Stocks struggled into the final hour on mixed economic data. For the week the DOW has gained about 50 points or ½% while the NASDAQ has picked up 30 points or some 1.5%. The ECRI Weekly Leading Index continues to slip as the smoothed annualized growth rate fell to 19.7 last week, while the Index itself dropped to 130 even, suggesting that the economic recovery continues to falter. Retail sales increased .5% in January as per the Census Bureau, the better than expected figure showed broad strength in spending and is another positive data point.
On the subject of the global economy Europe is starting to show signs of another slowdown, Just like the US, while China following its massive stimulus program tightened interest rates and upped bank reserve requirements to slow rampant speculation, their economic fundamentals remain an utter disaster.
The latest round of blatant hypocrisy comes to us from the Mortgage Bankers Association, there an industry lobbying group who it appears drank their own kool-aid buying an office property in downtown Washington DC at the market peak in 2007 for 79 million. They closed the deal with the following press release from the MBA’s president Jonathan Kempner. “We have come to the inescapable conclusion that owning our own building was the smartest long-term investment for the association,”.
Now the mortgage industry wants us to believe that homeowners have a moral obligation to pay their mortgage no matter what. As the following quote from “John Courson, president and C.E.O. of the Mortgage Bankers Association illustrates. “Homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends. Never mind the constant you need to pay your mortgage mantra.
Back to that office deal, seems the MBA sold the office quite recently for just 41.3 million, slightly more than half the 79 million originally paid, seems straightforward until you dig a little. First of all CEO John Courson refuses to discuss the terms of the deal and wouldn’t say if the full mortgage amount would be paid and it appears that it was in fact a forced short sale. Additionally the MBA is being sued by Tishman Spayer for breaking an earlier lease it still owes a million on.
So while the industry trade group and its CEO exhorts mortgage holders to do the right thing, the moral thing, pay the mortgage and honor the terms of the contracts they signed. These rules don’t apply to them and they are free to do as they please.
I’ve always believed that what is good for the goose is also good for the gander and if the CEO of the MBA is going to tell individual mortgage holders that they need to think about the message they send when they decide to strategically default on the mortgage. Perhaps Mr. Courson would care to explain just what message he and his lobbying group are sending with this transaction.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
