US Mortgage Bankers Association sells HQ at $38m loss

• Collapse in value came after subprime mortgage crisis
• Mortgage Bankers Association owes lenders $34m

The White House is close to the US Mortgage Bankers Association HQ – but that was not enough to hold up it's value. Photograph: Jewel Samad/AFP/Getty Images

If anyone should be capable of financing a property successfully, you would think it would be the US Mortgage Bankers Association. But the nationwide trade organisation has been obliged to sell its own headquarters at a loss of $38m (£24m) after spectacularly misjudging the value of a prime slice of Washington office space.

A lobbying organisation representing 2,400 member companies which arranges loans for American homebuyers, the MBA struck a $79m deal in January 2007 to buy a ten-storey building in the heart of Washington's lobbying district, a short walk from the White House.

The purchase came just before a catastrophic collapse in the US property market, widely blamed on the excesses of subprime mortgage lenders, which played a significant part in the global financial crisis. After a slump in value, the MBA agreed on Friday to sell its head office to a property intelligence company, CoStar Group, for $41m.

While the MBA is left red-faced, its mortgage providers are the true victims. The organisation borrowed $75m to buy the building, leaving it with a shortfall of $34m in repaying loans to a group of banks led by a Pittsburgh-based institution, PNC Financial Services.

"We have an agreement with the banks to fulfill our responsibilities with regard to the deficiency," said an MBA spokeswoman, who declined to say whether this entailed repaying the loan in full.

Groups supporting struggling homeowners have been quick to spot the irony of the debacle. Bruce Marks, chief executive of the Neighbourhood Assistance Corporation of America, said: "Clearly, they don't practice what they preach. They say there's a moral obligation for homeowners to repay their mortgages yet they don't believe that applies to them. This is why the American people are absolutely disgusted with bankers."

The MBA has often adopted a combative tone to members of the public who have failed to keep up repayments on their own mortgages. Its chief executive, John Courson, recently criticised those who walk away from under-water loans, asking: "what about the message they will send to their family and their kids and their friends?"

At its annual convention in 2008, the organisation invited George Bush's notoriously right wing strategist Karl Rove as a keynote speaker to deliver a diatribe blaming Democrats in Congress and irresponsible borrowers for the mortgage industry's difficulties.

In defence of the organisation's own financial housekeeping, a spokewoman said a cost-cutting initiative had balanced the MBA's books. She pointed out that three member taskforces had all agreed in 2007 that the office purchase was a good idea. In future, however, the MBA intends to rent.