Foreclosures go high-end

Rocky Mountain News ^ | July 11, 2008 | John Rebchook

[george76]

Million-dollar homes, offices, show up on rolls.

The foreclosure tsunami is starting to sweep over some of Denver's most exclusive neighborhoods.

Homes priced at $1 million or more in places like Cherry Hills, Cherry Creek Country Club and LoDo are popping up more frequently on foreclosure rolls.

And it's not just homes.

Senior centers, office buildings and even churches have been forced to deal with the threat of losing their million- dollar real estate to the lenders, forcing them to scramble to escape foreclosure auctions.

For example, the biggest health club in the metro area, the Lakeshore Athletic Club - Flatiron, was in foreclosure for about six months last year, before the $19 million foreclosure was withdrawn...

DiMercurio estimated that homes in the $1 million or higher price range in the Denver area probably today account for less than 1 percent of the total foreclosure market. But in places like California, where there were virtually no foreclosures two or three years ago, it's common to find multimillion-dollar homes going back to the lender...

They may not be super rich, but on a national level, even celebrities have been in foreclosure.

Ed McMahon, the former sidekick of Johnny Carson, recently made the media rounds with his foreclosure tale in Beverly Hills.

Former star athletes such as Evander Holyfield and Jose Canseco, lost their homes in foreclosure auctions.

And Michael Jackson's Neverland Valley Ranch in California was enmeshed in a foreclosure...

[ken21]

do do happens to

the bmw and mb crowd too.

[Tarpon]

Get rich quick flippers, for the most part. We have our share around our neck of the woods. Many were forced into bankruptcy when the flip failed. A lot of the flippers were Realtors.

[STONEWALLS]

“The only market that is immune to that is the super rich,” he said.”
WRONG!...there are many millions of us average Americans who own their own home.

[goldstategop]

Investors who found themselves upside their mortgage and decided to cut their losses in a cooling real estate market by walking away.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[george76]

the super rich are not immune .

[george76]

No money down can be a fast way to bankruptcy

[Tax-chick]

Former star athletes such as Evander Holyfield and Jose Canseco, lost their homes in foreclosure auctions.

Are we supposed to believe these people don't have anywhere else to live? I wish writers would stop using "home" when they mean "house." "Home" is where people actually live.

[purpleraine]

It can be or it can be very smart. Every thing depends on making the payment. Not everyone who did a 100% loan is in trouble.

[JessieHelmsJr]

I seen one of Holyfields houses on a show. Do you know how many hippies,treehuggers,liberals,mexicans,african americans,or simply put democRATS you could fit in that house? A helluv alot!!

[Tax-chick]

LOL! But who would clean?

[autumnraine]

Where I live there had been a massive housing boom for the past 10 years or so. Neighborhood popping up everywhere and there was no inexpensive homes, only the nice over $100,000 (which is expensive where I live). Now half of them sit empty because the people who thought they could afford $150,000 house realized they couldn’t when the mortage increase kicked in. I can’t tell you how many builders are going out of business. Long term ones too. It’s trickling down to the subs and they are laying off... I’ll be glad when the market corrects itself.

[JasonC]

Who could possibly care?

[cajungirl]

I am amused by those who come to a thread to declare “who cares”

You got something against rich people or big mortgages? At what point do you “care”? Is any mortgage worth caring about?

[CyberSpartacus]

Why should we care when we made good choices and they didn’t. I could of lived in one of those houses but I didn’t. I chose to live in a smaller house with a lower mortgage. At the time I bought I was told I was stupid because real estate was a “SURE” investment. Now who looks stupid!

[Cacique]

btt

[Carry_Okie]

At what point do you “care”?

When the bank holding the paper goes bust and comes to me as a taxpayer looking for a bailout.

[mewzilla]

Interesting link....

Viewpoint: Mortgage Mess Generates War of Entitlement

[dalereed]

“Is any mortgage worth caring about?”

Not if the person signing the contract for it can’t pay for it!

Forclose and kick them out on the street!!!!!!!!

[Nik Naym]

“When the bank holding the paper goes bust and comes to me as a taxpayer looking for a bailout. “

Yeah right! As if the Government would ever expect us to bail out banks that made stupid business decisions.

Wait.....What????

[TruthConquers]

That is a very good historical review of ALL the factors that lead to the crisis that is the mortgage implosion.

Thank You.

[B4Ranch]

Should you ever post a prayer thread, please be sure not to ping me unless you want to see, “Who could possibly care?” in reply to your pain.

[cajungirl]

well, I guess I don’t look at it in a personal sense but in a larger sense,,it is not good for anybody for a lot of foreclosures to happen. Not good for banks, for real estate values, for neighborhoods, for people.

People make stupid decisions and suffer consequences. What I was pointing out was “not caring” or having an interest in a huge problem is juvenile.

[Junior_G]

Why should we care when we made good choices and they didn’t. I could of lived in one of those houses but I didn’t. I chose to live in a smaller house with a lower mortgage. At the time I bought I was told I was stupid because real estate was a “SURE” investment. Now who looks stupid!

Yep...folks made financially unsound decisions and are now paying the price. Nevertheless, people like you who smugly gloat over it come across as juvenile and petty. I'd include Glenn Beck in that too. He has an unusual amount of vitriol directed towards folks that are losing their homes—it's very off-putting.

[AndyJackson]

From your article:

don’t blame Mozilo. He was only responding rationally to the incentives created by that all too compassionate monster, the state.

Of course one does not want to defend California or the feral gubmint's role in this, but, Mozilo is not exactly a victim here.

[JasonC]

The macro economy is worth caring about.

Conditions that effect millions of people are worth caring about.

Conditions that effect the solvancy of the banking system are worth caring about.

People of limited means in tough financial straits are worth caring about.

Millionaire speculators who have to move to ordinary houses out of absurb overpriced mansions are not worth caring about. Millionaires can take care of themselves.

[JasonC]

I never ping anyone.

As for millionaires and their pain over real estate speculations, here is the world's tiniest fiddle playing just for you (ri ki ki, ri ki ki).

Innocent people are being strafed and bombed in some parts of the world. Selfless heros are wearing 40 pounds of body armor in 120 degree heat to patrol dusty streets where murderous goons stalk them, to keep innocent people safe. Financiers are struggling to control bubbles and whacked credit systems to avoid world-wide depression. Men are carefully plotting what might work to stop evil madmen from getting nuclear weapons. Men riot over the price of bread as resources are diverted to alleviate energy shortages. Ordinary joes are struggling with skyrocketing prices and violently changing terms of trade, to feed cloth and house their families.

And the troubles of millionaires who borrowed too much to become multi-millionaires in a few years, don't even begin to "rank".

Stop being such self centered ungrateful whining crybabies. Suck it up already.

[cajungirl]

well, we have to disagree. A “millionaire” in todays world is not so different from a “thousanaire” of yesterday.

And when they go in foreclosure, others suffer.

I think you may have “millionaire envy”

[JasonC]

One, it is ridiculous to pretend that everyone is a millionaire. They aren't. Two, no I have no millionaire envy. I work for one, I have some in my family, I'm doing fine, I've no material worries. I just despise ingraditude and whining, and I sincerely believe the west is drowning in both, and needs to cut it out, ruthlessly. Like cancer.

[Polybius]

Who could possibly care? ..... And the troubles of millionaires who borrowed too much to become multi-millionaires in a few years, don't even begin to "rank".

Actually, everybody in the country should care. Not because they should care about dumb choices by millionaires but because they should care about recognizing a con game the next time such madness sweeps across the country.

Knowledge is power.

What happened was a scam, a con game, a swindle.

Specifically, it was a classic Pigeon Drop " in which a mark or 'pigeon' is convinced to give up a sum of money in order to secure the rights to a larger sum of money, or more valuable object. In reality the scammers make off with the money and the mark is left with nothing."

The "pigeon" of this scam was a mutual fund manager in your own 401K. Therefore, you, by proxy, were the pigeon.

The illegal aliens, the deadbeats without jobs or very low paying jobs or the middle class guy with a middle class job or the mere millionaire borrowing three times more than he could afford to repay were merely the tools of the scam.

The mortgage mess was created by loan brokers who were not lending their own money. They were just creating phony Pigeon Drop mortgages to sell to gullible investors. Let's be clear here. That "gullible investor" was NOT the house "buyer". It was a mutual fund manager in maybe your own 401K or a foreign investor wanting to invest in the U.S.

At the time, the stock market was not red hot like it was during the Tech Bubble and interest rates on CD's were pretty low.

However, Americans were lining up for big mortgages that they promised to repay at a good interest rate after a few years at an introductory "teaser" rate.

As a long term investment, those mortgage loans seemed pretty good and Wall Street's customers wanted to buy them up.

So, loan brokers would write up mortgages, they would be bundled up in financial instruments and would them be sold off to your 401K manager or to that foreign investor.

Every time that happened, the loan broker would get a good commission.

Life was good for a loan broker.

There was one problem, however. Although there was a high demand for that product and investor wanted to buy more and more of those mortgage loans, the supply of creditworthy borrowers was running out.

What to do?

Simple.

Just sign up borrowers without a snowball's chance in hell of repaying the loans: The illegal alien wanting to borrow $200,000, the middle class guy with a typical middle class job wanting to borrow $500,000, the millionaire worth $2.5 million wanting to borrow $6 million.

Mix those loans up with better loans in a package and they will still buy them up like hot cakes on Wall Street.

So, the loan brokers started creating mortgages by getting anybody, ANYBODY with a pulse (and even some dead people without pulses, as investigators discovered) to get their names on mortgages. The worthless mortgages were then sold to eager Wall Street investors, maybe the manager of your own 401K.

As the demand for these "great investments" grew, illegal aliens, native born Americans without jobs or good credit, people with good credit wanting to borrow three times what they could actually repay to buy a house at three times the price a real market could actually bear and even dead people had their names put on these Pigeon Drop mortgages.

And Wall Street's customers just kept buying that worthless paper up.

That is why loan brokers were getting filthy rich.

Every time such a worthless Pigeon Drop mortgage was sold on Wall Street to a 401K mutual fund manager ....KA-CHING..... the loan brokers got richer with commissions.

The loan brokers who rounded up the names of illegals, the names of people with decent jobs borrowing more than they could ever repay and the names of dead people' to put on the dotted line for "loans" they could never hope to repay knew exactly what they were doing: They was swindling YOUR mutual fund manager out of YOUR money and they knew it.

Part of the loan amount that that millionaire is walking away from came from part of a mutual fund in your 401K.

How's your 401K doing lately?

That's why you should care.

Knowledge is power.

The next time around, maybe, the country will be knowledgeable enough to stop such con games before they get out of hand.

[OhhTee5]

Many of you seem to forget the tremndous amount of “Gloating” that took place when real estate was going up.

Those of us that acted fiscally responsible were reminded on a daily basis of how “Stupid” we were for not buying a McMansion on 100% borrowed money.

Or about how “Stupid” we were for not trading up, etc.

I heard on a daily basis, either from work, the media, my favorite watering hole, etc., all the money everyone else was making and “HOW SMART” they were to do so.

It was a drunken orgy on borrowed money and those who tried to remind people that debt is not income, were berated and belittled.

Now the very same braggarts who crowed about how “Smart” they were, are now crying for bail-outs and hand-outs, cause they failed to heed common sense.

And these same braggarts are demanding sympathy from the same people they trashed for years who practiced responsibility.

[JasonC]

Oh, horsefeathers. Loan brokers are broke, bankers got fired, foreign investors got burned, some deadbeats walked away with houses but plenty more are stuck with them. The whole thing misallocated savings badly and that wrecked real wealth, but all by the age old never ending process of hope and wishful thinking and easy credit etc. Been there, done that, don't need a morality tale, there isn't anything new about a particle of it.

The only thing new is the scale of the self important whining this time around.

[Polybius]

Oh, horsefeathers. Loan brokers are broke, bankers got fired, foreign investors got burned, some deadbeats walked away with houses but plenty more are stuck with them.

The loan brokers who stayed too long in the Ponzi Scheme are broke. Those that cashed out pulled the scam off.

And only "foreign" investors got burned, you say?

As I asked before, how is you 401K doing?

You never answered.

Even if your own mutual funds in your own 401K never lost a single dollar directly as a result of the scam, those "foreign investors" that bought the stocks in your mutual funds that kept the stock prices up have being burned big time and are playing things very safe right now.

As a result, YOUR stocks in YOUR mutual funds in YOUR 401K are taking it in the shorts right now.

So, how is your 401K doing?

Ooops. Sorry. I repeat myself.

The whole thing misallocated savings badly and that wrecked real wealth,

Yep. Paying real wealth in the form of real dollars to buy mortgages that are made out to people who obviously could not repay them does, indeed, wreck real worth. ...... directly AND indirectly.

How was our 401K doing again?

Did you ever answer?

.... but all by the age old never ending process of hope and wishful thinking and easy credit etc. Been there, done that, don't need a morality tale, there isn't anything new about a particle of it.

Been there and done that, eh?

Where were your warnings about this friggin' mess while the scam was still in full swing?

Here is one of many of mine on FR from November, 2005:

***********

"House prices are ultimately determined by how much the buyer can afford to pay per month. The drastic lowering of that payment with "$0 down/interest only" gimmicks, has allowed sellers to charge highly inflated prices that the buyer will not be able to afford once the grace period expires. If you like their house, save up your cash for the day the "interest only" grace period ends and they are forced into foreclosure. .................. 39 posted on Sunday, November 20, 2005 3:02:55 PM by Polybius "

***********

What are you doing to educate the Sheeple now so that they can understand what happened and so it does not happen again in ten years?

Play your little fiddle and claim that nobody should care?

[JasonC]

Of course it will happen again in 10 years. It is happening again right now, in commodities. Bubbles are par, nothing will ever stop them from occuring somewhere, in some asset class or another.

My 401k is doing fine, thank you for caring. And emphera are ephermal. Meanwhile, back in reality, serious things occasionally happen in the world - Iran for example, or the US auto industry going bankrupt, just little stuff like that.

[Polybius]

Of course it will happen again in 10 years. It is happening again right now, in commodities. Bubbles are par, nothing will ever stop them from occurring somewhere, in some asset class or another.

This real estate Bubble got as bad as it did because the regulators were asleep at the wheel while hundreds of thousands of excess dollars were being loaned out to millions of different people that did not have any documented way to ever hope to pay back that money.

No down payment. No documentation of sufficient income. No payment of principal for a few years. No payment of even the going interest rate for a few years. Sometimes, no job. Sometimes, as regulators have now belatedly discovered in the worst cases, not even a pulse.

If I could figure out the lunacy of those lending practices and predict and warn about it on a Free Republic post dated November, 2005, the regulators could have figured out the same thing long before the disaster exploded in the face of the American economy.

When Bubbles are financed by a particular idiot's wealth, the popping of the Bubble affects that particular idiot.

When Bubbles are financed by millions of idiots massively borrowing money from the investment pool of the entire economy and when anybody with a lick of common sense knew that they were incapable of ever repaying that money, the popping of the Bubble affects the entire economy.

Bubbles are one thing.

This was a massively leveraged Bubble.