How Are Borrowers Expected to Buy and Finance Responsibly When Even the Mortgage Bankers Association Can't?
By: Freeman Liz
February 10, 2010
It's not surprising that hundreds of thousands of laypeople with little financial education got into financial trouble, buying property they couldn't afford and finding themselves unable to pay their mortgages. But when the experts at the Mortgage Bankers Association make the same mistake, that's newsworthy.
You'd think they'd be in a position to find the best real estate deal, nail down the lowest mortgage rates on their commercial building, and set an example for the rest of us poor slobs trying to pay our home loans each month. But, no, the Mortgage Bankers Association (MBA) managed to mess up on a far grander scale than the most ambitious income-stating, payment-optioning, blindly optimistic Florida real estate investor could even dream of.
The mortgage industry trade association short-sold its 10-story Washington headquarters for $41 million. They paid $79 million for it in 2007 at the height of the real estate boom. And they only put $5 million down, so it looks like someone is taking a $30-something million dollar bath. But who? The MBA has refused to disclose the terms of its short sale agreement with its lender, but judging from its other troubles it doesn't seem likely that the organization will make good on the deficiency.
The MBA's previous landlord is on its case as well, claiming the trade group still owes it $1 million for breaking a lease to buy and move into its tremendously overpriced headquarters. The kicker is that before moving, MBA president Jonathan Kemper made a statement that sounded not unlike the giddiest Las Vegas speculator: "We have come to the inescapable conclusion that owning our own building was the smartest long-term investment for the association," he said in a press release.
Like many others who hopped on the real estate boat too late,the Mortgage Bankers Association has gone from buyer to renter. Should we take comfort in the fact that even the experts miscalculated so badly? Or should we be frightened?
