Last Updated Feb 9, 2010 6:26 PM EST
The Wall Street Journal reported yesterday that in an interview last year, John Courson, chief executive of the Mortgage Bankers Association of America (MBA), said borrowers who were "underwater" should keep paying their mortgage if they can afford to do so. Defaults hurt neighborhoods by lowering property values.
At the time, he said: "What about the message they will send to their family and their kids and their friends?"
Wait for it....
The Wall Street Journal reports that the MBA is selling its new, gorgeous glass headquarters in Washington, D.C. for the current market value of $41.3 million, well below the $79 million the trade group paid for the property a few years ago.
Is the MBA coming to the table with a check for the amount it is underwater?
Courson refused to say whether the MBA would off the loan in full. The Journal found a couple of people who said off the record that they believed the MBA would pay off all or most of the loan over a period of years.
A spokeswoman for the MBA told the Wall Street Journal that the non-profit trade association had reached an agreement with its lenders.
Which is fine. But it's easy to see why homeowners are a little P.O.'d that they're being labeled by the financial industry as immoral if they walk away from their mortgage but it's okay if Wall Street does it.
A contract is a contract. If the contract the lender signs says that the house is what the lender gets if the borrower fails to make its payments, that's the deal.
If the financial industry is wondering whether contracts that aren't tied together with a moral code are worth doing, then that's an interesting subject for debate.
Personally, I've always believed you should live up to the contracts you make, whether they're in writing on done by handshake. But good faith must exist on both sides or a contract won't be worth the piece of paper it's written on.
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