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Oooops: California man losing 9 (nine) homes in mortgage mess

Turkish

Turkish

Lifer
Wow, just wow. At least he is not in denial, so I'll give him that but that's just terrible to deal with.

LOS ANGELES (Reuters) - A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.

Shawn Forgaard, a 37-year-old software company project manager, bought one home for his family to live in and nine more as investments. He stands to lose all the investment houses in the mortgage meltdown but says he has come away wiser from the experience.

"Everyone stumbles. I'm not going to hide or run or live in denial, or with regrets," Forgaard told Reuters in an interview. "On the surface it looks like total devastation but it's just the opposite. I'm confident our lives will be much, much richer as a result."

Forgaard bought a house in Santa Cruz, about 60 miles (100 km) south of San Francisco, in 2000. Four years later, using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative amortization loans -- in which payments do not cover the interest so that a borrower's balance grows over time.

It was those "neg-am" loans, which include triggers causing payments to balloon if the debt reaches a certain percentage of the original balance, that would come back to haunt him.

"I knew I was sitting on time bombs," Forgaard said. "I knew the market was going to go soft and I knew that property values would decline. But I figured that I had enough equity to survive the storm and sell or take the loss and refinance.

"I didn't anticipate a downturn of epic proportions such that home values are 40 percent less than they were," he said.

The mortgage market has melted down in the past two years in a crisis that began in the subprime sector and has left millions of Americans facing the possibility of foreclosure on their homes.

'THIS COULD GET UGLY'

Forgaard bought his first investment home in the booming housing market of North Las Vegas in 2004, followed in the next two years by eight others in such hot markets as Phoenix and Palm Springs, California, before he realized in 2006 that the situation was worse than he had feared.

"I knew that the market was soft but at that point I'm realizing that this could really get ugly," he said. "At that point I had a bad feeling in my stomach."

Forgaard thought he still had enough equity in the homes to "take a huge hit," possibly losing most of his investment, but thought for a while that he could still ride out the storm.

"It really wasn't until five months ago that I realized, 'Hey, you know what? Not only am I going to lose everything I have invested but this is going to force me into bankruptcy," he said.

"I'm going to lose my car and my primary (home) and we're not going to be able to live in Santa Cruz, where I was born and raised, and live by the beach. And that was pretty tough to take."

Experts say speculators like Forgaard, who count on real estate values to keep rising to pay off their debt, play a risky game and doubly so when they use neg-am loans.

"You are essentially betting the house on the strength of the housing market and if you're that leveraged in debt and the market goes down, you're going to lose your shirt," said Austin King, director of the community organizer ACORN's Financial Justice Center.

"To do it eight or nine times over is eight or nine times as foolish as just doing it once," he said.

The Forgaards likely will sell their Santa Cruz home and declare bankruptcy before banks start foreclosing on his properties. With a newborn son, they intend to start over in his wife's Northern California hometown.

Forgaard said that some good has come out of the experience and that his family is optimistic. He is relieved that he no longer has to deal with 10 homes at once and now will pursue a lifelong dream of starting his own business.

"Where I went wrong is I invested heavily in an area that wasn't my passion and I had a really demanding full-time job so I couldn't pay attention to nuances, the little indicators telling you the housing market was going soft," he said. "I was in over my head."
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http://www.reuters.com/article.../idUSN0952458820080511
 
tough luck fool! 9 Houses, hoping to profit? I'm not worried! Let the market adjust and fix the over priced housing situation moreso!
 
A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.
Click to expand...
Is he related to Captain Obvious?
 
:laugh:

Expect the write-downs and quarters 'in the red' to continue through 2008. We haven't seen the worst of it yet.
 
This is good to read. A part of me wants to laugh at his blatant foolishness. Apparently, he should leave financial investment decisions to professionals and stick to what he knows. I welcome the market downturn because it is correcting such foolish mistakes and makes life easier for those of us making intelligent financial decisions.
 
So wait a minute... a guy who wasn't too bright about investment properties is going to claim bankruptcy and then start his own business? WTF am I in banking right now?
 
Originally posted by: chusteczka
This is good to read. A part of me wants to laugh at his blatant foolishness. Apparently, he should leave financial investment decisions to professionals and stick to what he knows. I welcome the market downturn because it is correcting such foolish mistakes and makes life easier for those of us making intelligent financial decisions.
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The sad thing is that his foolishness is mainly that he actually invested his own cash in it instead of the bank's money.
 
This can't be true according NAR (National Association of Realtors) restates can only go up😀. I don't feel sorry for people like this guy one bit because he was speculating and lost. Look at this graph graph and we are only at the number 18. I can't imagine what the price of restates in another 2 years will be.
 
I dont get it. How are loans with less than Zero interest on 9 houses supposed to net you any money if you think that the market will be going soft? This guy is an idiot.
 
and he would be a hero if it worked out.

hindsight is 20/20.


on the other hand, he really doesn't own those other 9 homes, he technically he doesn't "lose" them.
 
Originally posted by: V00DOO
This can't be true according NAR (National Association of Realtors) restates can only go up😀. I don't feel sorry for people like this guy one bit because he was speculating and lost. Look at this graph graph and we are only at the number 18. I can't imagine what the price of restates in another 2 years will be.
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We had one "expert" here at the forums before the crash who loved to make ridiculous claims about real estate, a subject he really didn't know much about.

One claim he made was that housing prices never go down unless there is a huge reduction in the population. :laugh:
 
I know several people that made millions doing exactly what he did, some of them still own a lot of property and they will just sit on it until the market rebounds. This guy's problem is that he didn't have the reserves to weather a downturn.
 
Originally posted by: Greenman
I know several people that made millions doing exactly what he did, some of them still own a lot of property and they will just sit on it until the market rebounds. This guy's problem is that he didn't have the reserves to weather a downturn.
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The other problem is that he bought when the housing market was booming, instead of buying now when prices are declining.
 
Once the banks take over the properties, are they going to take a bath to bring the prices back in line, or will they to support the inflated price and let the property degrade?

Banks are not going to let a $600K house that has been foreclosed go for $300K.

After they have held onto it for6 months, they might consider it; by that time, who knows what damage/vandalism may have been done if the place is unoccupied.

Banks do not like to be landlords
 
Originally posted by: Common Courtesy
Once the banks take over the properties, are they going to take a bath to bring the prices back in line, or will they to support the inflated price and let the property degrade?

Banks are not going to let a $600K house that has been foreclosed go for $300K.

After they have held onto it for6 months, they might consider it; by that time, who knows what damage/vandalism may have been done if the place is unoccupied.

Banks do not like to be landlords
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That seems to be the case. There are a couple property's around here that are bank owned and have been sitting empty for over six months, the banks refuse to budge a dollar off the asking price.
I assume it looks better on the books to have a property listed as an asset and sitting empty rather than taking the write off? I'd like to know how they make that hold/sell decision.
 
Originally posted by: andylawcc
and he would be a hero if it worked out.

hindsight is 20/20.


on the other hand, he really doesn't own those other 9 homes, he technically he doesn't "lose" them.
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What hindsight? People were saying for years that there was a housing bubble that was due to burst.

It sucks that the banks are going to lose more than he did, but as long as he didn't defraud them to get the loans like that Casey Serin douchebag did, I can't say I feel sorry for them either. I have no idea how that guy isn't in jail.
 
Originally posted by: Greenman
Originally posted by: Common Courtesy
Once the banks take over the properties, are they going to take a bath to bring the prices back in line, or will they to support the inflated price and let the property degrade?

Banks are not going to let a $600K house that has been foreclosed go for $300K.

After they have held onto it for6 months, they might consider it; by that time, who knows what damage/vandalism may have been done if the place is unoccupied.

Banks do not like to be landlords
Click to expand...

That seems to be the case. There are a couple property's around here that are bank owned and have been sitting empty for over six months, the banks refuse to budge a dollar off the asking price.
I assume it looks better on the books to have a property listed as an asset and sitting empty rather than taking the write off? I'd like to know how they make that hold/sell decision.
Click to expand...

How a potential asset can turn to a liabilty very quickly.
 
..property flippers are a pariah to the realestate community. Require 5 year owner occupancy to get rid of em.
 
Originally posted by: IGBT
..property flippers are a pariah to the realestate community. Require 5 year owner occupancy to get rid of em.
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Flippers take beat-up property and remodel it. They aren't pariahs, they preform a service. It's the speculators, like the guy from the OP, who buy houses solely in hope of turning them around for profit in a booming market that are the pariahs.
 
Originally posted by: Greenman
Originally posted by: Common Courtesy
Once the banks take over the properties, are they going to take a bath to bring the prices back in line, or will they to support the inflated price and let the property degrade?

Banks are not going to let a $600K house that has been foreclosed go for $300K.

After they have held onto it for6 months, they might consider it; by that time, who knows what damage/vandalism may have been done if the place is unoccupied.

Banks do not like to be landlords
Click to expand...

That seems to be the case. There are a couple property's around here that are bank owned and have been sitting empty for over six months, the banks refuse to budge a dollar off the asking price.
I assume it looks better on the books to have a property listed as an asset and sitting empty rather than taking the write off? I'd like to know how they make that hold/sell decision.
Click to expand...

Don't they have to pay the property taxes on it while they hold it? So you would think they would want to get rid of it quick.
 
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