There was an interesting article in the February 8th edition of the Wall Street Journal regarding the Mortgage Bankers Association (MBA) entitled “Mortgage Group In Property Pinch”.

The MBA is a national organization of real estate finance professionals.  They are a sophisticated operation that performs excellent research, but not surprisingly are also unapologetic real estate cheerleaders.

According to the article in 2007 the MBA purchased its headquarters, at the top of the commercial real estate bubble, for $79 million.  At the time the trade group issued the statement: “We have come to the inescapable conclusion that owning our own building was the smartest long-term investment for the association”.

Last week the group agreed to sell the building for $41.3 million, well below the purchase price and the amount borrowed to finance the acquisition (speculated to be $75 million).  This shocking 48% decline in the value of MBA’s investment in less than 3 years demonstrates a difficult to rationalize lack of real estate market understanding by purported real estate experts.

By putting their money where their mouth was the MBA has at least suffered the same fate as homebuyers who followed the group’s advice to invest in housing.  Now the MBA is navigating the equivalent of a short sale while millions of Americans endure similar transactions. 

Of course the MBA is walking away from its mortgage while encouraging millions of underwater homeowners to continue to service their obligations. The group called its decision “economically prudent”.  Why wouldn’t it be equally prudent for underwater homeowners to abandon their properties?  Instead the MBA continues to promote failed Federal efforts to mitigate foreclosures.

Such a humbling event might be cause for introspection by the MBA.  The organization lists on its web-site two of its primary goals as “expanding homeownership and extending access to affordable housing to all Americans”.  It was precisely the Government’s pursuit of these two agendas during the 1990s which created and gestated the largest bubble in history.  It may be time for the MBA to reevaluate its priorities and recommendations based on its demonstrated lack of real estate investment sophistication.