There are two kinds of people walking away from the mortgages. One has no money and the other sees it as a long-term financial decision. Should you look at it as a cold hard decision? Should you think of your neighbor’s values?
There has been significant debate about this issue over the last year. Even John Courson, the CEO of the Mortgage Banker’s Association chimed in late last year. “But it isn’t just a matter of the borrower’s personal interest, defaults hurt neighborhoods by lowering property values, he says, adding: “What about the message they will send to their family and their kids and their friends?”
In 2007 the MBAA bought a building for $75 million but then they realized it may have not been the best idea as prices were falling. Apparently they defaulted and the building sold for $41 million on a short sale.
When the MBAA announced the purchase of the building in early 2007, the trade group’s president at the time, Jonathan Kempner, said: “We have come to the inescapable conclusion that owning our own building was the smartest long-term investment for the association.” In October 2009, however, the MBA informed its members that it had put the building up for sale. At that time, the MBAA said that continued ownership of the building, which was financed with $75 million of variable-rate debt, would be “economically imprudent.”
According to the video below, they moved to a building just a few blocks away and are renting.
I just find it humorous that the MBAA did what a lot of people did. They overbought and mistimed the market.
The trade group uses about 40% of the building’s 169,000 square feet and tenants occupy about 10%. The MBA spokeswoman said some members have since then concluded that the trade group shouldn’t be in the business of owning real estate.
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One thought on “Walking Away From Your Home – A Different Perspective”
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I’m glad you posted this. Most brokers don’t have the cojones.
IMO, it’s like this: If you borrow $100 from your buddy, that’s one thing. If you borrow the $100 bucks and he says, “Man, times are tough, so maybe I’ll take that Rolex your girlfriend got you just in case you don’t pay.” You don’t pay, he takes the watch. Which situation is worse?
The lenders all took the watch. They should have asked in advance if it was a knockoff and not worth what they thought.