MIT Professor William Wheaton – who is speaking at our Dec. 2 NAIOP/SIOR Annual Market Forecast – has been generating national media coverage lately with his calls for lenders to “split the difference” on mortgages facing foreclosure. From an email sent out by the MIT Center for Real Estate, where Wheaton teaches a popular course on the economics of real estate markets:
“With the release of MIT/CRE Professor William Wheaton’s recent proposal for fixing the housing mess, three of the nation’s premier media outlets (Fortune Magazine, National Public Radio, and CNBC) have sought him out for further comment and forecasting. Professor Wheaton proposes that the 2-sides of the equation “split the difference”. Lenders write down the mortgage to current value, and then take a significant (but not complete) share of any equity appreciation that does occur. This gives the borrower a deal good enough to prevent “walking”, and also provides the lender with an asset (the contingent claim on appreciation at sale) that is much better than taking the write down alone. It’s a win-win, although the devil is always in the details.”
Professor Wheaton will turn his attention to the commercial side of things at our always-popular Forecast, where his economic overview will look at current conditions, their impact on the market, and what to expect in the coming year. Don’t miss this opportunity to hear the latest economic news from a local expert! Click here for more info on the Forecast.