Check out this quote from 2008.
“We came to the inescapable conclusion last year that owning our own building was the smartest long term investment for the Association“
You might think it was from a naive buyer that was swept up in the real estate bubble hysteria. You would be right.
For those who didn’t check the link, the hapless buyer was the Mortgage Bankers Association (MBA) and the quote from mid-2008 referred to the purchase of a “trophy” headquarters building just five blocks from the White House in 2007.
But wait, there’s more!
They took out 95% financing. And they can’t afford the payments.
Last week the MBA sold the property for roughly $30 million less than they paid, and they left their lenders holding a $25 million shortfall.
At least they didn’t sign up with youwalkaway.com, a web site that tells you how to blame your lender for taking out a loan you can’t afford, and then spend the next year or more living rent free while playing the victim.
Unlike far too many borrowers, the MBA does intend to make good on the shortfall.
Having done the same myself (made good on a mortgage even though I had a huge loss on the property) when the sale price of my apartment was less than the mortgage, I can only say that I hope they do.
In the mean time, let’s all enjoy a chuckle at the expense of the professionals who believed their own hype.