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rd80 (99.11)

Mortgage Bankers Association: How NOT to Invest in RE

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February 06, 2010 – Comments (2)

This is too good not to share.  The Wall St. Journal is reporting:  Mortgage Bankers Association Sells Headquarters at Big Loss.  If you don't have access to WSJ online, here's a Washington Post article on the same story. 

Turns out the giants of finance who made many of those creative and disastrous loans bought their HQ building in DC in 2007/2008 for $79 million.  $75 million was financed with a variable rate bond issued by a group of banks led by PNC.

The building was just sold for a bit over $41 million.  The reports don't indicate how the shortfall between the sale price and the loan balance will be handled.  The WSJ states that the MBA and PNC declined to comment on the issue.

The WSJ article states,
In an interview late last year, Mr. Courson [MBA's chief exec] said he believed mortgage borrowers should keep paying their loans even if that no longer seemed to be in their economic interest.

One wonders if Mr. Courson still stands by that opinion.

 

2 Comments – Post Your Own

#1) On February 06, 2010 at 9:51 PM, EODJIM (< 20) wrote:

It's called a "short sale"! I'll bet the lender doesn't go after the MBA for a judgment for the difference.

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#2) On February 08, 2010 at 9:37 AM, rd80 (99.11) wrote:

It could be a short sale, we don't know for sure how much, if any, of the debt above the sale price will be repaid.  The article states that MBA and the bond holders have reached a settlement, but the details aren't being made public.

Since the financing was a bond issue, there may be some recourse that wouldn't be available in a typical mortgage transaction.

Thanks for the comment.

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