buildings back over to its lender two years after it purchased them when the market was at its priciest. The buildings are estimated to be worth about half of what Morgan Stanley paid.
“This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.”
Morgan Stanley is apparently current on the loan, so this is what is known as a “strategic default.”
Some might ask: If strategic defaults are OK for banks, why aren’t they OK for ordinary homeowners?
Is this a walkaway or a negotiated loan workout?
One might wonder why they did not go with a short sale?
for more on commercial short sales and commercial loan workouts