I’m sure there are plenty of troubled borrowers around the country who will do a bit more than chortle when they hear the story of how the Mortgage Bankers Association is having trouble paying the mortgage on its new building in downtown DC.
Due to the crisis in the credit market, the price of a loan these days is higher than ever. Folks at the MBA of course didn’t know that when they bought a 160,000 square foot, 12-story building in downtown DC. The association will now reportedly have to pay millions of dollars more than they would have just a year ago, when they signed the contract on the deal.
The Washington Post did an article on this over the weekend, of course including a quote from a liberal housing watcher who claims they’re getting what they deserve. But it's worse than just credit costs. Yes, the cost of money more expensive (the building’s price is $100 million and they now have to put down 10 percent more than planned), but on top of that revenue for the association is down 10-15 percent, thanks to some of their members going out of business, and the leasing market is slow, so they don’t have any tenants.
So the MBA is now cutting expenses, laying off some employees, and clearly hoping the housing market turns around soon. Yep, it’s easy to laugh at the irony, but I don’t find it funny. Of all the associations I talk to on a daily basis on this beat, they’ve been the most up-front publicly about what went wrong, right from the start.
They are actively supporting mortgage banking reform on the Hill and I see a representative at every one of those (seemingly constant) Treasury conferences on saving troubled borrowers. Most of their members aren’t thieves, even if some of them are. And no, I’m not related to any mortgage bankers.