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Vornado defaulted on it's mortgage of Springfield Mall because it was upside down.

Chiropteran

Diamond Member
Nov 14, 2003
9,811
110
106
Vornado Realty Trust defaulted on it's mortgage for Springfield Mall (VA), just to buy it back at a greatly reduced price a year later. Why is okay for a fortune 500 company to do this, but not a private citizen?

I apologize if this has been discussed earlier, but I never saw this reported in the news and just noticed it on Wikipedia today.

http://en.wikipedia.org/wiki/Springfield_Mall_(Virginia)
 

nehalem256

Lifer
Apr 13, 2012
15,669
6
0
Vornado Realty Trust defaulted on it's mortgage for Springfield Mall (VA), just to buy it back at a greatly reduced price a year later. Why is okay for a fortune 500 company to do this, but not a private citizen?

I apologize if this has been discussed earlier, but I never saw this reported in the news and just noticed it on Wikipedia today.

http://en.wikipedia.org/wiki/Springfield_Mall_(Virginia)
What is stopping them?

I know that at a least in some states you can walk away from your home and the banks cannot come after you for other assets to recoup costs. There is no reason you could not do that and turn around repurchase the house.
 

infoiltrator

Senior member
Feb 9, 2011
704
0
0
You can do this as a private citizen.
A private citizen defaulting on a mortgage payment is unlikely to have the "personal credit" to do so, or escape creditors.
A business has (I am certain) a law firm to "redefine" itself and means of "attracting" financing no private citizen can. This is independent of the "realities" involved.

People with money to lend can see a "business" as making a minor judgement error "repositioning" itself debt wise.
For reasons unclear to me most lenders "sell" off "troubled" mortgages at a great loss rather than renegotiate with private citizens. Bill collectors, since most private citizens know neither law nor are in a position to judge, are often threatened and hounded after foreclosure.

And tax payers eat it big time. Taxable value drops, and a business can " charge" losses against taxes.

Business as usual has the muscle to SC*** u while private citizens (operating without influence) are usually nailed and hounded.
 
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nehalem256

Lifer
Apr 13, 2012
15,669
6
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For reasons unclear to me most lenders "sell" off "troubled" mortgages at a great loss rather than renegotiate with private citizens.
There are probably a couple of reasons.

1.) You do not want to encourage people to become "troubled" with regards to their mortgage.

2.) I imagine it takes a large staff to assess and renegotiate with all the troubled buyers.

3.) I ran the numbers on one of the troubled home buyers once and even reducing the interest rate to 0% it was not possible to get them down to a government acceptable payment-to-income ratio.

4.) Even when they do renegotiate a very large number of borrowers end up become "troubled" again. Banks might think it makes more sense to just bite the bullet up front.

... or maybe banks just hate making money?
 

nextJin

Golden Member
Apr 16, 2009
1,848
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Springfield Mall was straight garbage for a long damn time. Especially after Tysons Corner came online.

I would have never rebought that shit hole no one is going there after and its a miracle some of those places remain open.
 

shortylickens

No Lifer
Jul 15, 2003
79,432
12,249
126
Springfield Mall was straight garbage for a long damn time. Especially after Tysons Corner came online.

I would have never rebought that shit hole no one is going there after and its a miracle some of those places remain open.
I still havent been to Tysons corner. I visit Fair Oaks maybe twice a year and its nice.
 

OCGuy

Lifer
Jul 12, 2000
27,220
26
91
There is nothing stopping a private citizen from doing this.

The problem is you would have to buy it in cash, or hope the home was only on one spouce's credit, and the other spouce can qualify for the loan by themselves.
 

Matt1970

Lifer
Mar 19, 2007
12,320
2
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Plans to redevelop were plagued by governmental delays and approval issues. Large sections of stores at the Springfield Mall have been boarded up and are awaiting redevelopment. During the delays, the mall's occupancy, revenue, and value plummeted. Shortly after approval was finally granted, Vornado defaulted on the mall's loan. After a year in default, Vornado bought back the loan at a greatly reduced amount
If the Gov got off their ass and approved the redevelopment, this probably wouldn't have happened. What they did was also the same thing as settling a debt which happens all the time.
 

Darwin333

Lifer
Dec 11, 2006
19,946
2,325
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I think the OP is talking about certain posters here that think that people shouldn't walk away from loans and stuff because it isn't "right", a deals a deal and all that jazz.
 

fskimospy

Elite Member
Mar 10, 2006
73,121
24,687
136
I think the OP is talking about certain posters here that think that people shouldn't walk away from loans and stuff because it isn't "right", a deals a deal and all that jazz.
It is interesting to me that people who choose strategic personal bankruptcy are viewed as having done something wrong, but businesses do it all the time and it's accepted.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
It is interesting to me that people who choose strategic personal bankruptcy are viewed as having done something wrong, but businesses do it all the time and it's accepted.
Where the two are similar I wouldn't view the individual as having done something wrong, or the business as not having done something wrong.

If the individual's financial condition was the result excessive spending on frivolous items (e.g., expensive vacations, consumer items, luxury cars or lavish homes they had no reasonable expectation of affording) then, yes, I have a problem with it. But I also have a problem with the dumbazzes that loaned them the money and have no sympathy for their losses.

OTOH, many people, like businesses, are going to encounter financial problems from things outside their control, like a changing economy etc. In such cases I have no problems with a bankruptcy.

Fern
 

jstern01

Senior member
Mar 25, 2010
532
0
71
Where the two are similar I wouldn't view the individual as having done something wrong, or the business as not having done something wrong.

If the individual's financial condition was the result excessive spending on frivolous items (e.g., expensive vacations, consumer items, luxury cars or lavish homes they had no reasonable expectation of affording) then, yes, I have a problem with it. But I also have a problem with the dumbazzes that loaned them the money and have no sympathy for their losses.

OTOH, many people, like businesses, are going to encounter financial problems from things outside their control, like a changing economy etc. In such cases I have no problems with a bankruptcy.

Fern
So you don't think huge CEO and executive pay, golden parachutes, corporate largesse to their board and general raiding of pension funds is bad? The reason that a lot of corporations go bankrupt is poor management, just like a lot of individuals. The only difference is that businesses have no conscience and will take the easy way out rather than wrestle with the problem.
 

her209

No Lifer
Oct 11, 2000
56,352
9
0
There is nothing stopping a private citizen from doing this.

The problem is you would have to buy it in cash, or hope the home was only on one spouce's credit, and the other spouce can qualify for the loan by themselves.
Private citizens should incorporate and buy their houses under their shell corporations too so that if they walk away, their personal credit doesn't take the hit. Just incorporate under a new company name and rinse, repeat.

America! Fuck yeah!
 

Jhhnn

No Lifer
Nov 11, 1999
62,301
14,509
136
When little people go broke, they're called deadbeats. When wheeler-dealers go broke using OPM, over & over, they're called creative enterpreneurs & savvy businessmen- witness the Donald.

Obviously, bankrupting your investors & creditors is one thing- bankrupting yourself is entirely another.
 

shortylickens

No Lifer
Jul 15, 2003
79,432
12,249
126
Yup.
Trump has declared bankruptcy several times to get out of trouble. He always bounces back and remakes his little empire.
 

nehalem256

Lifer
Apr 13, 2012
15,669
6
0
Private citizens should incorporate and buy their houses under their shell corporations too so that if they walk away, their personal credit doesn't take the hit. Just incorporate under a new company name and rinse, repeat.

America! Fuck yeah!
But I thought the Supreme Court rule that corporations were people. Cant we just reverse that logic and claim that people are corporations? :sneaky:
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
So you don't think huge CEO and executive pay, golden parachutes, corporate largesse to their board and general raiding of pension funds is bad? The reason that a lot of corporations go bankrupt is poor management, just like a lot of individuals. The only difference is that businesses have no conscience and will take the easy way out rather than wrestle with the problem.
Sure, businesses can do utterly stupid things. But I've seen far less of the stupid frivolous type waste of money with businesses as compared to individuals. Yes, the amounts can be larger, even huge for businesses, but as a % of net income they are quite small. It's the complete opposite in many cases involving individuals.

CEO and exec pay is mostly from stock options. Stock options are not a cost for the business, and even if you wanted to argue they were they certainly are not a cash type expense. Print all the stock options you want, if won't hurt your bank account or drive it into a financial hardship.

I do have a problem with some of the more ecessive Golden Parachutes I've seen.

I've never seen any real examples of "corporate largesse to their board".

Nor have I seen any "general raiding of pension funds". For one thing, that's illegal and can get you actual prison time. For another, pension funds, except for union execs, have disappeared. The type of pension funds you would be referring to are Defined Benefit Plans, these were dropped in favor of Defined Contribution Plans such as 401(k)s long ago. It's not possible to raid a 401K.

Fern
 
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infoiltrator

Senior member
Feb 9, 2011
704
0
0
There exists a nonprofit Health organization in CT that thru political connections is always first in line for "grants, bonds, and numerous government programs." The CEO/Owner/Director hires family members for very rumunitive positions. The Board is also "related."
The "perks" are amazing.
The Organization, in violation of "Community Health Care" intent cherry picks its clients. IF you are unprofitable you find yourself on a "waiting list" or will constantly "rescheduled" appointments.
This CEO sucks up community support money making promises of increased services for each community he manages to penetrate. Service which never materialize.
He has the worst Physician to client ratio in the state.

I know of several other businesses run strictly for the ego of their owner/managers.
The "I am the boss, do not reason with me."

Many Hospitals have inflated management personel and costs.
Many "malls" are profitable in the short term and become "losers."

The USA leads the world in creating multimillionaires, unfortunately bankrupt corporations have destroyed many local economies.
Housing and banking "boom and bust" are an ongoing problem.
 

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