REAL ESTATE : Missing a Loan Payment Can Pay Off if You’re Big Enough and Bold Enough
Recession Economics 101: It is sometimes more profitable to miss a payment than to make it, and if you’re a big business, it won’t even hurt your credit rating.
Baldwin Co., a home builder based in Newport Beach, took a lot of heat last week for missing a $619,900 bond payment to the county and getting hit with the threat of a foreclosure on a chunk of its Portola Hills development.
The day after the story hit the papers, Baldwin paid the bill, apparently to avoid further embarrassment. But the day before the check was belatedly proffered, Geoffrey Fearns, president of Baldwin’s Orange County operations, said the company missed the payment because it could make more money investing the $619,000 for an extra 60 days or so than it would lose in county-imposed late fees.
“We did the same thing last year,” Fearns said.
Ah, if only the folks at American Express would buy that.
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