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Manhattan’s Stuy Town Heading to Foreclosure Auction

Four months after ""Bank of America"":http://www.bankofamerica.com and its special loan servicer ""CWCapital Asset Management"":http://www.cwcapital.com sought to foreclose[IMAGE]on Manhattan's largest apartment complex, a New York federal judge has given them the green light to move forward with a foreclosure sale.

Stuyvesant Town and Peter Cooper Village sit on 80 acres and house 11,000 units on the city's East Side. Real estate developer ""Tishman Speyer"":http://www.tishmanspeyer.com and money manager ""BlackRock, Inc."":http://www.blackrock.com bought the dual-property complex for $5.4 billion in 2006, when the market was booming.

In January, the companies withheld their $16.1 million payment on the $3 billion senior mortgage â€" a strategic move Tishman and BlackRock said was intended to force CWCapital to restructure the debt.

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The power play didn't work out so well. BofA and CWCapital opted to pursue foreclosure on behalf of senior creditors. According to a report by ""_iStockAnalyst_"":http://www.istockanalyst.com/article/viewarticle/articleid/4239738, Fannie Mae and Freddie Mac together hold $1.5 billion of the $3 billion senior mortgage bonds. Equity and mezzanine lenders, who hold about $1.4 billion in secondary debt on the properties, will be wiped out completely.

Judge Alvin Hellerstein of the U.S. District Court in Manhattan granted the default judgment on Monday, and ruled that the outstanding loan balance has grown to $3.67 billion, with interest, fees, and taxes tacked on.

The complex is currently estimated to be worth $1.9 billion.

Tenants, many of whom enjoy rent-controlled apartments, have been seeking out investment partners to try and buy the complex themselves, with an end goal of turning some of the units into co-ops or condominiums. It's also been rumored that New York developer Richard LeFrak and investor Wilbur Ross have their eyes on the high-profile properties.

Judge Hellerstein said potential buyers wishing to bid on Stuyvesant Town-Peter Cooper Village must lay down a $100 million deposit. Bids will be accepted on the two properties as a single deal, or as separate entities.

According to the ""_New York Times_"":http://cityroom.blogs.nytimes.com/2010/06/22/sept-sale-seen-for-stuyvesant-town-and-peter-cooper/ the foreclosure auction is expected to take place in September.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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