W Residences Win

In what will come as no shocker to those who are in the know, the W Boston Residences have won their latest court battle against Prudential. For those that aren’t following the situation, Prudential was attempting to foreclose on the W project and the W entered into Bankruptcy protection to prevent this.

In this latest ruling, the judge agreed that residences and hotel provided sufficient collateral to allow a restructuring. The loans currently have an interest rate of 9.5% the restructuring would allow the rate to be dropped to 5-6%. One of the major points of the case was the value of the hotel and the judge ruled that Prudential had major flaws in how it had calculated that value.

For those interested in purchasing at the W the most opportune time is now as deals can still be had due to the protection still placed, but you can be secure in the knowledge that the building will emerge from protection in the next 4 months. The current stats for the building show 29 sold units and 13 more that are under-agreement. If you are interested in seeing what the W has to offer give us a call at 617-449-3642.

To Pay or Not to Pay Your Mortgage?

I read an interesting article on Boston.com over the weekend, entitled Real Estate Deadbeats. The article talks about people who were no longer paying their mortgage but not leaving the house either. The “stay don’t pay” idea is one thought that doesn’t occur to most people, since most people assume that you will be evicted as soon as you stop paying. The truth however is slightly more complicated.

The article talks about a company called You Walk Away, which helps people when they decide to stop paying their mortgage. They clue them into the fact that, even if no mortgage payments are made, a person still owns that property until the bank legally and officially takes it back through the foreclosure process or the house is sold to someone else. As one lawyer put it:

“The banks can’t force you out until they own the property. You own the property even if you are late in payments, have a notice of default filed or a notice of trustee sale. Nothing can be done until the property has been sold at auction or the banks take it back.”

The most common advice given when someone decides to do this is to save all of their mortgage money and pay off any other debts. Any extra money should be used when it comes time to rent. This brings me to a conversation I had yesterday with a bank director. When I asked him what he was seeing when people stopped paying, he said the average time it took for his bank to foreclose on a property was 12-18 months. That’s a lot of money for people to put aside for fixing their other debts.  I am by no means recommending this route for those people who are underwater, in fact I would consider this an absolute last resort; but it is an interesting route that more and more people are taking.