Myth or not... Rich people pay in cash!


By thomas.wong1986   Follow   Wed, 6 Apr 2011, 11:07pm   2,970 views   45 comments
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Ex-King Martin loses Rocklin home to foreclosure
Published Tuesday, Apr. 05, 2011

http://www.sacbee.com/2011/04/05/3528243/ex-king-martin-loses-rocklin-home.html

A bank has repossessed a Rocklin home belonging to former Kings basketball star Kevin Martin after failure to reach an agreement with him on a short sale.

Martin, who will earn $11 million this year playing for the Houston Rockets, has been in default on his $1.5 million home loan since June, according to Foreclosures.com.

Aurora Loan Services took possession of the 5,000-square-foot home last week, property records show.

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  1. thomas.wong1986


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    1   12:50pm Thu 7 Apr 2011   Share   Quote   Permalink   Like (2)   Dislike  

    iwog says

    caused the real estate bubble

    Seen it over the past 10 years. Irrational Exhuberance by consumers !

  2. dodgerfanjohn


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    2   5:53am Thu 7 Apr 2011   Share   Quote   Permalink   Like (1)   Dislike  

    How the heck can you default on a home where your yearly income is 7x what the home costs?

    If this bank doesn't sue, its the ultimate proof positive that the banks and federal government are beyond crooked and corrupt, having delved into straight up evil.

  3. MarkInSF


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    3   10:06am Fri 8 Apr 2011   Share   Quote   Permalink   Like (2)   Dislike (1)  

    ....Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder...

    Banking-industry officials and others have argued that homeowners have a moral obligation to pay their debts even when it seems to make good business sense to default. Individuals who walk away from their homes also face blemishes to their credit ratings and, in some states, creditors can sue them for the losses they suffer.

    But in the business world, there is less of a stigma even though lenders, including individual investors, get stuck holding a depressed property in a down market. Indeed, investors are rewarding public companies for ditching profit-draining investments. Deutsche Bank AG's RREEF, which manages $56 billion in real-estate investments, now favors companies that jettison cash-draining properties with nonrecourse debt, loans that don't allow banks to hold landlords personally responsible if they default. The theory is that those companies fare better by diverting money to shareholders or more lucrative projects.

    ...Owners of commercial property have an easier time walking away than homeowners because commercial mortgages are typically nonrecourse....

    http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html

  4. thomas.wong1986


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    4   6:54pm Fri 8 Apr 2011   Share   Quote   Permalink   Like (1)   Dislike  

    MarkInSF says

    http://online.wsj.com/article/SB10001424052748703447004575449803607666216.html
    And there are tens of thousands of small cases like this that don’t make the news because they’re not big companies. The owners of these companies have millions in assets. But it’s completely irrelevant, just like it’s irrelevant in Martin’s case. They all see that it’s a big loosing deal for them, so they break the contract, and both parties face the consequences.
    Or back in the downturn:
    The forecast for the 2009 corporate default rate has risen to 12 percent to 14 percent, from a May forecast of 11 percent to 13 percent
    http://www.reuters.com/article/2009/09/28/us-restructuring-summit-bain-idUSTRE58R4QO20090928
    You think the owners of these companies don’t have millions?

    Bankruptcy Chapter 11 - Reorganization and Chapter 13 Debt Adjustments are not what one would call "breaking the rules".

    Debt restructuring isnt new has been common between customers and vendors for a long time.

    breaking

  5. iwog


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    5   7:15am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike   Protected  

    Strategic default isn't anything new.

    California is a no recourse state. This means that even if you have $100 million in cash, you can still walk away from a bad real estate investment and not have to pay the bank back.

  6. klarek


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    6   7:19am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    dodgerfanjohn says

    How the heck can you default on a home where your yearly income is 7x what the home costs?

    It's California. You can do whatever you want at other people's expense.

  7. klarek


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    7   8:07am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    He probably likes his house, but wanted to pay less for it.

    iwog says

    There’s nothing strange going on here.

    Just a deadbeat trying to score undue gains and renege on his purchase/loan agreement. Not strange, but shameful.

  8. fatblond


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    8   8:56am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    klarek says

    iwog says

    He probably likes his house, but wanted to pay less for it.

    iwog says

    There’s nothing strange going on here.

    Just a deadbeat trying to score undue gains and renege on his purchase/loan agreement. Not strange, but shameful.

    That old chestnut. Every time I hear people spout off crap like that, all I hear is "Grrrrr arrgghh. I don't understand contracts, capitalism, or the California law, but I am moral so nyeh nyeh nyeh."

    Ignorance is not a virtue.
    You don't like the law? Get some people together, elect someone, change the law.

  9. MarkInSF


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    9   9:04am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    klarek says

    score undue gains

    Not sure how walking on a underwater house classifies as a "gain". He lost whatever down payment he made, which was probably in the 100's of thousands of dollars.

  10. klarek


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    10   9:26am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    fatblond says

    That old chestnut. Every time I hear people spout off crap like that, all I hear is “Grrrrr arrgghh. I don’t understand contracts, capitalism, or the California law, but I am moral so nyeh nyeh nyeh.”

    Ignorance is not a virtue.
    You don’t like the law? Get some people together, elect someone, change the law.

    Was I complaining about the law, or dumbshit deadbeats not wanting to pay back loans they can afford? Hmmmmmm.....

    MarkInSF says

    Not sure how walking on a underwater house classifies as a “gain”.

    Somebody that gambles with other people's money expecting to keep the profits and dump the losses on the creditor = seeking undue gains.

  11. iwog


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    11   9:37am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike   Protected  

    klarek says

    Just a deadbeat trying to score undue gains and renege on his purchase/loan agreement. Not strange, but shameful.

    I consider it a fraud victim reclaiming some of his losses from the perpetrator.

    The bank paid thousands of shills to manipulate the market so he'd have to pay too much, and used other people's money to do it with.

    I applaud his efforts. Fuck the bank.

  12. klarek


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    12   9:58am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    I consider it a fraud victim reclaiming some of his losses from the perpetrator.

    His loan wasn't made fraudulently and he isn't a victim. 0/2.

  13. MarkInSF


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    13   10:26am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    klarek says

    Somebody that gambles with other people’s money expecting to keep the profits and dump the losses on the creditor = seeking undue gains.

    You don't seem to understand how debt and equity investment work. A debt investor accepts a fixed interest rate, but does not get to participate in any capital gains, and their risk is much lower. The equity investor - in this case the home buyer, gets all of the potential capital gains, but has an interest expense to the debt investor, and takes much more risk of loss.

    This story is a good example. Martin lost 100% of his investment. The lender took a modest loss, the amount of which to be determined after they sell the property.

    It's capitalism 101.

    If you want to claim Martin was "gambling", then the lender was also "gambling" - just with less risk, and less potential reward.

  14. iwog


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    14   11:20am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike   Protected  

    ChrisLA says

    no one put a gun to his/her head telling him/her to go into severe debt flipping houses back and forth. For a lot of these people dollar signs were clouding their judgement bit too much.

    I'm not disputing that, however no one put a gun to the bank's head and told them to lend a huge amount of money in a non-recourse state either. There is risk on both sides as Mark has already pointed out.

    The criminal act however is entirely on the side of the bank. The bank loaned people money who could not afford to pay it back, then funded it by telling people the debt was AAA rated.

  15. EBGuy


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    15   11:21am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    He exercised his implied put option. Reports say his first loan was for $1,552,000 (80% of purchase price $1.94 million). The Placer County Recorders site appears to show two Deeds of Trust with American Home mortgage: 2007-0066941 (which was foreclosed) and 22007-0066942 (possibly a second?). Here is the house for those who are interested: 2582 ClubHouse Drive W, Rocklin, CA.

  16. klarek


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    16   11:36am Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    MarkInSF says

    If you want to claim Martin was “gambling”, then the lender was also “gambling” - just with less risk, and less potential reward.

    I don't disagree. They were both gambling, and both want to escape their losses. The difference is that one is a scumbag mortgage broker and the other one is a deadbeat piece of shit.

    iwog says

    The bank loaned people money who could not afford to pay it back, then funded it by telling people the debt was AAA rated.

    Yet this guy can pay it back.

  17. klarek


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    17   12:05pm Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    What’s your point? That a borrower should make a financial decision contrary to his own best interest because of some misguided loyalty to the corporation that screwed him in the first place?

    The bad decision was made when he bought the place. Deciding after the face (when there's no profit) that it's finally time to make a financial decision in his own best interest is what makes him a deadbeat. That's my point.

  18. iwog


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    18   12:24pm Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike   Protected  

    klarek says

    The bad decision was made when he bought the place. Deciding after the face (when there’s no profit) that it’s finally time to make a financial decision in his own best interest is what makes him a deadbeat. That’s my point.

    Deadbeat is just a meaningless label. I think his actions are honorable, and if more Americans did the same thing we'd be in much better shape.

  19. iwog


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    19   12:47pm Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike   Protected  

    thomas.wong1986 says

    So your saying realtors were paid by the banks to hype the market ?

    Wow! thats really good one!

    No, that's not what I'm saying at all. You should probably study up on what caused the real estate bubble and where the money came from.

  20. klarek


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    20   1:01pm Thu 7 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    iwog says

    How about American revolutionaries? Was George Washington a sociopath because he stole territory that rightfully belonged to Britain? How about those original Tea Party hooligans? Sociopaths all of them!

    Now you're comparing a bunch of greedy bubble-buying dumbasses to George Washington and our founding fathers. You're deranged.

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