Monday, May 12, 2008

California Speculator Loses 9 Houses

Will sent this one in:

"You may have already caught this one...

http://www.reuters.com/article/bondsNews/idUSN0952458820080511?sp=true

I thought I'd send it along in case it slipped by. I don't think too many people will be losing sleep over this guys loss."

From the article:

"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.

...

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."

I gotta give this guy credit, he actually takes responsibility for his mistake. He knew he was speculating and got burned.

"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.

"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."

2 comments:

MiTurn said...

Really, pdxoutsider, who cares? This guy is a poster child for the greedy and moronic. Pathetic, if anything.

WillJongIll said...

As the guy who sent this in -- true, is an example of greed. But more importantly, it an example of the crazy variety of greed that helped create the situation that the real estate market is in... and the 10-40% drops that certain markets in California are dealing with.

Portland likely didn't have that level of speculation but speculation was / is happening -- so let's see what happens next.