Mortgage Giant Sells HQ at Big Loss

On the short list of mortgage holders able to sell their property for the maximum amount, you’d likely pop the U.S. Mortgage Bankers Association up to the top of the list. But hold the phone — the Association just sold its Washington headquarters for a $38 million loss and potentially left a lot of its D.C. neighbors bitter in the process. The lessons the MBA learned — and there are many — can apply to home sellers across the country.

First things first. Discussing national mortgage industry powerhouses without mentioning the MBA is like discussing great gorilla movies without mentioning King Kong.

The Mortgage Bankers Association is the de facto face of the U.S. real estate finance industry. It includes 2,400 member companies, including mortgage firms, mortgage brokers, commercial banks, thrifts, life insurance companies and credit unions. The MBA’s board of directors is chock full of brand name banking executives, including higher-ups from big banks like JPMorgan Chase (Stock Quote: JPM) and KeyCorp (Stock Quote: KEY).

So you’d think such a seasoned group would cut a better real estate deal.

That’s where lesson number one comes in. What do you do when your property is underwater — meaning the loan value was greater than the property value? For the MBA, going underwater on the $79 million loan on its building just minutes from the White House led it to trigger a "short sale" for $41 million.

In other words, the MBA’s best move was selling the property for 55 cents on the dollar, according to estimates from the “Breaking Ground” blog at The Washington Business Journal.

The blog, penned by Journal reporter Jonathan O’Connell (no, we’re not related) points out the hypocrisy of the MBA, which has a track record of lecturing U.S. homeowners for running from troubled mortgages.

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