Wednesday, September 20, 2006

Facing Foreclosure

by Osman Parvez


I gave a talk at my Rotary Club the other day on the housing bubble and its impacts on Boulder Real Estate. One key concern: the increasing flood of foreclosures.

If you've been reading this blog, you already know that Boulder County has been fairing well compared to our neighbors. We have less than 500 single family homes in foreclosure and the trend has been flat. Yet the state of Colorado is the worst in the country for foreclosures and since the 4th quarter of 2004, we've seen foreclosures and delinquencies rise 75%. With the volume of ARM resets forecast for the next 12 to 18 months, the situation is expected to get worse before it starts to get better.

Today I happened upon a blog detailing your worst foreclosure nightmare. This blogger/investor is only 24 years old and finds himself $2.2 million in debt after only 9 months.

In "Why Am I Facing Foreclosure," Casey Serin wrote,

I started investing full-time in January of this year. This is after going to numerous real estate investing seminars, reading books and learning from other investors for the past 2 years. Made a few successful deals on the side and was anxious to go full-time. I quit my website programming job and went all out! In the last 6 months I bought 7 houses in 4 different states, mostly with the help of 100% LTV stated income (liar's) loans. Most are fixers. I was going to rehab and flip each one within a month or so. Buying was easy, but man was I in for a surprise (or a lesson?)
Today he wrote,

I will need to put on a thick skin. This may cause me to become the talk of the neighborhood. People might laugh, criticize or ridicule. The concerned parents of teenage or 20-something kids will tell their kids "See! This is what happens when you take dumb risks!"“. Some may think Facing Foreclosure .com (http://iamfacingforeclosure.com) is just a ploy to make a sale. I don't care... I'’m desperate.

Here's a copy of his hardship letter,



If you're wondering what it's like to deal with foreclosure on a deeply personal level, visit Casey Serin's Foreclosure Blog.

My advice? First, get some help from experts you can trust.

If you're buying, don't get something that you can't afford and plan for a reasonable holding period. Be sure you understand how your loan might change over time and if it sounds too good to be true (50 year mortgages, option ARMs with low initial rates, etc), it probably isn't the deal you think.

If you find that your ability to continue paying bills is becoming too much to handle, remember that the longer you wait, the sooner you'll reach the point of no return. Contact your lender and discuss your options. Talk to an experienced real estate agent and get an analysis of your property's value. Get a strategy in place and execute it.

Whatever you do, don't ignore the problem. Selling property takes time and if you're in a situation like Casey Serin, wasted time is something you can't afford.

If you'd like to speak with us about your real estate situation, you can reach us at ph: 303.746.6896.

Images:Casey Serin




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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

10 comments:

  1. This comment has been removed by a blog administrator.

    ReplyDelete
  2. In his blog, he writes: "Flipping (or quick turn investing) is not bad or illegal. What’s bad is applying for an owner-occupant loan but having no intention to live in the house. I have been doing this for most of the deals in order to get better rates and/or 100% financing. It’s actually pretty common and many mortgage brokers will encourage you to do it (along with stated income loans). But it’s plain lying! So the bank denied the loan."

    Okay, so this guy readily admits to committing multiple counts of mortgage fraud. Also on the blog, he talks about "liar loans," and how his mortgage brokers encouraged his use of stated income loans.

    I don't see many tears being shed for this young man.

    ReplyDelete
  3. He also states:

    "My terms are pretty straight forward. I just want some cash and walk away. "

    No he will learn the hard way.

    ReplyDelete
  4. You're right. It's not just bad to lie on a mortgage application. It's unethical and illegal.

    The reason I posted about it wasn't for sympathy. It's because the process of dealing with a foreclosure situation is challenging from a business perspective and can be emotionally difficult as well. Casey seems like he's taking accountability and trying to make the situation right with his creditors.

    In short, I'd rather my clients and visitors to this blog learn from the mistakes of guys like Casey rather than "the hard way."

    ReplyDelete
  5. So true Osman. Thanks!



    Anonymous said...

    9/21/2006 08:31:06 PM

    ReplyDelete
  6. Osman, IMO he's still not ready to come clean. His recent posts are full of marginal hail mary schemes. AdSense revenue, a partner, etc. Until he stops asking to walk away with a little cash he's still in flip for profit mode. Here's my last comments:

    I was wondering what the true "cost" of your newfound honesty has been? In some respects you are only making the balloon payment on defered dishonesty. In other respects you are much smarter than you were before. And look at all the free advice you've gotten. Sell the slightly positve props ASAP. Negotiate "short sales" with the note holders of the slightly negative a hope you can close enough to cut inventory down to where the ethical lapses on the rest can overlooked in light of the efforts I've just mentioned.

    Oh and forget the AdSense and blogging, you are too busy applying your newfound honesty and sense of responsibility to have time that could be used negotiating an exit strategy and seeking qualifed renters and working contract web programming and prepping the properties for sale and such.

    As to a "partner" ask what you are offering/bringing to the table. They are going to want something. I can't think of any honest arrangement that would be attractive to a fellow honest ethical participant.

    You'll need some luck but experience indicates that you can make luck. You'll still need a little more personal growth however. I see you've enabled comment moderation. That says you aren't truly ready to face the entirety of the situation you've created for yourself and others.

    ReplyDelete
  7. I just posted an update with details on what exactly I did that may be considered "SHADY":

    Will I Go To Jail For Mortgage Fraud?

    After I get feedback on this post and talk to some attorneys I will hopefully know if jail time is a realistic expectation.

    I honestly didn’t think the stuff I did was THAT bad. Especially since all the people helping me do it (gurus, wholesalers, investors, mortgage brokers) didn’t seem to think there is much to worry about.

    I think taking the blog down is a little too late. I might as well keep going.

    My Plan:

    1) come clean [done]

    2) figure out what I did that was so illegal and HOW illegal is it?

    3) appologize

    4) EXPOSE shady industry practices
    in the process

    5) become an example for others facing foreclosure who may have done SHADY loans

    I think that would be a good use of free speech and personal journalistm.

    Yes I will have to take whatever consequences that come.

    Casey Serin
    www.IamFacingForeclosure.com

    ReplyDelete
  8. I honestly didn’t think the stuff I did was THAT bad.

    Huh? You borrowed a lot of money under false pretenses.

    The people that you borrowed money from are not faceless bankers; they are people like grandmothers and grandfathers that depend on the income stream from the loan. The bankers are middlemen who take a cut but don't get hurt during your bankruptcy.

    You have bilked people out of millions of dollars.

    Do you still think it's not "THAT bad"?

    FYI if you haven't figured it out yet: It does not matter what you think. It will matter what the DA, judge, and jury thinks.

    ReplyDelete
  9. Earlier today, Casey posted a message with a picture of his "Rich Dad" business address. I _found_ the business (he had blurred out the phone number and vehicle licence plate) but I made use of some interesting information he _forgot_ to delete.

    I found the business to be:

    Secure Tomorrow-Asset Protctn
    (916) 978-4880 3636 Auburn Blvd
    Sacramento, CA


    The person who runs the business is: Paul Prestwich.

    I believe his blog is garbage. A few hours after I posted my comment
    "What does Secure Tomorrow - Paul Prestwich have to do with a Roch Dad and real estate?"

    He did not post my comment and deleted the picture of his Rich Dads business.

    my email address is:

    john@johnbordynuik.com

    Info about the Rich Dad:

    Year Started:
    2004

    State of Incorporation:
    N/A

    Location type:
    Single Location

    Stock Symbol:
    N/A

    Stock Exchange:
    N/A

    Trade Style Names:
    N/A





    SIC Code:
    8322-Individual and Family Social Services


    Business Description:
    Individual/Family Services





    Estimated Annual Sales:
    $61,000

    Estimated Employees:
    2

    Estimated Employees at Location:
    2





    Contact Name:
    Paul Prestwich

    Contact Title:
    Principal

    ReplyDelete
  10. RE: Casey Serin:

    Some similarly business-minded folks from the old country also run into tough times, due to their own innovative ideas for creating wealth, just like Casey:

    Uzbekistani immigrants await discussion of entrepreneurial methods

    ReplyDelete