I am facing forclosure
October 6, 2006 2:41 PM Subscribe
I am facing forclosure A 24-year-old kid who leveraged eight houses in a dropping market with no-down loans from television get-rich-quick seminars is now $2.2 million in debt. Thanks, Donald Trump, you twat.
That really reminds me of what would happen if someone followed the advice in One Minute Millionaire. They recomend getting into debt buying houses (or, as they say "using other people's money), then flipping them. They also advocate spamming others with get-rich-quick schemes to "make a million dollers in one minute".
posted by juliarothbort at 2:45 PM on October 6, 2006
posted by juliarothbort at 2:45 PM on October 6, 2006
24 is not a kid, but is young enough to be foolish... in fact 80 is young enough to be foolish. I think Trump is mearly part of the systemic problem.
posted by edgeways at 2:45 PM on October 6, 2006
posted by edgeways at 2:45 PM on October 6, 2006
I blame Donald Trump for this post, too.
posted by routergirl at 2:45 PM on October 6, 2006
posted by routergirl at 2:45 PM on October 6, 2006
By the way, reading this article I totally get the same feeling you get at the start of a zombie movie, like Night of the Living Dead, when the young couple is walking near the graveyard and some shuffling characters are approaching in the background, lurching with every step. It's not the full financial holocaust yet, just the outlier, the first of these stories which will almost seem quaintly prophetic when we look back after the fact.
posted by jonson at 2:45 PM on October 6, 2006 [3 favorites]
posted by jonson at 2:45 PM on October 6, 2006 [3 favorites]
"Yes, I Lied on My Loans!
No more excuses! It’s true. I lied on my loans.
I overstated my income, and misrepresented my owner-occupied status and concealed the cash-back-at-close from the bank. I knew it all along. Nobody made me do it. It was my fault. I take full responsibility. And, that’s how I originally started this blog.
But then… I started to spin it."
But... Donald Trump is the twat?
posted by It's Raining Florence Henderson at 2:45 PM on October 6, 2006
No more excuses! It’s true. I lied on my loans.
I overstated my income, and misrepresented my owner-occupied status and concealed the cash-back-at-close from the bank. I knew it all along. Nobody made me do it. It was my fault. I take full responsibility. And, that’s how I originally started this blog.
But then… I started to spin it."
But... Donald Trump is the twat?
posted by It's Raining Florence Henderson at 2:45 PM on October 6, 2006
Who gives a 24 year old a no-downpayment loan on a house? And then who does it several times?!
posted by mathowie at 2:49 PM on October 6, 2006
posted by mathowie at 2:49 PM on October 6, 2006
Yes, it's true. Donald Trump is a twat.
posted by Bighappyfunhouse at 2:50 PM on October 6, 2006
posted by Bighappyfunhouse at 2:50 PM on October 6, 2006
Wow! I was counting on this job so I can establish a financial base from which I can launch my come back. This way at least I can continue paying for my wife to finish her degree and put food on the table for both of us. The job would also give me some seed money for additional real estate deals.
This poor, poor victim. Won't someone save him from himself?
posted by glenwood at 2:50 PM on October 6, 2006
This poor, poor victim. Won't someone save him from himself?
posted by glenwood at 2:50 PM on October 6, 2006
DOnald Trump is, at best, a merkin.
posted by It's Raining Florence Henderson at 2:50 PM on October 6, 2006 [1 favorite]
posted by It's Raining Florence Henderson at 2:50 PM on October 6, 2006 [1 favorite]
OK, The Donald isn't the twat. But have you seen his real estate ads? This is exactly the system he talks about.
posted by parmanparman at 2:51 PM on October 6, 2006
posted by parmanparman at 2:51 PM on October 6, 2006
could someone edit the post and take the last sentence out? pretty please.
posted by parmanparman at 2:51 PM on October 6, 2006
posted by parmanparman at 2:51 PM on October 6, 2006
It's probably not a hoax (too much verifiable stuff), but it sure seems like one. What kind of dumbass makes a public confession to fraud?
posted by Kwantsar at 2:53 PM on October 6, 2006 [1 favorite]
posted by Kwantsar at 2:53 PM on October 6, 2006 [1 favorite]
DOnald Trump is, at best, a merkin.
I don't think so much of Donald Trump Merkin as Donald Trump combover down below.
posted by juliarothbort at 2:53 PM on October 6, 2006
I don't think so much of Donald Trump Merkin as Donald Trump combover down below.
posted by juliarothbort at 2:53 PM on October 6, 2006
Oh boo-fucking-hoo. I think I hear the world's smallest violin playing. Poooor you.
posted by Rhomboid at 2:58 PM on October 6, 2006
posted by Rhomboid at 2:58 PM on October 6, 2006
I overstated my income, and misrepresented my owner-occupied status and concealed the cash-back-at-close from the bank.
This is fraud, right? Did this guy just confess to a felony on the internet? And with the amount of money involved, I think we're talking pretty serious prison time.
Seriously: what the fuck?!
posted by mr_roboto at 2:59 PM on October 6, 2006
This is fraud, right? Did this guy just confess to a felony on the internet? And with the amount of money involved, I think we're talking pretty serious prison time.
Seriously: what the fuck?!
posted by mr_roboto at 2:59 PM on October 6, 2006
Is this where I should point out that “debt consolidation,” “loan refinancing,” and other, related phrases, are currently the top payout for Google Adsense ads?
posted by ijoshua at 3:02 PM on October 6, 2006
posted by ijoshua at 3:02 PM on October 6, 2006
What needs to be addressed locally is the fact that people who live and work in their home area compete with house flippers nationwide. Property taxes should favor those who live in their homes.
posted by Brian B. at 3:02 PM on October 6, 2006
posted by Brian B. at 3:02 PM on October 6, 2006
OK, not exactly as high as mesothelioma, and a few other medical/legal phrases, but we’re talking $5–10 per click.
posted by ijoshua at 3:05 PM on October 6, 2006
posted by ijoshua at 3:05 PM on October 6, 2006
If he's a Republican he'll be fine. Our shining, virtuous capitalist wonderland routinely bails out failed businesses if they know the right lobbyists.
posted by bardic at 3:06 PM on October 6, 2006
posted by bardic at 3:06 PM on October 6, 2006
So, he tries to take advantage of the bank(s) in order to take advantage of home buyers, all the while overlooking the fact that we're in the biggest seller's market in the history of covered dwellings. Then, he has the gall to complain that legitimate economies are taking his job overseas because, lets face it, he really has no solid skills that are worth more than ten cents a day.
Yup, a real winner. Fuck 'im.
Oh, and Brian, property taxes (in Canada at least) do favour a primary residence over an investment income. My folks have a holiday place in a different city and consequently get gouged on the property tax.
posted by jimmythefish at 3:06 PM on October 6, 2006
Yup, a real winner. Fuck 'im.
Oh, and Brian, property taxes (in Canada at least) do favour a primary residence over an investment income. My folks have a holiday place in a different city and consequently get gouged on the property tax.
posted by jimmythefish at 3:06 PM on October 6, 2006
Wow! I was counting on this job so I can establish a financial base from which I can launch my come back. ... The job would also give me some seed money for additional real estate deals.
It seems to me that about the last thing this guy needs is additional real estate deals.
posted by smackwich at 3:08 PM on October 6, 2006
It seems to me that about the last thing this guy needs is additional real estate deals.
posted by smackwich at 3:08 PM on October 6, 2006
Leveraged - gah. I hear this word used more and more; it's one of the least attractive neologisms of our time. What does it actually mean?
posted by greycap at 3:13 PM on October 6, 2006
posted by greycap at 3:13 PM on October 6, 2006
I am facing foreclosure. Please, Interweb friends, send money now.
posted by ericb at 3:14 PM on October 6, 2006
posted by ericb at 3:14 PM on October 6, 2006
For some reason I am not moved by his plight.
I can't quite put my finger on why, though ...
posted by moonbiter at 3:15 PM on October 6, 2006
I can't quite put my finger on why, though ...
posted by moonbiter at 3:15 PM on October 6, 2006
In related news -- Trump launches vanity vodka: "Trump Super Premium Vodka."
posted by ericb at 3:16 PM on October 6, 2006
posted by ericb at 3:16 PM on October 6, 2006
"Leveraged - gah. I hear this word used more and more; it's one of the least attractive neologisms of our time. What does it actually mean?"Means he borrowed against property he didn't actually have any equity in.
posted by It's Raining Florence Henderson at 3:17 PM on October 6, 2006
gamble (găm'bəl)
1. To bet on an uncertain outcome, as of a contest.
2. To take a risk in the hope of gaining an advantage or a benefit.
3. To engage in reckless or hazardous behavior
posted by Argyle at 3:18 PM on October 6, 2006 [1 favorite]
1. To bet on an uncertain outcome, as of a contest.
2. To take a risk in the hope of gaining an advantage or a benefit.
3. To engage in reckless or hazardous behavior
posted by Argyle at 3:18 PM on October 6, 2006 [1 favorite]
this kid's ahead of the curve, I'd say!
trailblazer! (and finger-pointer)
posted by Busithoth at 3:18 PM on October 6, 2006
trailblazer! (and finger-pointer)
posted by Busithoth at 3:18 PM on October 6, 2006
Wait a minute, Donald Trump is a Dick Merkin"?
I'm confused.
posted by isopraxis at 3:19 PM on October 6, 2006
I'm confused.
posted by isopraxis at 3:19 PM on October 6, 2006
Can't this guy just declare bankruptcy and get it over with?
posted by Vindaloo at 3:19 PM on October 6, 2006
posted by Vindaloo at 3:19 PM on October 6, 2006
Here's something Casey says in one of the comment sections:
"honestly… my lawyers told me to SHUT UP!!!
But I’m still out here. I am definitely NOT following legal advice with this blog."
posted by mr_roboto at 3:25 PM on October 6, 2006
"honestly… my lawyers told me to SHUT UP!!!
But I’m still out here. I am definitely NOT following legal advice with this blog."
posted by mr_roboto at 3:25 PM on October 6, 2006
There are lots of stories of people who shouldn't be getting loans actually getting several. There was an article in a local paper recently about real estate agents getting people to lie on their "stated income" loan apps just to make the sale, convincing them that it would all be okay because of a refinance down the road.
The free money spigot has driven this housing bubble, and when it's all over, there will hopefully be some serious regulations put in place to prevent it from ever happening again. The profession of "Realtor" is one that indeed needs very heavy regulation, with extremely stiff penalties for lying or misleading people.
posted by Potsy at 3:25 PM on October 6, 2006
The free money spigot has driven this housing bubble, and when it's all over, there will hopefully be some serious regulations put in place to prevent it from ever happening again. The profession of "Realtor" is one that indeed needs very heavy regulation, with extremely stiff penalties for lying or misleading people.
posted by Potsy at 3:25 PM on October 6, 2006
Usually when I wake up ~4 am to go to work, the Girls Gone Wild informercial is on. Since I have teh Intarweb, I haven't paid for porn for many years. However, I still see this as effective advertising.
Other times, the GGW informercial is supplanted by one of the house-flipping, get-rich-quick-scheme infomercials. I usually change the channel at that point but first I wonder who could be stupid enough to fall for something like that.
Now I know.
posted by SteveTheRed at 3:30 PM on October 6, 2006
Other times, the GGW informercial is supplanted by one of the house-flipping, get-rich-quick-scheme infomercials. I usually change the channel at that point but first I wonder who could be stupid enough to fall for something like that.
Now I know.
posted by SteveTheRed at 3:30 PM on October 6, 2006
Any IRS auditors reading MetaFilter?
posted by It's Raining Florence Henderson at 3:30 PM on October 6, 2006
posted by It's Raining Florence Henderson at 3:30 PM on October 6, 2006
Jesus. I bought a condo two months ago, and my mortgage company wanted my financial records for the last 3 months, they wanted a letter from my employer stating my income, and they chased that with a personal phone call to my boss to confirm. When my parents donated a bit of coin for the down payment, they required a waiver signed by my father indicating that it was a gift, not a loan.
Having been through all that, I really can't understand how people manage to game the system. Or why they'd want to, really.
posted by Hildegarde at 3:38 PM on October 6, 2006
Having been through all that, I really can't understand how people manage to game the system. Or why they'd want to, really.
posted by Hildegarde at 3:38 PM on October 6, 2006
You people are all so negative. Don't you realize that he just wanted "to do a service for the community by fixing up the house very nice?"
posted by revgeorge at 3:38 PM on October 6, 2006
posted by revgeorge at 3:38 PM on October 6, 2006
Well, at least after he files for bankruptcy and his credit is trashed, he'll still be able to buy a house again at 32.
I hope he's gained some wisdom by then.
posted by mr_crash_davis at 3:39 PM on October 6, 2006
I hope he's gained some wisdom by then.
posted by mr_crash_davis at 3:39 PM on October 6, 2006
Also, kudos for the possible first use of the word "twat" in an FPP.
posted by knave at 3:39 PM on October 6, 2006
posted by knave at 3:39 PM on October 6, 2006
mr_roboto: Here's something Casey says in one of the comment sections:
"honestly… my lawyers told me to SHUT UP!!!
But I’m still out here. I am definitely NOT following legal advice with this blog."
Well, that proves we have either:
A. Not a real human being; either some sort of fiction, or some viral project or other. Probably one pushing some other get-rich scheme which will no doubt appear to save him when things look worst.
B. The stupidest person to ever walk the planet.
posted by Mitrovarr at 3:40 PM on October 6, 2006
"honestly… my lawyers told me to SHUT UP!!!
But I’m still out here. I am definitely NOT following legal advice with this blog."
Well, that proves we have either:
A. Not a real human being; either some sort of fiction, or some viral project or other. Probably one pushing some other get-rich scheme which will no doubt appear to save him when things look worst.
B. The stupidest person to ever walk the planet.
posted by Mitrovarr at 3:40 PM on October 6, 2006
Gee, it turns out that get rich quick schemes are generally dumb.
posted by Artw at 3:42 PM on October 6, 2006
posted by Artw at 3:42 PM on October 6, 2006
greycap: Leveraged - gah. I hear this word used more and more; it's one of the least attractive neologisms of our time. What does it actually mean?
If you buy shares of a company for $20,000, the price goes up by 10%, and you sell the shares for $22,000, you've made $2,000.
If you buy a $100,000 house with a $20,000 down payment and an $80,000 mortgage, the price goes up by 10%, and you sell for $110,000, you've made $10,000.
That's leverage: by borrowing 80% of the money, you're taking on greater risk, but you're also able to place a bet that's five times as large.
Where does the greater risk come in? If the price of the house goes down by 10%, and you sell at $90,000, you've lost $10,000.
This guy was 100% leveraged--he borrowed all of the money to buy these houses.
posted by russilwvong at 3:44 PM on October 6, 2006 [2 favorites]
If you buy shares of a company for $20,000, the price goes up by 10%, and you sell the shares for $22,000, you've made $2,000.
If you buy a $100,000 house with a $20,000 down payment and an $80,000 mortgage, the price goes up by 10%, and you sell for $110,000, you've made $10,000.
That's leverage: by borrowing 80% of the money, you're taking on greater risk, but you're also able to place a bet that's five times as large.
Where does the greater risk come in? If the price of the house goes down by 10%, and you sell at $90,000, you've lost $10,000.
This guy was 100% leveraged--he borrowed all of the money to buy these houses.
posted by russilwvong at 3:44 PM on October 6, 2006 [2 favorites]
Getting a $8/hour job is stupid. My minimim payments for the credit lines ($140k worth) are about $3700 per month. I will waste 8 hours a day working a job.
I'm ready to vote "fictional person" based on this comment.
posted by Hildegarde at 3:45 PM on October 6, 2006
I'm ready to vote "fictional person" based on this comment.
posted by Hildegarde at 3:45 PM on October 6, 2006
I recently googled "twat" because of the way some people were using it here. I had never heard it used against a person.
posted by Brian B. at 3:45 PM on October 6, 2006
posted by Brian B. at 3:45 PM on October 6, 2006
I grossly underestimated everything. I bought many houses sight unseen! And the ones I did see I was still too optimistic. I miscalculated the money+time it would take to find contractors, manage contractors, do repairs, and resell quickly. Add the cost of doing out-of-state deals. I was not prepared for the huge travel expenses and the difficulty of managing all these deals remotely.
This part made me laugh. If you watch any of those "Flip this house" shows, EVERYONE underestimates EVERYTHING, full stop.
posted by ernie at 3:53 PM on October 6, 2006
This part made me laugh. If you watch any of those "Flip this house" shows, EVERYONE underestimates EVERYTHING, full stop.
posted by ernie at 3:53 PM on October 6, 2006
hee hee hee! dot com^10. Go cry to Carleton Sheets.
posted by nj_subgenius at 3:53 PM on October 6, 2006
posted by nj_subgenius at 3:53 PM on October 6, 2006
Heh, from his blog: He was offered a job and then the offer was rescinded.
As it turns out .. the scope and size of the project has grown way beyond what it was in August and as a result the CEO decided that instead of supporting an in-house team of developers, to outsource to India!
I'm not against outsourcing, but it's a huge risk if you don't know what you're doing. Definitely not the thing to do if you want to get things done quickly. Still, $70k/year for PHP? Whatever.
posted by delmoi at 4:07 PM on October 6, 2006
As it turns out .. the scope and size of the project has grown way beyond what it was in August and as a result the CEO decided that instead of supporting an in-house team of developers, to outsource to India!
I'm not against outsourcing, but it's a huge risk if you don't know what you're doing. Definitely not the thing to do if you want to get things done quickly. Still, $70k/year for PHP? Whatever.
posted by delmoi at 4:07 PM on October 6, 2006
Mathowie, this is precisely the kind of thing that happens in a financial mania. Remember all the craziness around the dotcom boom and collapse? Booms cause this kind of stupid behavior; they feel great, but they do immense hidden damage to an economy.
We haven't really suffered through the downturn from the Nasdaq collapse, because the Fed injected absolutely unprecedented amounts of money into the system to prop things up. So the financial mania, attracted by rates lower than any in three generations, moved into real estate and debt; instead of popping, it shifted and got a lot larger. A lot larger.
The last time we had a bubble/bust was in 1930. We've never had a double (or triple) bubble before, much less a Fed that actively encouraged speculative/irrational behavior.
If they follow past precedent, as the housing bubble starts to collapse, the Fed will increase liquidity injections even more, possibly by an order of magnitude. The normal outcome of a bubble is a deflationary collapse, which are profoundly No Fun. (as debt goes bad, this destroys 'money', because accounts receivable are treated as a form of money by most financial entities.) The Fed will do its best to prevent this by using their only weapon... money printing. Lots and lots of it.
We're already seeing pretty nasty inflation; the only reason it has been contained is because the Japanese and Chinese central banks have been buying up dollars, to the tune of hundreds of billions. In essence, because they print their currency to buy ours, they are importing our inflation. This is part of the reason for the crazy growth rate in China. It may also be in a bubble. (20% yearly growth rates result in huge malinvestment and enormous waste. That is NOT NORMAL, and there's a good chance they'll go through a very bad and very long recession.)
Japan was the last country to have a systemic real estate bubble, in the 1980s, and they suffered for twenty years from it. The only thing that brought them out of their profound and prolonged recession was heavy-duty yen printing to buy dollars; by importing our inflation, they finally kick-started their economy back to something vaguely resembling normal.
But that's not really an option we can choose; all our options are bad. We can allow a deflationary collapse, which would be deep and terrible, but survivable, just as the 1930s were. But while that would probably be the best approach long-term, our politicians think in terms of days or weeks, not years or generations. So what we will probably do is print more money. That's what got us sick in the first place... it's just more of the same drug. Ultimately, that road leads to Weimar Republic-style hyperinflation .... and an even more total economic collapse. By avoiding short-term pain, we end up with a great deal more of it over a much longer period.
Money printing is precisely like using methamphetamine for personal productivity. It works for awhile, sometimes for a long while. Eventually, it doesn't work anymore, and the abuser often dies.
This kid is just a symptom... an early whiff of the rot and corruption in the system.
posted by Malor at 4:09 PM on October 6, 2006 [13 favorites]
We haven't really suffered through the downturn from the Nasdaq collapse, because the Fed injected absolutely unprecedented amounts of money into the system to prop things up. So the financial mania, attracted by rates lower than any in three generations, moved into real estate and debt; instead of popping, it shifted and got a lot larger. A lot larger.
The last time we had a bubble/bust was in 1930. We've never had a double (or triple) bubble before, much less a Fed that actively encouraged speculative/irrational behavior.
If they follow past precedent, as the housing bubble starts to collapse, the Fed will increase liquidity injections even more, possibly by an order of magnitude. The normal outcome of a bubble is a deflationary collapse, which are profoundly No Fun. (as debt goes bad, this destroys 'money', because accounts receivable are treated as a form of money by most financial entities.) The Fed will do its best to prevent this by using their only weapon... money printing. Lots and lots of it.
We're already seeing pretty nasty inflation; the only reason it has been contained is because the Japanese and Chinese central banks have been buying up dollars, to the tune of hundreds of billions. In essence, because they print their currency to buy ours, they are importing our inflation. This is part of the reason for the crazy growth rate in China. It may also be in a bubble. (20% yearly growth rates result in huge malinvestment and enormous waste. That is NOT NORMAL, and there's a good chance they'll go through a very bad and very long recession.)
Japan was the last country to have a systemic real estate bubble, in the 1980s, and they suffered for twenty years from it. The only thing that brought them out of their profound and prolonged recession was heavy-duty yen printing to buy dollars; by importing our inflation, they finally kick-started their economy back to something vaguely resembling normal.
But that's not really an option we can choose; all our options are bad. We can allow a deflationary collapse, which would be deep and terrible, but survivable, just as the 1930s were. But while that would probably be the best approach long-term, our politicians think in terms of days or weeks, not years or generations. So what we will probably do is print more money. That's what got us sick in the first place... it's just more of the same drug. Ultimately, that road leads to Weimar Republic-style hyperinflation .... and an even more total economic collapse. By avoiding short-term pain, we end up with a great deal more of it over a much longer period.
Money printing is precisely like using methamphetamine for personal productivity. It works for awhile, sometimes for a long while. Eventually, it doesn't work anymore, and the abuser often dies.
This kid is just a symptom... an early whiff of the rot and corruption in the system.
posted by Malor at 4:09 PM on October 6, 2006 [13 favorites]
the comment thread on the one Dallas property is a riot.
"I’ve lived in Dallas for 17 years in that neighborhood. You got screwed on this one, or you screwed yourself. You’ll be lucky to get half of what you’re asking for this.
You’d better hire a good bankruptcy lawyer."
posted by ernie at 4:10 PM on October 6, 2006
"I’ve lived in Dallas for 17 years in that neighborhood. You got screwed on this one, or you screwed yourself. You’ll be lucky to get half of what you’re asking for this.
You’d better hire a good bankruptcy lawyer."
posted by ernie at 4:10 PM on October 6, 2006
It's probably not a hoax (too much verifiable stuff), but it sure seems like one. What kind of dumbass makes a public confession to fraud?
That really stunned me too. I mean. I'm sure it's illegal. But he was stupid enough to get into this mess, so it doesn't surprise me he'd be stupid enough to admit to fraud on his friggin' blog.
posted by delmoi at 4:11 PM on October 6, 2006
That really stunned me too. I mean. I'm sure it's illegal. But he was stupid enough to get into this mess, so it doesn't surprise me he'd be stupid enough to admit to fraud on his friggin' blog.
posted by delmoi at 4:11 PM on October 6, 2006
Oh and if you're looking for scapegoats, folks... it's mostly Clinton and Greenspan. Bush's team is too stupid to do the kind of damage that those guys did.
'Course, it may be that they see the storm coming better than we do, and the whole Iraq adventure was a chance to loot the Treasury while there was still something IN the Treasury.
posted by Malor at 4:16 PM on October 6, 2006
'Course, it may be that they see the storm coming better than we do, and the whole Iraq adventure was a chance to loot the Treasury while there was still something IN the Treasury.
posted by Malor at 4:16 PM on October 6, 2006
I have never been so happy about my huge 30-year-fixed.
posted by mckenney at 4:20 PM on October 6, 2006
posted by mckenney at 4:20 PM on October 6, 2006
the comment thread on the one Dallas property is a riot.
What's even better is when a former OCCUPANT OF THE HOUSE speaks up.
posted by mrbill at 4:24 PM on October 6, 2006
What's even better is when a former OCCUPANT OF THE HOUSE speaks up.
posted by mrbill at 4:24 PM on October 6, 2006
He's screwed no matter what - maybe he assumed it didn't make any difference any more. At least this way, he gets to have a moment of fame before burly gentlemen arrive to take him away.
posted by athenian at 4:37 PM on October 6, 2006
posted by athenian at 4:37 PM on October 6, 2006
From the same thread ernie mentioned:
Sue, I agree with you on that its a weird house. I found out a lot of it after I bought it. It was my mistake for not doing my homework more. Thank you for your comments and additional history.
Wow.
posted by delmoi at 4:38 PM on October 6, 2006
Sue, I agree with you on that its a weird house. I found out a lot of it after I bought it. It was my mistake for not doing my homework more. Thank you for your comments and additional history.
Wow.
posted by delmoi at 4:38 PM on October 6, 2006
Also, kudos for the possible first use of the word "twat" in an FPP.
Well -- I used it in the title of an FPP last night. ; )
posted by ericb at 4:38 PM on October 6, 2006
Well -- I used it in the title of an FPP last night. ; )
posted by ericb at 4:38 PM on October 6, 2006
The comment section is a riot. The stupid is strong with these people:
First, to the people saying ‘get an attorney’, that is considered giving legal advice, and is illegal unless you are qualified to do so (i.e., youre an attorney). Even if you are an attorney, thats is considered unethical to solicite work to a person in obvious need and grounds for disbarrment (meaning abulance chasing is not cool).
Has anyone in this thread yet pointed out that he's on the front page of the SFGate website? If there's anything this genius doesn't need, it's publicity.
posted by mr_roboto at 4:41 PM on October 6, 2006
First, to the people saying ‘get an attorney’, that is considered giving legal advice, and is illegal unless you are qualified to do so (i.e., youre an attorney). Even if you are an attorney, thats is considered unethical to solicite work to a person in obvious need and grounds for disbarrment (meaning abulance chasing is not cool).
Has anyone in this thread yet pointed out that he's on the front page of the SFGate website? If there's anything this genius doesn't need, it's publicity.
posted by mr_roboto at 4:41 PM on October 6, 2006
mr_roboto -- thanks for the link. That article provides a good overview of the situation.
posted by ericb at 4:44 PM on October 6, 2006
posted by ericb at 4:44 PM on October 6, 2006
The best thing about California is that if you're a cokefed whiteboy who does something monumentally idiotic, there will always be someone out there to codepend with your self-delusion.
posted by nasreddin at 4:45 PM on October 6, 2006 [2 favorites]
posted by nasreddin at 4:45 PM on October 6, 2006 [2 favorites]
Don't knock property flips. This guy was just greedy. I did one a year for eighteen years.
Bought in winter and spent my summers off
(education) remodeling.
I enjoy a very comfortable Fl. retirement financed by flipping.
posted by notreally at 4:49 PM on October 6, 2006
Bought in winter and spent my summers off
(education) remodeling.
I enjoy a very comfortable Fl. retirement financed by flipping.
posted by notreally at 4:49 PM on October 6, 2006
Alright, here's my theory on this. There is a real "Casey" person who is actually the public face of a cabal of real estate brokers trying to unload some property. Kind of like "tom" and the myspace company. They want to dump the property quick, onto the sorts of amateurs who read this crap. You see in the Dallas thread someone offering to buy the property for $196k.
So "he" didn't really lie on his forms, isn't really going bankrupt, didn't really lose a job to outsourcing (way to pat) or anything. "he" is just an average real-estate chump wanting to hype some properties.
I mean seriously, why the hell would you buy a bunch of properties in a bunch of states with no possible way to visit and maintain them?
Plus he's probably making a killing on Google adwords.
posted by delmoi at 4:51 PM on October 6, 2006 [1 favorite]
So "he" didn't really lie on his forms, isn't really going bankrupt, didn't really lose a job to outsourcing (way to pat) or anything. "he" is just an average real-estate chump wanting to hype some properties.
I mean seriously, why the hell would you buy a bunch of properties in a bunch of states with no possible way to visit and maintain them?
Plus he's probably making a killing on Google adwords.
posted by delmoi at 4:51 PM on October 6, 2006 [1 favorite]
"I've always been entrepreneurial," he said. "I've had a business ever since we moved to the U.S." Serin, whose family emigrated from Uzbekistan to Sacramento when he was 12, exhibits the untarnished faith in American capitalism characteristic of some immigrants
Ah, must be the bone in the middle his brain.
posted by delmoi at 4:55 PM on October 6, 2006
Ah, must be the bone in the middle his brain.
posted by delmoi at 4:55 PM on October 6, 2006
You are so wrong to bring Donald Trump into this. He has absolutiely NOTHING to do wtih this. I know you are trying to be clever with your angst-fueled celebrity hate, but you should be apologizing.
-A
posted by mogabog at 4:59 PM on October 6, 2006
-A
posted by mogabog at 4:59 PM on October 6, 2006
Somewhere, tonight, a bank manager is ordering steak the same way he does every Friday night - large, overpriced, and extra rare.
Somewhere, tonight, a college dropout is catching the last few minutes of NPR. While she waits in line in the Burger King drive-thru, she listens to a story of young people ensnared and crushed by debt. She begins crying, as she just forclosed today.
The bank manager, laughing, orders another vodka martini at Morton's. His server is young, and very attractive. She just took out a 240K mortgage this week. Life is so very good.
posted by four panels at 5:00 PM on October 6, 2006 [3 favorites]
Somewhere, tonight, a college dropout is catching the last few minutes of NPR. While she waits in line in the Burger King drive-thru, she listens to a story of young people ensnared and crushed by debt. She begins crying, as she just forclosed today.
The bank manager, laughing, orders another vodka martini at Morton's. His server is young, and very attractive. She just took out a 240K mortgage this week. Life is so very good.
posted by four panels at 5:00 PM on October 6, 2006 [3 favorites]
Also, Uzbek my ass. Either his parents are former Communist Party hacks from Russia or he's not a real person.
Uzbeks, as a rule, do not look like Kurt Cobain. Not even if they bleach their hair.
posted by nasreddin at 5:03 PM on October 6, 2006
Uzbeks, as a rule, do not look like Kurt Cobain. Not even if they bleach their hair.
posted by nasreddin at 5:03 PM on October 6, 2006
After reading some of his replies to comments, there's no way a 24 year old could be *this* boneheaded. I'm starting to agree with delmoi.
posted by mrbill at 5:06 PM on October 6, 2006
posted by mrbill at 5:06 PM on October 6, 2006
There's plenty of money to be made in flipping. Buying houses at foreclosure, fixing them up, and then renting them out to pay the mortgage or selling them can be a great side business. (My parents do it where they live in Richmond, VA, as a matter of fact.)
However, you don't do that by buying "8 houses in 8 months across 4 states with no money down." You have to know your market -- you don't buy where there's little to no chance of selling for less than you paid! That's just common sense, isn't it? (Though I shouldn't expect common sense from someone who admits to mortgage fraud on his weblog...)
I hope this guy learns from his mistakes. Judging from his intent to get "seed money" to do make more "deals," though, my hopes are probably in vain.
posted by armage at 5:08 PM on October 6, 2006
However, you don't do that by buying "8 houses in 8 months across 4 states with no money down." You have to know your market -- you don't buy where there's little to no chance of selling for less than you paid! That's just common sense, isn't it? (Though I shouldn't expect common sense from someone who admits to mortgage fraud on his weblog...)
I hope this guy learns from his mistakes. Judging from his intent to get "seed money" to do make more "deals," though, my hopes are probably in vain.
posted by armage at 5:08 PM on October 6, 2006
mogabog writes "You are so wrong to bring Donald Trump into this. He has absolutiely NOTHING to do wtih this. I know you are trying to be clever with your angst-fueled celebrity hate, but you should be apologizing. "
Holy shit! Mr. Trump?!?!? Matt, I think it's time for a new sidebar entry!
posted by mr_roboto at 5:13 PM on October 6, 2006
Holy shit! Mr. Trump?!?!? Matt, I think it's time for a new sidebar entry!
posted by mr_roboto at 5:13 PM on October 6, 2006
Yeah, I'm don't think this is impossible, but he, if he's real, is crazy to buy property he can't even get to in person on short notice. But there are so many stupid things he admits too, which is why it seems like he's full of it. I'm surprised the "real reporters" involved in this didn't do more digging.
posted by delmoi at 5:18 PM on October 6, 2006
posted by delmoi at 5:18 PM on October 6, 2006
Ultimately, that road leads to Weimar Republic-style hyperinflation ....
I'm really looking forward to burning stacks of bills because they are cheaper than firewood. Seriously, it's going to be great.
posted by TheOnlyCoolTim at 5:33 PM on October 6, 2006
I'm really looking forward to burning stacks of bills because they are cheaper than firewood. Seriously, it's going to be great.
posted by TheOnlyCoolTim at 5:33 PM on October 6, 2006
I have never been so happy about my huge 30-year-fixed.
Preach it, mckenney. I never felt comfortable enough with those fancy-schmancy adjustable rate mortgages to actually sign one, and now events are confirming my discomfort. More and more you're hearing stories on the news of people getting seriously bitten in the ass by an exotic mortgage they signed without really understanding the terms.
Someone showed me a reprint of this Business Week article last week and it confirms the alarm I've heard elsewhere. It isn't just going to be the get-rich-quick-types like this kid (real or not) who are going to feel the pain as the market goes down. A lot of just-folks who either thought they could use their house as an ATM, or signed a too-good-to-be true mortgage will too.
posted by hwestiii at 5:42 PM on October 6, 2006
Preach it, mckenney. I never felt comfortable enough with those fancy-schmancy adjustable rate mortgages to actually sign one, and now events are confirming my discomfort. More and more you're hearing stories on the news of people getting seriously bitten in the ass by an exotic mortgage they signed without really understanding the terms.
Someone showed me a reprint of this Business Week article last week and it confirms the alarm I've heard elsewhere. It isn't just going to be the get-rich-quick-types like this kid (real or not) who are going to feel the pain as the market goes down. A lot of just-folks who either thought they could use their house as an ATM, or signed a too-good-to-be true mortgage will too.
posted by hwestiii at 5:42 PM on October 6, 2006
Ah, must be the bone in the middle his brain.
I knew there was some reason I was reading this whole thread. Thanks,Borat delmoi!
posted by languagehat at 5:46 PM on October 6, 2006
I knew there was some reason I was reading this whole thread. Thanks,
posted by languagehat at 5:46 PM on October 6, 2006
Instead of a get-rich-quick scheme, has anyone ever come up with a get-poor-slowly scheme? Because that would be much, much better.
posted by Ritchie at 5:47 PM on October 6, 2006
posted by Ritchie at 5:47 PM on October 6, 2006
Uzbeks, as a rule, do not look like Kurt Cobain. Not even if they bleach their hair.
Probably ethnic Russian. Lots of them emigrated after independence, and the timeframe fits.
Just sayin'
posted by dhartung at 5:57 PM on October 6, 2006
Probably ethnic Russian. Lots of them emigrated after independence, and the timeframe fits.
Just sayin'
posted by dhartung at 5:57 PM on October 6, 2006
Someone above mentioned bankruptcy -- he's gonna have a tough time getting those debts discharged in bankruptcy court if he obtained them fraudulently. It's not a financial get out of jail free card.
posted by Toecutter at 6:09 PM on October 6, 2006
posted by Toecutter at 6:09 PM on October 6, 2006
I am facing forclosure
Somebody buy that guy a vowel.
And, man, the Uzbek expertise is strong in this thread. It drips with it.
Not even if they bleach their hair.
I can hear it now....
I'm a loser, baby
So, why don't you kill me ?
(drive-by housing-loan)
Somebody buy that guy a vowel.
And, man, the Uzbek expertise is strong in this thread. It drips with it.
Not even if they bleach their hair.
I can hear it now....
I'm a loser, baby
So, why don't you kill me ?
(drive-by housing-loan)
UzBeckposted by y2karl at 6:29 PM on October 6, 2006
Don't knock property flips... I did one a year for eighteen years. Bought in winter and spent my summers off (education) remodeling. I enjoy a very comfortable Fl. retirement financed by flipping. posted by notreally at 7:49 PM EST
That is fabulous and I'm really happy for you, notreally.
(Couldn't resist.)
posted by hal9k at 6:55 PM on October 6, 2006
That is fabulous and I'm really happy for you, notreally.
(Couldn't resist.)
posted by hal9k at 6:55 PM on October 6, 2006
y2kari, you are my new hero.
posted by joannemerriam at 7:14 PM on October 6, 2006
posted by joannemerriam at 7:14 PM on October 6, 2006
I'm skeptical. The blog can be summarized as, "I've fucked up my life. Now I'm blogging it. Stay tuned."
Doesn't ring true.
posted by jayder at 7:35 PM on October 6, 2006
Doesn't ring true.
posted by jayder at 7:35 PM on October 6, 2006
Hurry up and go belly up ! Its good for the rest of us.
posted by R. Mutt at 7:59 PM on October 6, 2006
posted by R. Mutt at 7:59 PM on October 6, 2006
I've seen stupid, but never stupidity of this magnitude.
There's no way this is a real person.
posted by bshort at 8:43 PM on October 6, 2006
There's no way this is a real person.
posted by bshort at 8:43 PM on October 6, 2006
Who gives a 24 year old a no-downpayment loan on a house? And then who does it several times?!
Yeah . . . and while we're on the topic, how can this 35 year old bullshit them into getting him a nice co-op 1BR?
(Without having to go to jail.)
posted by jason's_planet at 8:43 PM on October 6, 2006
Yeah . . . and while we're on the topic, how can this 35 year old bullshit them into getting him a nice co-op 1BR?
(Without having to go to jail.)
posted by jason's_planet at 8:43 PM on October 6, 2006
Wow, this guy is on a rocket-ride to the moon! And while you're there, would you pick up some of that nice, green moon money for me?
posted by bob sarabia at 8:48 PM on October 6, 2006
posted by bob sarabia at 8:48 PM on October 6, 2006
No more excuses! It’s true. I lied on my loans.
I overstated my income, and misrepresented my owner-occupied status and concealed the cash-back-at-close from the bank. I knew it all along. Nobody made me do it. It was my fault. I take full responsibility. And, that’s how I originally started this blog
I'm always astonished at how jaw-droppingly fuck-witted people can be with their blogs. I used to think it was being in front of the TV camera that made people act like moe-rons. I was wrong; it's the blog, not the TV camera, that steals 20 IQ points.
I have to wonder: Have blog entries ever been used as evidence in a criminal case or lawsuit? Or is this guy going to be the first?
From the comments:
Hank Yohansen
Holy ***, you signed a note for 14% in this market. Son, you need to find a new line of work.
posted by jason's_planet at 10:06 PM on October 6, 2006
I overstated my income, and misrepresented my owner-occupied status and concealed the cash-back-at-close from the bank. I knew it all along. Nobody made me do it. It was my fault. I take full responsibility. And, that’s how I originally started this blog
I'm always astonished at how jaw-droppingly fuck-witted people can be with their blogs. I used to think it was being in front of the TV camera that made people act like moe-rons. I was wrong; it's the blog, not the TV camera, that steals 20 IQ points.
I have to wonder: Have blog entries ever been used as evidence in a criminal case or lawsuit? Or is this guy going to be the first?
From the comments:
Hank Yohansen
Holy ***, you signed a note for 14% in this market. Son, you need to find a new line of work.
posted by jason's_planet at 10:06 PM on October 6, 2006
*Clicks*
*Points*
*Laughs*
*Waits for his wife to post an AskMe*
posted by Alvy Ampersand at 10:06 PM on October 6, 2006
*Points*
*Laughs*
*Waits for his wife to post an AskMe*
posted by Alvy Ampersand at 10:06 PM on October 6, 2006
I was just at an investment seminar last night where the guy was talking about the fundamentals of the residential real estate market. He pointed to the Sacramento market as an example and stated that he thought it would undergo a 30% correction over the next two years.
posted by BrotherCaine at 10:06 PM on October 6, 2006
posted by BrotherCaine at 10:06 PM on October 6, 2006
I bought one of those Donald Trump merkins, and I've been having a lot of trouble with it. The hair only seems to be attached at the very back, so it's hard to keep in place and often ends up smelling funny. Should I return it and ask for a refund?
posted by flabdablet at 10:16 PM on October 6, 2006
posted by flabdablet at 10:16 PM on October 6, 2006
And then who does it several times?!
He actually applied for the loans at the same time, to get around this obvious difficulty.
posted by Heywood Mogroot at 10:24 PM on October 6, 2006
He actually applied for the loans at the same time, to get around this obvious difficulty.
posted by Heywood Mogroot at 10:24 PM on October 6, 2006
Is there a way to find out who's paying for the UPS box? I can't believe so many banks would loan that much money to a 24-year-old non-citizen. This can't be real.
Um, what makes you think he's a non-citizen? Most child immigrants get naturalized pretty easily.
posted by delmoi at 11:20 PM on October 6, 2006
Um, what makes you think he's a non-citizen? Most child immigrants get naturalized pretty easily.
posted by delmoi at 11:20 PM on October 6, 2006
Ugh, I can't believe I spelled "Foreclosure" incorrectly, esp since I am a journalist. Mark it up to being addicted to chewing gum.
posted by parmanparman at 11:27 PM on October 6, 2006
posted by parmanparman at 11:27 PM on October 6, 2006
The site seems a little weird to me, too. I don't know whether it's a hoax or not - hell, maybe he's just a bad writer. But I wouldn't be surprised to find him asking for money at some point.
posted by miskatonic at 4:54 AM on October 7, 2006
posted by miskatonic at 4:54 AM on October 7, 2006
And I think delmoi is right - he must be making a ton off AdSense, and it wouldn't be strange at all if that's the sole purpose for the site. The bizarre story is a source of traffic, true or not.
posted by miskatonic at 5:05 AM on October 7, 2006
posted by miskatonic at 5:05 AM on October 7, 2006
Dammit, people, can we get back on topic here? Donald Trump, he is very bad.
posted by ikkyu2 at 5:15 AM on October 7, 2006
posted by ikkyu2 at 5:15 AM on October 7, 2006
Wow, this guy is on a rocket-ride to the moon! And while you're there, would you pick up some of that nice, green moon money for me?
posted by bob sarabia
No deal, sarabia! That moon money is mine!
posted by Fuzzy Monster at 6:12 AM on October 7, 2006
posted by bob sarabia
No deal, sarabia! That moon money is mine!
posted by Fuzzy Monster at 6:12 AM on October 7, 2006
What about George Soros? Isn't anyone going to blame him?
posted by leftcoastbob at 6:22 AM on October 7, 2006
posted by leftcoastbob at 6:22 AM on October 7, 2006
Oh and if you're looking for scapegoats, folks... it's mostly Clinton and Greenspan
Hey, don't forget about Osama bin Laden. You might as well go for the trolling hat trick.
posted by PeterMcDermott at 6:29 AM on October 7, 2006
Hey, don't forget about Osama bin Laden. You might as well go for the trolling hat trick.
posted by PeterMcDermott at 6:29 AM on October 7, 2006
Was it Hunter S. Thompson who invented the word "greedhead?" I think so. I just don't understand how people can think the purpose of life is to make money. You only get one life, as far as I know. I'm going to be honest, happy, underpaid, and just slightly in debt my whole life.
And if you ever see me at one of those "real estate seminars," just shoot me.
posted by kozad at 9:21 AM on October 7, 2006 [1 favorite]
And if you ever see me at one of those "real estate seminars," just shoot me.
posted by kozad at 9:21 AM on October 7, 2006 [1 favorite]
I like how he says he got into the whole mess with "good intentions, but bad tactics." The road to hell and all that....
posted by number9dream at 10:32 AM on October 7, 2006
posted by number9dream at 10:32 AM on October 7, 2006
So anyone want to go in on me and offer him a rock bottom price so he can start paying back the banks? We'd then have some nice real estate at well below the market prices ... wait it out for 5-10 years and we should have doubled our money off this kid's stupid decisions.
posted by geoff. at 11:02 AM on October 7, 2006
posted by geoff. at 11:02 AM on October 7, 2006
Sure geoff., I got $5. I think we should also make him dance for it too.
posted by Talanvor at 11:28 AM on October 7, 2006
posted by Talanvor at 11:28 AM on October 7, 2006
First, to the people saying ‘get an attorney’, that is considered giving legal advice, and is illegal unless you are qualified to do so (i.e., youre an attorney).
You have got to be smoking crack. Are you seriously suggesting that the only people allowed to suggest to other people that they get an attorney are ... attorneys themselves?
I can't believe this went without comment (til now). Saying "get a lawyer" is not legal advice. It's meta-legal advice.
posted by beth at 5:40 PM on October 7, 2006
You have got to be smoking crack. Are you seriously suggesting that the only people allowed to suggest to other people that they get an attorney are ... attorneys themselves?
I can't believe this went without comment (til now). Saying "get a lawyer" is not legal advice. It's meta-legal advice.
posted by beth at 5:40 PM on October 7, 2006
beth writes "I can't believe this went without comment (til now)."
I pointed out that particular gem yesterday.
posted by mr_roboto at 6:10 PM on October 7, 2006
I pointed out that particular gem yesterday.
posted by mr_roboto at 6:10 PM on October 7, 2006
Nevermind, mr_roboto, I thought you were saying that, not quoting it. Use italics!!!!!!!@!@!!@!@! Don't confuse me! :D
posted by beth at 7:09 PM on October 7, 2006
posted by beth at 7:09 PM on October 7, 2006
... I live in Roseville (or very close thereto). I could, y'know, hang around that P.O. box in the UPS store on Roseville Parkway (I know the store) until I find out who retrieves mail from it, then follow them home!
My lifelong ambitions of P.I. work fulfilled at last!
posted by po at 8:43 PM on October 7, 2006
My lifelong ambitions of P.I. work fulfilled at last!
posted by po at 8:43 PM on October 7, 2006
I worked for a large, secondary market financer for a couple of years, trying to develop automated tools to detect loan applications from, and loans issued to, people like this guy. I can say with the certainty of inside industry data that even if this particular guy isn't real, there are hundreds8212;probably thousands8212;of people who really do just what he claims to have done. This sort of fraud is rampant, and costs the industry (and consequently, homebuyers) many millions every year.
How does someone like this guy get a loan in the first place? He had bad credit because he carried large, maxed-out credit card balances, and he had very little income. In the past several years, lenders have been working very hard to extend credit to new segments of the market8212;partly to keep origination (loan issuance) numbers up when refinancing slows, partly because they think they can (their ability to estimate risk has improved markedly in the past several years, though expanding to new segments is always risky, because there is little good data from those segments on which to base risk estimates), and partly because they think they have to. On his first loan application, he looked like a first-time home-buyer (FTHB), so he probably didn't get the best terms, but he probably qualified for several FTHB incentives, and his credit profile was evaluated in light of what his income was anticipated to be based on fraudulent documentation he provided.
Why did the lender trust his assertions about his income? Lenders sometimes issue low-documentation loans (sometimes called "Alt-A" loans in the business) in special situations to reduce the cost and hassle of loan origination. Traditionally, these were used for low-leverage loans, where the lenders ran very little risk of default. (By low-leverage, I mean that the loan was small relative to the value of the home8212;generally implying a large down-payment with the purchase, or a rate/term refinance late in the life of the original purchase loan.) Low-doc loans are now also offered to people who might have difficulty showing income through traditional means (pay stubs, tax returns, etc.): e.g., recent law school graduates with new high-paying jobs, or people who have otherwise recently changed jobs. This guy presumably claimed he was newly employed as a real-estate mogul, and based on his assertions (verified by calls to his employer8212;himself!) he would be paid quite handsomely. Lenders charge higher rates for such low-documentation loans due to contamination of the risk pool by liars like this guy, but because most people applying for such loans generally do intend to pay them off, and manage to do so, lenders are able to make money on them in the aggregate.
He also managed a large cash-back agreement on the first loan. This can be done in a variety of shady ways, but usually it also involves "massaging" loan data to make it look more favorable to lenders. Sometimes the seller raises the price by, say, $30K, with the promise of giving $30K cash back to the buyer after the sale. Suppose the "real" value of the house were $300K, but the reported sale price is $330K due to the unreported cash-back agreement. Then the bank thinks they are financing a house worth $330K and issues what they think is a 100% loan-to-value (LTV) loan for $330K. In reality, they have just financed an extra 10% (for an LTV of 110%), which means the loan amount exceeds the value of the house, a very risky state of affairs for the lender. Generally such arrangements violate the terms of the loan, and depending on how they're done, they may constitute fraud (or at any rate, a fraudulent conveyance, voidable under state law). So he also probably deceived his lender on the actual value of the home somehow.
So that's how he got the first loan. But what about the others? Why didn't his second lender hesitate when, in addition to his poor credit history, he had an oustanding 100% (or higher) financed home as well? As he says:
The first mortgage hadn't shown up on his credit report yet when he applied for the second, so the lender had no way of knowing about it. So the second lender got swindled in much the same way as the first one. Presumably, he failed to mention the first mortgage on his application for the second, which is also probably a violation of the loan terms, and possibly fraud. He also applied for owner-occupied loans each and every time, without ever intending to live in any of them, also a violation of loan terms and fraud.
And the cycle continues... This guy could be in very, very serious legal trouble. The lenders might not do much if he manages to keep current on the loans or pays them off, but that hardly eliminates the risk he faces of prosecution by the FBI and other law-enforcement organizations. His best hope is that the FBI is too busy to go after a stupid little guy like him.
posted by dilettanti at 12:09 PM on October 8, 2006 [1 favorite]
How does someone like this guy get a loan in the first place? He had bad credit because he carried large, maxed-out credit card balances, and he had very little income. In the past several years, lenders have been working very hard to extend credit to new segments of the market8212;partly to keep origination (loan issuance) numbers up when refinancing slows, partly because they think they can (their ability to estimate risk has improved markedly in the past several years, though expanding to new segments is always risky, because there is little good data from those segments on which to base risk estimates), and partly because they think they have to. On his first loan application, he looked like a first-time home-buyer (FTHB), so he probably didn't get the best terms, but he probably qualified for several FTHB incentives, and his credit profile was evaluated in light of what his income was anticipated to be based on fraudulent documentation he provided.
Why did the lender trust his assertions about his income? Lenders sometimes issue low-documentation loans (sometimes called "Alt-A" loans in the business) in special situations to reduce the cost and hassle of loan origination. Traditionally, these were used for low-leverage loans, where the lenders ran very little risk of default. (By low-leverage, I mean that the loan was small relative to the value of the home8212;generally implying a large down-payment with the purchase, or a rate/term refinance late in the life of the original purchase loan.) Low-doc loans are now also offered to people who might have difficulty showing income through traditional means (pay stubs, tax returns, etc.): e.g., recent law school graduates with new high-paying jobs, or people who have otherwise recently changed jobs. This guy presumably claimed he was newly employed as a real-estate mogul, and based on his assertions (verified by calls to his employer8212;himself!) he would be paid quite handsomely. Lenders charge higher rates for such low-documentation loans due to contamination of the risk pool by liars like this guy, but because most people applying for such loans generally do intend to pay them off, and manage to do so, lenders are able to make money on them in the aggregate.
He also managed a large cash-back agreement on the first loan. This can be done in a variety of shady ways, but usually it also involves "massaging" loan data to make it look more favorable to lenders. Sometimes the seller raises the price by, say, $30K, with the promise of giving $30K cash back to the buyer after the sale. Suppose the "real" value of the house were $300K, but the reported sale price is $330K due to the unreported cash-back agreement. Then the bank thinks they are financing a house worth $330K and issues what they think is a 100% loan-to-value (LTV) loan for $330K. In reality, they have just financed an extra 10% (for an LTV of 110%), which means the loan amount exceeds the value of the house, a very risky state of affairs for the lender. Generally such arrangements violate the terms of the loan, and depending on how they're done, they may constitute fraud (or at any rate, a fraudulent conveyance, voidable under state law). So he also probably deceived his lender on the actual value of the home somehow.
So that's how he got the first loan. But what about the others? Why didn't his second lender hesitate when, in addition to his poor credit history, he had an oustanding 100% (or higher) financed home as well? As he says:
"That’s because I was buying the houses so fast the credit reporting wasn’t keeping up with my activity."
The first mortgage hadn't shown up on his credit report yet when he applied for the second, so the lender had no way of knowing about it. So the second lender got swindled in much the same way as the first one. Presumably, he failed to mention the first mortgage on his application for the second, which is also probably a violation of the loan terms, and possibly fraud. He also applied for owner-occupied loans each and every time, without ever intending to live in any of them, also a violation of loan terms and fraud.
And the cycle continues... This guy could be in very, very serious legal trouble. The lenders might not do much if he manages to keep current on the loans or pays them off, but that hardly eliminates the risk he faces of prosecution by the FBI and other law-enforcement organizations. His best hope is that the FBI is too busy to go after a stupid little guy like him.
posted by dilettanti at 12:09 PM on October 8, 2006 [1 favorite]
Homeboy's got some crazy comments running. We've got transactions being hashed out, previous owners dropping by, haggling...
posted by Ogre Lawless at 9:01 AM on October 9, 2006
posted by Ogre Lawless at 9:01 AM on October 9, 2006
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posted by jonson at 2:43 PM on October 6, 2006