Mortgage Lobbyists Falling on Hard Times?

It sounds exactly like the standard consumer mortgage nightmare: Buying a place that’s really bigger than you need. For more than you really can afford to pay. Then your income gets cut. And the financing gets more expensive too. Stop me if you think you’ve heard this story before.

No, you haven’t. You really haven’t. For consumer advocates like myself, this story is proof of God and divine justice. Because this time, it’s the Mortgage Bankers Association. The organization that lobbies on behalf of the real estate finance industry — the same folks who defend the lending behavior that helped create the current subprime finance disaster, and most recently helped engineer a defeat for bankruptcy legislation that might have saved several hundred thousand homes from foreclosure.

The Washington Post reported yesterday that the MBA is paying “about $100 million” for a 12-story building in Washington, D.C. They apparently only need 1/3rd of the space for themselves and had anticipated leasing out the rest of the space to tenants, when they first started down this road.

The tenants have not yet emerged. But the financing crunch has. So, according to the Post, the MBA has to pony up about 10% more for a down payment. And they have apparently lost about 500 of their 3,000 member finance companies, in part no doubt because they are going out of business or being sold for a song. Between the loss of contributing members — and their membership’s financial problems — and the lack of paying tenants — the MBA is going to soon identify more with consumers than it probably ever anticipated. Or desired.

Of course like any consumer, the MBA is soldiering on. It plans to go ahead with buying and moving into the building. It’s just going to cut some overhead — cut back on seminars and audio-visual aids, sort of like you and me cutting back on the recreation in our budget.

Perhaps the much vaunted but largely useless HOPE-NOW program will expand to commercial property loans and help them modify their mortgage when the well runs dry for the MBA too. Optimism does spring eternal, doesn’t it?