Today we are going to look at two of the more colorful losers to emerge from The Great Housing Bubble; David Lereah and Casey Serin.
Address: 2313 Watermarke Pl Irvine, CA 92612
Asking Price: $350,000
{book2}
Where are you going
With the long face pulling down
Dont hide away like an ocean
But you can see, but you can smell and the sound
Of your waves coming down
I am no superman not at all
But I have no answers for you
I am no hero, and thats for sure
But I do know one thing
Where you go, is where I want to be
Where are you going?
Where do you go?
Where Are You Going? Dave Matthews Band
There are a number of important people who played a role in The Great Housing Bubble. Some of the more famous ones have written books or had books written about them. There are men like the Tan Man, Anthony Mozilo, who are infamous in housing blog circles, but who emerged from the bubble wealthy and with limited legal problems. Today, I want to look at a couple of D-List players who failed spectacularly. These are colorful men who will be footnotes in housing bubble history.
Casey Konstantin Serin
Casey Serin was the infamous blogger of I am Facing Foreclosure blog. He purchased nine properties in a few months during early 2006 using liar loans. He rolled the dice on the housing bubble, and came up snake eyes.
He has managed to get a Wikipedia entry made about him as he has made a career out of his failure. The following is a list of Serin’s known mainstream press coverage in reverse chronological order.
- May 18, 2007: Update and Announcement of Talkcast
- May 14, 2007: Casey Serin: The world’s most hated blogger? CNET
- April 13, 2007: Real Estate Leaves One Investor High and Dry ABC Nightline
- April 12, 2007: Spekulanten werden nun bestraft (Stern, a German news magazine)
- April 7, 2007: Facing Foreclosure (Suzie Orman Show broadcast date; segment shot in Jan / Feb?)
- March 22, 2007: America’s housing market (The Economist)
- March 7, 2007: Central Valley Man Poster Child Of Mortgage Crisis CBS 5 Eyewitness News (video)
- October 31, 2006: On Rich Dad TV with Robert Kiyosaki (video available here)
- October 22, 2006: 10 mistakes that made flipping a flop USA Today
- October 6, 2006: A would-be real estate mogul follows boom tips straight to bust SFGAte.com
- September 25, 2006: 24 Years Old, $2 Million in the Hole The Motley Fool
Casey Serin has come to epitomize everything that went wrong with the real estate bubble. At least he understands the importance of positive cashflow now…
Jon Ronson interviewed Casey with his trademark wit on BBC Radio.[22] While in Australia, Casey Serin appeared on Top Shelf Radio with Robbie Buck[26]. The Official IAFF (I Am Facing Foreclosure) Theme Song received 400 plays in one day during Serin’s rise to fame — a small example of his cult-like status among bloggers. Apparently, Casey is still trying to cash in on his infamy. The latest attempt is a book called The Foreclosure Code Book. Having gone through it nine times, he is certainly an expert on foreclosure now.
David Lereah
David Lereah was the chief economist for the National Association of Realtors during the housing bubble. He wrote about about the virtues of investing in residential real estate just as the market was peaking. He was as wrong as wrong can get and as public as one could possibly be. I cringe when I think about it.
In his heyday, there was a blog devoted to watching for his fall. With his fall from prominence, the blog isn’t updated as much as it used to be. It will sit there like a dormant archive of his misdeeds waiting to strike him down if he rises up again.
BTW, did you know that David Lereah wrote a book touting tech stocks that came out in early 2000? This man’s timing is amazing. He managed to write two books that came out right at the peak of their respective financial bubbles that were totally wrong!
For the sake of contrast, let’s compare David Lereah with Robert Shiller, an author who also had books come out at the peak of the NASDAQ bubble in early 2000 and the peak of the Great Housing Bubble in 2006. Robert Shiller correctly called the top of both financial bubbles and laid out a conceptual framework that better explains asset price movements.
Robert Shiller was right, and he was very publically right at the perfect time. David Lereah and Robert Shiller are the outliers — the two extremes of being wrong and being right.
It hasn’t turn out well for Mr. Lereah. I was interviewed for a Wall Street Journal follow up that appeared on the front page of the print version in January of 2009. It was a hit piece; Realtors’ Former Top Economist Says Don’t Blame the Messenger.
Mr. Lereah admits to one mistake: believing there would be no national
housing crash. “I have to take the blame for that,” he says. “I never
thought it would be as bad as this.”
{insert humorous quip that disguises my gloating over his demise} Nobody saw the collapse of housing prices back then, right?
So where is David Lereah now? From the WSJ article:
Mr. Lereah now works in a small upstairs office that doubles as an
exercise room. He has started his own company, Reecon Advisors, that
puts out a weekly newsletter on the housing market and provides
consulting services. “I feel I have such a refreshing view now because
I’m not representing any interests,” says Mr. Lereah.
He charges $495 annually for the newsletter, and currently has fewer than 50 paying subscribers
So the most powerful real estate economist in the country is now making $25,000 a year ($495 x 50) and working out of his exercise room. How the mighty have fallen…
Address: 2313 Watermarke Pl Irvine, CA 92612
Asking Price: $350,000
Income Requirement: $64,419
Downpayment Needed: $70,000
Purchase Price: $501,000
Purchase Date: 8/26/2005
Net Gain (Loss): -$172,000
Percent Change: -30.1%
Annual Appreciation: -7.3%
Monthly Payment $1,813
Monthly Cash Outlays $2,321
Monthly Cost of Ownership $1,588
Redfin Property Details for 2313 Watermarke Pl Irvine, CA 92612
Beds 2
Baths 2 baths
Size 1,123 sq ft
($312 / sq ft)
Lot Size n/a
Year Built 2005
Days on Market 1
Listing Updated 10/2/2009
MLS Number S591293
Property Type Condominium, Residential
Community Airport Area
Tract Watr
According to the listing agent, this listing is a bank owned (foreclosed) property.
Experience the urban OC lifestyle in the sophisticated community of WATERMARKE providing you with amenities such as Concierge sevice, fitness center, pool, spa, tennis, movie room, etc.
Casey Serin made nine purchases similar to this one. The property was purchased on 8/26/2005 for $501,000. The owners used a $400,800 first mortgage and a $100,200 second mortgage; there was no downpayment. They refinanced in April of 2007 and took out $12,000. I imagine they needed some help with the payments…
On 9/21/2009 HSBC BANK USA NATIONAL ASSOCIATION bought it at auction for $427,500. Just as in Casey Serin’s case, the lenders are the ones who absorbed the losses from the speculation.
Balance in the System
In a way, the Casey Serin’s of this world do serve as a check and balance on our banking system. When lenders are not regulated — and really stupid — the Casey Serins of this world rise up and cause such enormous losses that it brings down the whole system. Casey Serin was not trying to break the law (he did most of his malfeasance in ignorance); think about the scope and scale of the fraud that was perpetrated. Very little was ever caught.
Good financial regulation may or may not have prevented The Great Housing Bubble. Absent any future regulatory changes, the only thing standing between us and another housing bubble is the willingness of lenders to inflate one. How long before they lose their minds again?
I remember that idiot Casey Serin.
He was fairly blatant about the fact that he lied on all of his mortgage applications — never had a paying job yet borrowed $2.4 million to buy six or seven different SFRs in the Sacramento area. This does not excluse the banks for loaning him the money, but he has committed massive fraud. So, why isn’t he is prison? The only difference between a Serin and a Madoff is one of scale and longevity.
Actually Serin lost the rights to his own book as he got shafted by his shady publisher. The book bears his name but he won’t make a dime off of it.
Serin’s idiocy goes way beyond even what most people realize.
He has now started a website that purports to build an “island fund” that will gather “sponsor” money and use it to buy a tropical island by 2012 so that they may all go live there. I am not kidding. island2012.com is the new venture.
Yeah, I saw that…not too many takers at this point, at least. Still, what is wrong with our justice department? He ought to be in prison.
Much to his discredit, Lereah also told people that paying off mortgages was a bad idea.
“What was once considered undesirable — taking on large debt — is now seen as smart. And what used to be smart — becoming debt-free — is described as imprudent.
“If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years,” said David Lereah, chief economist of the National Association of Realtors and author of “Are You Missing the Real Estate Boom?” “It’s as if you had 500,000 dollar bills stuffed in your mattress.” http://articles.latimes.com/2005/aug/28/business/fi-homedebt28?pg=2
It is amazing how completely wrong one man can be. He was even totally wrong on the ancillary details. Amazing!
Is the University of Virginia full of neo-classisists Milton Freedman clones the same as the University of Chicago? It explains everything.
Uh, no, Friedman (check the spelling) and the neo-classists were are not fools.
He even makes the “house as piggy bank” analogy that you seems the psychology cause of so much pain.
Any “economist” that did not see what was happening is not an economist. They just think they are economists.
What a fruad. I am tired of these no nothing “professionals.”
As for that little kid, oh man our tax dollars went to bail out banks that made loans like this?
I supported the bank bailout, because it was the least worst choice. Letting most of the banks in the country fail all at once would cause the second Great Depression.
It never ceases to amaze me the complete lack of personal responsibility that bailout people put out on display. Maybe if instead of pushing your socialist bailout policies on America you had spent the time praying for your country, then people like me wouldn’t have been forced out of 2 houses and an RV.
Is that snark or not? So hard to tell these days.
So now pleading with a higher power to let you keep houses you couldn’t afford is a sign of fiscal responsibility?
I hope it’s snark, but it sounds too much like the idiot neighbors I had who used their crappy, overpriced tract homes as ATMs. When they were underwater and delinquent on their interest-only loans, they did a lot of praying too.
Welcome back Kirk 🙂
What color was the RV?
Missed you, Kirk!
PRAYING? seriously?! maybe if you could afford the housing you were “forced out of” we wouldn’t have had to implement “socialist bailout policies”.
This isn’t a political issue when analyzed at the individual level, its an ethical one. I’m so tired of wing nuts politicizing the lack of personal integrity.
We didn’t avoid it…just delayed it.
Then why we need FDIC? Let FDIC get them no matter how big they are. For Investment banks, create one to re-org them. Until now, the cause of the depression is still alive and well. Nothing have done to it (like regulating it, go through some sort of clean houses to deal…)
They’re economists the way the guy who bleeds you and puts leeches on is a doctor. People believed in that stuff a long time and even were very skeptical of actual medicine because they did things like carve up dead bodies to see what was happening.
Great Read! Thanks for the wakeup.
Your Casey Serin info is woefully out of date.
The Foreclosure Code book project folded in mid 2007 – http://www.caseypedia.com/wiki/The_Foreclosure_Code
It was followed by The Foreclosure Helpbook project that never got off the ground and folded in late 2007 – http://www.caseypedia.com/wiki/Damion
That failed book project was followed by a few blogs – EscapeMyHouse.com – http://www.caseypedia.com/wiki/Escapemyhouse
Millionaire By Christmas – http://www.caseypedia.com/wiki/Millionaire_By_Christmas
His latest scam/venture is Island2012.com. The goal is for people to buy advertising on his blog so he can buy an island in 2012. (No, I am not making this up. See for yourself at http://www.island2012.com or http://www.caseypedia.com/wiki/Island2012 )
Thank you for the update. I will make your links live.
Wow. That island2012 link is riveting.
If Serin had half a brain he could probably make money from his infamy.
I’m glad her decided to start wearing a shirt for his video money begging scheme.
He still looks like he’s a drug addict though.
FHA down payment limit may increase!
http://www.latimes.com/business/la-fi-fha8-2009oct08,0,189550.story?track=rss
“Mr. Lereah admits to one mistake: believing there would be no national housing crash.”
Other than that, how’d you like the play, Mrs. Lincoln?
My brother pointed me to Casey Serin’s blog in the spring of 2007 when we were in the process of moving to Sacramento from the east coast. Everyone in Sac was telling us to “Buy! Buy! Buy! The market is down but it will be going up soon. Now is the time to buy!”
Thanks to the wisdom of my brother and the idiocy of Serin we are 2 years into a beautiful rental property. Our rent still is about 1K less than if we were to purchase a comparable house.
Glad to see you profile this, IR.
My favorite quote from David Lereah from Time back in 2006:
“This looks like we’re touching down for the soft landing we’ve been expecting.”
Uh huh.
Lereah also commented about the David Lereah Watch blog a couple of years ago. He said that it made his mother cry. I think that even Mom would now agree that his public comments bore no resemblance to reality.
I still hear the NAR and CAR commercials on radio. Last week I heard…8 out of 10 economists agree that housing prices will go up in the next 5 years. Bwahaahaha.
Any of these so called experts should have their past predictions in bold print next to their names. That way we can get rid of 90% of these shills. These clowns are no different than the bozos on Wall St. who issue buy and sell ratings on stocks…they are so drunk off their own Kool Aid they couldn’t tell you which way is up.
Fundamentals always win out in the end. Patience is a virtue!
Thats a trick statement. There saying prices will rise in 5 years, not have increased value from now in 5 years.
I agree prices wont increase in value from todays values in 5 years. But housing may start to appreciate in 5 years after another 4 year slump.
The more you think about that statement…the more ridiculous it is. It is completely open ended. Joe Sixpack hears this and thinks it’s time to buy.
As far as opinions on housing goes, I would believe the guy selling oranges on the off ramp before listening to the fraudulent David Lereahs of the world.
“Fundamentals always win out in the end. Patience is a virtue!”
Fundamentals just lost big time to govt intervention. Check DJIA as well as all the fancy foreclosure sites and other non-NAR blog sites.
Still having fun with your SKF and SRS?
I am intrigued by David Lereah. He’s got punished. But I know a guy who purchased lots of big buildings/ in 2005 and 2007, didn’t end up like Mr. Lereah. He got a very good job after all the properties he purchased were foreclosed. It is about what you have done, it is about who you know! Mr. Lereah might be powerful sometime again.
Let’s see:
1. Nothing down with two loans at purchase (non-recourse?)
2. third recourse loan of $12,000
3. How long did he have free rent?
4. If it’s longer than 6 months, he ahead financially but behind on credit.
5. His big mistakes were only taking a $12K recourse loan and not increasing the purchase loans to 130% of purchase price.
6. If he did only the latter, he would have $150K in cash, really be underwater, so the bank would be more likely to reduce the principle or let him stay longer without paying.
Only in America.