Hat Tip to T!
http://money.cnn.com/galleries/2009/real_estate/0908/gallery.Life_after_foreclosure/3.html
City: Carlsbad, Calif.
Price paid: $840,000
Current value: $600,000
This California resident bought his house nine years ago in a gated community within the posh, seaside city of Carlsbad. He took out an adjustable rate mortgage to keep the initial monthly payments affordable, but by this spring his monthly mortgage bill was $5,600.
At the same time, he found himself severely underwater thanks to falling home prices and several cash-out refinances.
The headhunter and motivational speaker couldn’t afford that big a payment and realized he wasn’t likely to make back nearly a quarter-million dollars in value. He tried for months to work something out with his lender, but he says, “They made me an offer that was unacceptable.”
Instead, Nash, who is married with two kids, decided to go through the foreclosure process. He didn’t pay the mortgage for 18 months and finally vacated in June. Not having a housing payment during that time kept him from financial ruin since his headhunting business was in a tailspin.
Nash and his family are now living in a $1,900-a-month rented townhouse in the same great neighborhood just a half mile away from their former home. “I downsized about 1,000 square feet to a 1,500-square-foot home,” he says. “Hey! It’s a lot easier to clean.”
He feels like he landed on his feet in just about every way: His kids were able to stay in the same school; he stayed in the same location, which is like living in a beach resort; and he’s spending a lot less on housing. “Nothing was lost but a big, freaking headache,” he says.
http://money.cnn.com/galleries/2009/real_estate/0908/gallery.Life_after_foreclosure/3.html
Deadbeats make me sick. He’s living in the place a hard working family that didn’t extend themself a stupid amount deserve.
So I used my mad google skillz to find this guy.. interestingly google led me right back to your site:
https://www.bubbleinfo.com/wp-content/uploads/2009/01/allsdnots25.pdf
Looking at the public records it looks like his wife bought it for 398k in 2000 and then she got married to him and they (him!) proceeded to milk the holy crapola out of it.
Savers often marry spenders… to their detriment.
The CNN article says “Price paid: $840,000”, that sure looks like pure spin trying to make sparky not look as bad.
Just from the incomplete records I can see it looks like a purchase for 398k then
$639,999 in 2004 (cash out refi first probably)
$734,400 in 2005 (ditto)
$150,000 in 2006 (cash out refi second, probably still has legal liability for this).
Criminy.
You mean Google His Name?
I get scooped on my own blog by another blogger using my advice to find data on my blog, all while I manually search the tax rolls like a grandma.
Looks like it’s currently for sale as an REO for $629k:
http://www.redfin.com/CA/Carlsbad/1405-Turquoise-Dr-92011/home/3713198
From the auction notice posted by Effective Demand, looks like they owed $840k on the property (that was the minimum bid, although it was recorded at $562,500), but they purchased it for $398k. I think CNNMoney just screwed up here and confused the two numbers.
lol @ JtR, Yeah I think “Ron Nash” REO Carlsbad was the money winner for google.
Sometimes the double quotes will eliminate too much, and using different search phrases instead of REO (NOD, NTS, etc) can bring up different results when I’m searching for info on people.
10-4 on all of that, he paid $398,000 in 2000, and now should slide into the $400,000s before selling because it is a terrible tri-level floor plan – very hard sale.
Googling him is interesting. Lots of hits from his job as a motivatial speaker, as well as this older CNNMoney post:
http://money.cnn.com/galleries/2009/real_estate/0901/gallery.tough_workouts/5.html
He turned down a loan mod lowering his interest rate to 2.8% because they wouldn’t give him a principal reduction. What a dumbass-almost nobody gets a principal reduction, due to the massive moral hazard that causes.
I agree with shadash. The CNN article makes the guy out to be a hero. However, dishonest people like him who ride the free rent gravy train for 18 months at taxpayer expense are effectively squatting on properties that hard working, law abiding people are in desperate need for housing their families. This is why there is such a dearth of inventory now.
“However, dishonest people like him who ride the free rent gravy train for 18 months at taxpayer expense are effectively squatting on properties that hard working, law abiding people are in desperate need for housing their families. This is why there is such a dearth of inventory now.”
Perfectly said.
But these people need to be protected since every homeowner is a precious angel that must never be foreclosed on.
The evil bankers are taking away innocent borrowers homes who were tricked into taking money and/or buying homes… That is the party line.. that is the line being fed by all the media. It’s complete BS.
Is that floor plan really that bad? Here’s one .17 miles away, same square footage, looks the same from the overhead shot, so I assume same floor plan, that sold in May for $632k in what appears to be a normal sale:
http://www.redfin.com/CA/Carlsbad/1493-Sapphire-Dr-92011/home/3713208
I’ll bet they used that as a comp/broker’s price opinion to get the $629k list price, too.
1493 Sapphire has a nice ocean view, and the other is on a busy corner with no view. Minimum 10% difference.
The floor plan starts with having to go up stairs to the front door. Having shown my share of these, and having one of this tract’s same floor plan listed (and expired), I’ve heard buyers start complaining before they get inside – not good.
The living area is up another set of stairs, so either you go up and up, or up and down to the bedrooms. The garage access is to walk all the way around the downstairs, then up two half-flights.
It’s worse than it sounds.
$5,600.00 x 18 Months = $100,800.00 (Original place)
$1,900.00 x 18 Months = $34,200.00 (Rental)
Pick either number above, or somewhere in between.
This guy got to live Mortgage/Rent free for 18 months.
Look at his picture – I’d be smiling too! That’s officially what I call a “Jerkface.”
I’m not sure if I’m jealous, or if I want to smack him upside the head. Probably both. Jerkface.
The view explains the difference. Looks like the bank didn’t take that into account when they set the price-they probably did what I did, punch it into a computer (Redfin for me) without ever actually looking at the comp in real life, and said “less than a quarter mile away, same floor plan, sold for $632k-let’s round it down to $629k and go have some martinis”.
I hate stairs, so this sounds horrible to me. Split level houses of any sort are just plain stupid, IMHO.
Hear, hear sdnerd!
sdnerd,
I wonder how much money he saved during that 18 months, I bet less than $10,000 easy. It’s probably really tough for him to get used to paying rent again.
He called the bank’s offer “unacceptable” only because renting was the cheaper of the two.
I expect the battle to be won or lost right here.
The vast majority of loan-mod applicants will hate the thought of having to start PAYING again, and opt for renting 98% of the time.
18 months!!! How can banks go 18 months without receiving payment or foreclosing? No need to answer my naive, stupid question, it’s rhetorical.
Although 18 months is the longest I’ve heard of, long periods of not making payments are common. I have many clients (I’m a tax preparer) who have stretched out their “free rent” bonanza to a year or so.
I wonder how many of us personally know people who haven’t paid their full mortgage payment for an extended period of time (not just stories from friends of friends, but personally know them). Personally, I know of at least one family who flat-out admitted to it, but suspect at least a couple more.
One really has to wonder how common this is. IMHO, this is where they are hiding all the “shadow inventory.” As long as they don’t issue NODs, we can’t keep track of how many foreclosures there **should be** on the market right now. I think it has nothing to do with lenders “being overwhelmed” as it’s all about keeping that mark-to fantasy accounting alive and well. Notice how the stock and housing markets shot up after they stopped marking assets at their real values.
18 months free rent is nothing compared to the $440K they pull out from that house. Where did that $450K go for this apparently healthy family. I bet it went to someone’s checking account.
It might be unethical, but ‘efficient breach’ definitely seems like the right move for him. If the banks are stupid enough to make non-recourse loans like that, how can we blame people for taking advantage of them in this way.
“However, dishonest people like him who ride the free rent gravy train for 18 months at taxpayer expense are effectively squatting on properties that hard working, law abiding people are in desperate need for housing their families.”
What do you think he’s lying about that makes you call him dishonest? Apparently it isn’t too hard to find housing in that area – he himself got a nearby rental. It might not be pretty, but I’m not going to point a finger at him when I’d certainly be tempted by the possibility of 18 months free rent in addition to hundreds of thousands of dollars in debt forgiveness. (I guess I’m cheap that way.) I’m no expert, but as far as I can tell, there’s no shortage of housing, but only a shortage of housing at a sane price. And, staying in the house during the foreclosure process means that he’s using less (net) housing that if he were renting an occupying another house at the same time.
I personally know one person in Las Vegas who made the last payment in September 2007 and the final moveout (with $1000 cash-for-keys!) was not until February 2009. I also know someone who made the last payment in April 2008 and no NOD has been filed yet!
“Nothing was lost but a big, freaking headache,” he says.”
Well I SAY DEBTORS PRISON AND HARD LABOR as well as a Felony conviction and proof-of-citizenship for openers. F these deadbeat losers.
That’s Right, DEADBEAT LOSERS. Puth them in a cage with Lawrence Yun and David Lereah as part punishment.
NateTG – it should be a recourse loan – it wasn’t the original purchase loan, they refi’d and pulled cash out, repeatedly. In theory they should be on the hook for whatever was written off.
CA Renter – I agree completely – the folks that aren’t paying, but are not foreclosed on ARE the shadow inventory. The banks seem hesitant to actually foreclose for some reason.
I looked at the other folks in the article – the one right before Ron Nash is a couple from Oceanside. Like Nash they had trouble renting due to credit hits. But family bailed them out. Same with the first folks in the series.
The last folks in the series appear to be the only ones in the bunch who kept paying till their short sale went through.
1493 Sapphire has a nice ocean view, and the other is on a busy corner with no view. Minimum 10% difference.
The floor plan starts with having to go up stairs to the front door. Having shown my share of these, and having one of this tract’s same floor plan listed (and expired), I’ve heard buyers start complaining before they get inside – not good.
The living area is up another set of stairs, so either you go up and up, or up and down to the bedrooms. The garage access is to walk all the way around the downstairs, then up two half-flights.
It’s worse than it sounds. – From JTR
These are like Split Levels from the east coast. Horrible floorplan imo. They have these in SEH also.
If this guy sought expert advice and received the same kind of ill advice I did and wasn’t smart enough to perform his own due diligence and purchase within his means, then I fault those ‘professionals’ and to a lesser extent him. Those in power want to stay in power. There will be no change. And the separation of classes will continue but faster.
High quality reporting there. “Adustable Rate Mortgage” payments kept going up. Was that because of a shady loan (like my ex-neighbor who got foreclosed on when his payments quadruple such that his payments were more than my new house that cost twice as much. He was an immigrant who I think got slightly hoodwinked.), or was it because he kept hitting the ATM. This is the guy they want highlight? How about a guy who bought a house, business tanked and tried to rengotiate but couldn’t because house was underwater. I can sympathize with that person. But, the guy who doubles the price of his house through re-fis isn’t going to make me shed tears.
But, the guy who doubles the price of his house through re-fis isn’t going to make me shed tears.
They also list the final loan amount as the “purchase price” They did this with the Oceanside couple as well, but they had bought in 1994. For both of these foreclosures, if they had not hit the home ATM, they’d have been able to sell the place for a profit at worst.
The questions is, can someone who was taking out the equivalent of $100,000 pre-tax per year for 8 years even be able to pay the $1,900 in rent. I am going out on a limb and say his motivational speaking was not bringing in as much as his house.
Moreover, we keep reading about cases like this all over North County. In case you think the economy is going to bounce back you should consider that Mr Nash (and many others) will not be buying a new luxury car or going out to dinner nightly anytime soon.
“The banks seem hesitant to actually foreclose for some reason.”
The reason is that if the banks foreclose they have to put the loss on the books. Currently, the banks do not have to mark to market – so they can keep listing those bad loans at full assumed value. If the banks had to put everything on the books at current market value every large bank would be insolvent. As someone else said, the shadow inventory is all those people who have not yet been foreclosed on even though they’ve stopped paying. The banks are trying to stretch the losses out long enough for insiders to sell their stocks at a profit in this rally. Once the insiders get out with their money intact, all bets are off.
@Art, I’m usually a fan of mark to market accounting, but if you want to assume that the market value of a 100,000 loan on a 50,000 is 50,000 and not 100,000, then you have to assume that the customer isn’t going to pay. There are people who, despite being underwater, are paying their mortgages in full every month. The bank gets its 100K back in that scenario, and that’s the value to them.
I personally believe that the loan should be marked down once a Notice of Default is filed (which would mean the homeowner is at least 90 days late with the payment). I’m not positive if that’s the case, however-does anybody know for sure? The mark down might be as late as after selling it as a REO.
If they pay every month in full, it should be valued at the book value, IMHO.
“The reason is that if the banks foreclose they have to put the loss on the books.”
This might not be 100% accurate. Most loans are bundled, sliced and sold to investors around the world. It is very hard, if not impossible, for an investor to initiate foreclosure. That, together with other functions, is delegated to servicers (which could be a bank).
Now, what happens when a person stops paying? The servicer keeps paying the investors and gets in at the front of the line to recoup the loss (payments furnished to investors and various late fees) after foreclosure or cure.
So, the servicer is incentivized to foreclose, but only after it tacks on as many fees as possible without exceeding the eventual selling price.
The only thing lost was the money that the bank lost. Oh wait, that’s our money. Glad we could support someone living rent free for 18 months.
CA renter, you speak the truth.
“Nothing was lost but a big, freaking headache,”
That and about 250 points on his FICO score for a few years.
“Nothing was lost but a big, freaking headache,”
How about integrity, honesty, a moral example for his kids…he’s a motivational speaker all right – just like Barney Frank, Dodd, Geithner, Summers and the rest of the Wall Street Banksters.
@Former RB Resident
The bank owns the loan (and maybe not even that) not the house. Just because the assessed value of the home is 50k and not 100k does not mean the loan is now only worth 50k. As long as the loan is performing at 100% valuing it at 100% or somewhat close to it is relatively valid. The probability of default is still higher than normal and the market should factor that in.
However, the moment some one misses a payment, that loan shouldn’t be valued at 100%. This isn’t because there is no chance the bank recoups 100%, but because the probability of them doing so has dropped considerably. The moment the tenant/owner misses a few, the value of the loan should drop further. However, this isn’t happening since there is no real market for these loans. The banks are avoiding price discovery of these loans and for good reason — they’d be bust.
On another note, I understand the anger toward this “deadbeat”. However, I’d do the same thing in his situation.
I don’t know how much money was sucked out of that house, but let’s just be generous and say $400k. Plus another ~100k in rent-free living, deadbeat style. I’ll take a 250 point credit hit for a half million dollars. Who’s offering? Until I hear a story about how this s.o.b. has had to pay back EVERY cent he owed, there is no fate that can befall him that could POSSIBLY make me feel sorry for him. Garbage like this is everywhere, and I have to listen to sob stories on the radio about how they need help, and why principal reductions are the answer. NO WAY!
I’ve gotta laugh at all of the people saying this guy is a dead beat or that he’s living the high-life at the expense of the taxpayer.
Give me a break. His decision not to pay the mortgage was a practical one, feed the family or go bust ? And consider, if the bank is not willing to foreclose and evict him then who is at fault here ?
Seems to me that the business decision he made worked out great for his family. If you need to blame anybody then it should be the bank. They should have kicked him out and sold the property but … they didn’t.
And you want to blame him ? Please.
Who is to blame, the guy taking free money or the banks giving it to him. While I have absolutely no respect for him, nor any sympathy, I believe most of this goes to the banks that made stupid loans. They are the reason our economy is still on the edge of a cliff right now.
Ugh. That is a HUGE amount of money to take out in refi loans. I’m going to guess he has some very nice cars now, and a huge bank account.
I remember seeing the reo listing for the house, and had no interest in seeing it once I saw that you have to up stairs to get to the kitchen. Very strange floor plan.