New York State Court of Appeals ruling against the owners, the $3-billion mortgage on the Peter Cooper Village/Stuyvesant Town apartment complex has gone into technical default. The 11,227-unit complex's owners, a joint venture of Tishman Speyer Properties and BlackRock Realty, said Friday that they had missed January's $16-million payment on the loan, which went into special servicing in November.

Now that the other shoe has dropped, questions abound as to what happens next. The answers may be a long time in coming: as a letter to the complex's tenants from City Council Member Daniel Garodnick—himself a Stuy-Town resident—pointed out, the default triggers "a number of events, most of which are strictly legal in nature." A statement from the Peter Cooper Village/Stuyvesant Town Tenants Association calls the default "the first step in what will likely be a long legal process."

Untangling and restructuring the loan is likely to take months, and there are numerous legal issues pertaining to the court's Oct. 22, 2009 ruling, which found that the complex's owners illegally decontrolled rent-stabilized apartments while also receiving J-51 tax benefits to perform renovations. Moreover, the $3-billion mortgage is only one layer of financing on the complex; there are also $1.4 billion in mezzanine loans as well as about $1 billion in equity invested by the JV and others.

Dan Fasulo, managing director of Real Capital Analytics, tells GlobeSt.com that in the long term, the Stuy-Town mortgage "may go down as one of the biggest commercial property foreclosures of all time," and that there's a possibility that all of the equity and mezz debt holders will be "wiped out." He predicts that the federal government will eventually take control of the loan via Fannie Mae or Freddie Mac and that the loan may get restructured, but "a return to the private market through a foreclosure auction seems unlikely, considering the politics involved."