California Man Losing 9 Homes Admits Real Estate Investment a ‘Mistake’
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The housing crisis continues to drag on and drag down the US economy. This piece from Reuters says it all:
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.
Frogaard’s modus operandi, it turns out, was to put 10% to 40% down on negative amortization (’neg-am’)loans — the kind where the payments do not cover the interest so that a borrower’s balance grows over time.
At least the now bankrupt project manager is philosophical about his losses. Apparently, he knew he was “sitting on time bombs,” with the loans. He even knew “the market was going to go soft and I knew that property values would decline.” Froggard’s only miscalculation, by his own account was that he didn’t anticipate a downturn “of epic proportions.”
While residential real estate is in the dog house, Brian Hunt in DailyWealth says the market likes commercial real estate market again.