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Is Strategic Default Morally Bankrupt?

A tipster (send in your tips here) sent in this video from the Daily Shop regarding the Mortgage Bankers Association and their own strategic default on the organizations headquarters.

CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. The price is far below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also is far below the $75 million financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. to finance the purchase.

John Courson, chief executive officer of the trade group, declined in an interview Saturday to say whether the MBA would pay off the full loan amount. “We’re not going to discuss the financing,” he said. A spokeswoman for the MBA added that the MBA has reached “an agreement with all relevant parties” regarding the outstanding amount on that loan but declined to provide any details. – Source


READ  Mortgage Bankers Association Tells People Not to Default, But They Did



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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

6 Comments

  • In MA we’re finding a lot of the damage is done after the homes are vacated. The copper plumbing is always the first to go.

  • You bring up a great point. In my day I have toured quite a few homes that have been foreclosed on and for the most part the homeowners did tear them up before they left.

    I wonder if strategic defaulters leave them broom clean instead of the typical punched holes in the wall?

  • I do not think it morally bankrupt to strategically default, it is, however, morally bankrupt to default and destroy the property.

    The bubble was created by the actions of unscrupulous lending practices that drove up prices via fraudulent loans. The post bubble actions of the government and big institutions then created devaluation of the dollar and excessive inflation. If the institutions refuse to provide meaningful modifications or debt forgiveness, the best thing that homeowners can do is react strategically, and resolve their mortgages in such a manner as to put them on the path to recovery.

    Love the John Stewart episode.

  • I do not think it morally bankrupt to strategically default, it is, however, morally bankrupt to default and destroy the property.

    The bubble was created by the actions of unscrupulous lending practices that drove up prices via fraudulent loans. The post bubble actions of the government and big institutions then created devaluation of the dollar and excessive inflation. If the institutions refuse to provide meaningful modifications or debt forgiveness, the best thing that homeowners can do is react strategically, and resolve their mortgages in such a manner as to put them on the path to recovery.

    Love the John Stewart episode.

    • You bring up a great point. In my day I have toured quite a few homes that have been foreclosed on and for the most part the homeowners did tear them up before they left.

      I wonder if strategic defaulters leave them broom clean instead of the typical punched holes in the wall?

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