Mortgage Crisis Update: Mortgage Bank Association Forced into Short Sale

If you think you’re in jeopardy of losing your home and think you may have to short sale, don’t feel bad; it seems the Mortgage Bank Association (MBA) feels your pain. In an interesting twist of reality, the MBA, which is the national association representing the real estate finance industry, had to sell its headquarters at a loss, according to the Wall Street Journal.

How in the Heck Did This Happen?

You know the world is being turned upside down when the association representing the real estate finance industry isn’t able to hold on to its real estate. Everyone knew that the mortgage crisis was really bad and resulted in many homeowners having underwater mortgages and even having to short sale and foreclose. But who knew it could happen to the MBA?

It turns out that the group originally financed the headquarters in 2007 through a group of banks led by PNC Financial for $79 million. However, the building’s property value plunged in a two-year period, turning the mortgage upside down – or plunging it underwater – which basically means that the group owed more on the building than it was worth.

As a result, the MBA sold its Washington headquarters building to CoStar (a commercial real estate data firm) for $41.3 million. However, since the group only used about 40 percent of the 169,000 square feet building, they shouldn’t have a difficult time relocating to a smaller place.

What to Do If Your Mortgage is Underwater?

Millions of homeowners found themselves in the same predicament as the MBA in the past couple of years, and many others are still trying to figure out how to manage a mortgage when their property’s value is lower than the amount they financed it for.

If you are underwater, you have a couple of options to help you out:

• Try a Federal Program: Programs like Hope for Homeowners (H4H), which will continue through Sept. 2011 and the Home Affordable Modification Program, which will expire Dec. 31, 2012.
• Try a Short Sale: Like the MBA, you could consider a short sale, which means you sell your home for less than it’s worth and avoid foreclosure.

As you can see, the mortgage crisis affected more than homeowners, it affected businesses as well. Hopefully, as the MBA was able to get out of its underwater mortgage, you will be able to as well.