The Mortgage Bankers' Association is a trade group for mortgage lenders - you know, the people who spent the last several years writing loans with shaky terms to buyers with even shakier credit. It seems last year, they decided to build a new headquarters in pricey Washington, DC. They figured if they built a bigger, fancier building, they could lease the excess space in the hot DC commercial real estate market, thereby making the building affordable. Besides, money was cheap, and their revenues were swollen by the hordes of people that had joined the mortgage lending business, lured by the promise of an endless stream of fat commissions.
That was then. This is now.
Money's not so cheap anymore, and their own lender wants an extra 10% down on the $100 million, 160,000 square foot building. Gulp.
Their revenues are down 10-15%, because of all their member firms that have gone belly-up and/or fired scores of loan officers. Double gulp.
And the housing-bubble-caused recession has resulted in such softening of the commercial real estate market in DC - which is undoubtedly as overbuilt as the subdivisions the mortgage bankers tried to fill - that the MBA can't lease their vacant space. Ouch.
As a result of this triple-whammy, the Mortgage Bankers' Association may face difficulty paying their own mortgage.
Cost of a new building in Washington, DC for the Mortgage Bankers' Association: $100 million.
Additional down payment required by commercial mortgage lender: $10 million.
The prospect of the Mortgage Bankers' Association defaulted on its own mortgage: Priceless.
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