Did anybody catch the story about Kevin Martin's house in the Bee the other day?

[Glenn]

I deleted the post . I realized I sounded like a smart-a**. I just like the topic and tend to get...excited. I think a lot of this entire recession is a direct result of misinformation and a lack of public education. During my stint I noticed a very common trend: VERY rarely do people actually sit down and budget. Education and enlightenment was the key and I took that to heart. More often than not I turned people away from filing bankruptcy and just acted as a financial planner. It was, however sad it is to say, a very fulfilling experience - having the opportunity to help people.

One of my main jokes during initial consultations was: "I never want to see you again." .

This thread should be closed or I'll respond to this. It's going to become a political dicussion very soon.

 

[ESP47]

Very interesting. Programs I have worked in for the government have a much lower than bankruptcy or foreclosure rate than the national average, so it wasn't something I had to get involved in a lot, thank goodness. We were quite strict in our underwriting. We want our first-time homeowners to succeed. Not only can we lose taxpayer money in a bankruptcy or foreclosure, but we feel we leave the family worse off than before they bought the house. (By the way, I have not worked for FHA, Fannie Mae or Freddie Mac ) And generally, when its happened its been other debt, not the home loan that causes the problem.

I figured student loans couldn't be walked away from. Neither can IRS debt. Although I've been told that the interest and penalties on the IRS debt can be wiped out in a bankruptcy?

Yeah I feel bad for the people that bought their houses for $300k a few years ago only to see them drop to $145k now.

I just bought a house two years ago for $145k. I only made $10/hr at the time but had a 20% down payment saved up. I lived just fine for months until I finally started making a little more. People just don't want to give up their non necessities like a new car, flat screens, digital cable etc etc. If you absolutely had to, you could eat for a dollar a day and still be perfectly healthy. People would rather foreclose and go bankrupt before giving up their comfortable lifestyle.

It was funny because I was actually searching for an apartment to rent out when I decided to just do a mortgage calculator online for the hell of it. Turns out buying a house was cheaper and in a nicer neighborhood than the apartment. Throw in the $8000 first time homebuyer credit and I was set.

 

[rhythmless]

Yeah I feel bad for the people that bought their houses for $300k a few years ago only to see them drop to $145k now.

Why? They bought a house to live in that they valued @ 300K, with payments @ x dollars/mo that they knew had to be made. It doesn't matter if the house is valued now at 200k, 100k, a bag of chips, or Kenny Thomas. The payments are the payments. Who cares if you are "upside down" right now? None of this valuation even matters until you sell.

As for those who bought as an investment, all investments can go up or down. That is the inherent nature of an investment; risk.

 

[Dime Dropper]

Auto, boat, motorcycle? Arena loan? If you can dream it, you can do it (as long as you have another person willing to do it with you).

Your house is only worth so much. When you need more capital for whatever reason, no one is going to lend you 50k to be 5th in line on your house.

I'm going to have to step in before this gets out of hand. I don't know what sort of vulgar forums you've been frequenting, but around here, the theft of poster's signatures is taken very seriously. Don't let me catch you at it again.

 

[LWP777]

The point of me posting the article was to point out that he has a MORAL obligation to pay the debt. I understand that legally he may have an out but I still think it's a douche move to do what he did when his yearly salary is nearly 6x what he paid for the house (and how many people can even come close to saying that). What if the house appreciated? He, of course, would have cashed out and pocketed the cash. So why should the bank eat it when he can afford to pay? Every foreclosure ends up costing taxpayers money whether it's through higher interest rates, higher bank fees, TARP money, etc. We pay it somehow.

Another depressing thought is thinking about all the other houses that will probably go into foreclosure if the Kings leave town.

 

[chief bromden]

The point of me posting the article was to point out that he has a MORAL obligation to pay the debt. I understand that legally he may have an out but I still think it's a douche move to do what he did when his yearly salary is nearly 6x what he paid for the house (and how many people can even come close to saying that). What if the house appreciated? He, of course, would have cashed out and pocketed the cash. So why should the bank eat it when he can afford to pay? Every foreclosure ends up costing taxpayers money whether it's through higher interest rates, higher bank fees, TARP money, etc. We pay it somehow.

Another depressing thought is thinking about all the other houses that will probably go into foreclosure if the Kings leave town.

According to your morals?
Are you assuming that he hasn't spent all of his earnings?
The lender was not forced to extend the loan to Kevin Martin.

 

[LWP777]

Yes, according to MY morals and most other decent human beings. I suppose you are not included in that group. So is anybody really forced to do a loan? If a friend loaned you money, would you not pay him back because you were not "forced" to? Keep making excuses for dirtbags pal.

The other thing is some lenders can LEGALLY collect the unpaid mortgage balance through what's called a deficiency judgement. I hope they do.

 

[chief bromden]

Yes, according to MY morals and most other decent human beings. I suppose you are not included in that group. So is anybody really forced to do a loan? If a friend loaned you money, would you not pay him back because you were not "forced" to? Keep making excuses for dirtbags pal.

The other thing is some lenders can LEGALLY collect the unpaid mortgage balance through what's called a deficiency judgement. I hope they do.

Since you "suppose" that I am not a decent human being, why would you "suppose" that I have any friends?... and why would they loan money to me?

If a person loaned money to me, I would expect them to require something put forth as collateral to secure the loan.

According to your morals, if I accept a loan from a friend and die accidentally the next day, I am immoral and considered sub "decent human being" for not paying the loan back.

How do you know that Kevin Martin has the money to adhere to the payment schedule?

 

[Hoovtrain]

Yes, according to MY morals and most other decent human beings. I suppose you are not included in that group. So is anybody really forced to do a loan? If a friend loaned you money, would you not pay him back because you were not "forced" to? Keep making excuses for dirtbags pal.

The other thing is some lenders can LEGALLY collect the unpaid mortgage balance through what's called a deficiency judgement. I hope they do.

Not in CA.

 

[pdxKingsFan]

I agree that he does have a moral obligation because when he doesn't pay back his debt it raises the price of credit for everyone else with virtually no consequence to him because he can pay with cash for the rest of his life if he sees fit. What's 7 years of damaged credit for a multi-millionaire in the prime of his earning career? It's an insult to all of us who live within our means and its also an insult to those who are less fortunate because they fell for a fast talking realtor or lendor's pitch that real estate was like printing money and who's lives have been destroyed as a result.

 

[Bricklayer]

One should note in Kevin's defense here that his profession put him in a fairly uniquely bad position here. All of a sudden, overnight, the home he was paying his mortgage on was abruptly no longer his home, he was shipped across country, and the thing just became a huge monthly liability through no choice or fault of his own. Being abruptly forced to pay whatever the monthly mortgage is on a $1.5mil loan for a house you cannot possibly live in for a year in a terrible housing market might have a tendency to stretch your morals a bit.

I'm not going to opine on how that effects the douchiness of the move, but I do think at the very least it would be worse if he had chosen to leave town, and just tossed the keys over his shoulder on the way out.

 

[Section 101]

The point of me posting the article was to point out that he has a MORAL obligation to pay the debt. I understand that legally he may have an out but I still think it's a douche move to do what he did when his yearly salary is nearly 6x what he paid for the house (and how many people can even come close to saying that). What if the house appreciated? He, of course, would have cashed out and pocketed the cash. So why should the bank eat it when he can afford to pay? Every foreclosure ends up costing taxpayers money whether it's through higher interest rates, higher bank fees, TARP money, etc. We pay it somehow.

Another depressing thought is thinking about all the other houses that will probably go into foreclosure if the Kings leave town.

Maybe if the banks had morals we wouldnt be in a housing crisis. They went for the money grab along with everyone else in the real estate market. It's the people who did it right that got screwed.

 

[LWP777]

Since you "suppose" that I am not a decent human being, why would you "suppose" that I have any friends?... and why would they loan money to me?

If a person loaned money to me, I would expect them to require something put forth as collateral to secure the loan.

According to your morals, if I accept a loan from a friend and die accidentally the next day, I am immoral and considered sub "decent human being" for not paying the loan back.

How do you know that Kevin Martin has the money to adhere to the payment schedule?

Your logic is so bad that I'm actually, for the first time ever, going to put you on my "ignore" list. Debating with you is like dealing with a 2 year old.

 

[LWP777]

I agree that he does have a moral obligation because when he doesn't pay back his debt it raises the price of credit for everyone else with virtually no consequence to him because he can pay with cash for the rest of his life if he sees fit. What's 7 years of damaged credit for a multi-millionaire in the prime of his earning career? It's an insult to all of us who live within our means and its also an insult to those who are less fortunate because they fell for a fast talking realtor or lendor's pitch that real estate was like printing money and who's lives have been destroyed as a result.

Well said.

 

[LWP777]

Maybe if the banks had morals we wouldnt be in a housing crisis. They went for the money grab along with everyone else in the real estate market. It's the people who did it right that got screwed.

I don't disagree with most of this. You're right, everybody got greedy. Banks, realtors, homeowners, etc. The people who opted for the more conservative loans (30 year fixed) got screwed because they can still afford their payments but their houses are way upside down. Of course, the bank won't help these people because they don't have a "hardship." I'm just not sure how you can say that the banks were immoral when they were the ones loaning the money, taking the risk. They are the ones who have taken it on the chin harder than anybody.

Here we have a professional athlete who currently earns 11M per year and has already earned close to 50M in his career, yet he won't pay his mortgage balance in full. We have idiot posters here who defend him by saying "How do you know he hasn't spent that money?" What in the hell is our world coming to? There is absolutely no accountability anymore for anything.

 

[pdxKingsFan]

One should note in Kevin's defense here that his profession put him in a fairly uniquely bad position here. All of a sudden, overnight, the home he was paying his mortgage on was abruptly no longer his home, he was shipped across country, and the thing just became a huge monthly liability through no choice or fault of his own. Being abruptly forced to pay whatever the monthly mortgage is on a $1.5mil loan for a house you cannot possibly live in for a year in a terrible housing market might have a tendency to stretch your morals a bit.

While a fair point, there's no reason to believe that a man of Kevin's means couldn't hold the property, even use it as a rental and ride out the current market conditions, maybe even come out ahead.

 

[pdxKingsFan]

Maybe if the banks had morals we wouldnt be in a housing crisis. They went for the money grab along with everyone else in the real estate market. It's the people who did it right that got screwed.

I think its safe to say that Kevin didn't get a predatory loan by a fly by night banker.

 

[Section 101]

I don't disagree with most of this. You're right, everybody got greedy. Banks, realtors, homeowners, etc. The people who opted for the more conservative loans (30 year fixed) got screwed because they can still afford their payments but their houses are way upside down. Of course, the bank won't help these people because they don't have a "hardship." I'm just not sure how you can say that the banks were immoral when they were the ones loaning the money, taking the risk. They are the ones who have taken it on the chin harder than anybody.

Here we have a professional athlete who currently earns 11M per year and has already earned close to 50M in his career, yet he won't pay his mortgage balance in full. We have idiot posters here who defend him by saying "How do you know he hasn't spent that money?" What in the hell is our world coming to? There is absolutely no accountability anymore for anything.

Because they were breaking the lending rules to loan people money they couldnt afford. They came up with all these different loan programs for high dollar loans with low payments for a few years. Risk ? What risk? They got bailed out. They ended up selling the loans writing off the difference in taxes. Then the loans were refinanced at the lower amount as FHA loans so now they are guaranteed by the government then resold back to the banks. It's all a big scam on the tax payers. Should have let them all fold and sold the properties on the courthouse steps. That's the American way !

 

[Section 101]

While a fair point, there's no reason to believe that a man of Kevin's means couldn't hold the property, even use it as a rental and ride out the current market conditions, maybe even come out ahead.

There arent too many million dollar + homes out there that people are looking to rent. Part of the problem is the taxes aren't being lowered fast enough for the lower property values. Plus maintenence, utilities, probably home owners dues it was probably costing him over $12k/month for an empty house.

 

[pdxKingsFan]

There arent too many million dollar + homes out there that people are looking to rent. Part of the problem is the taxes aren't being lowered fast enough for the lower property values. Plus maintenence, utilities, probably home owners dues it was probably costing him over $12k/month for an empty house.

I'm certainly not suggesting he is going to profit from a rental, I am saying he can ride it out at a loss of some sort until he gets his money back. Like most normal people that make bad investments have to.

Why should property taxes go down? That's the deal in California, you pay taxes based on the price you paid for it. Certainly nobody complains when their taxes don't go up (for the record I am no fan of prop 13, but it's funny to see the shoe fall on the other foot).

 

[Capt. Factorial]

According to your morals, if I accept a loan from a friend and die accidentally the next day, I am immoral and considered sub "decent human being" for not paying the loan back.

When did Kevin Martin die, again?

How do you know that Kevin Martin has the money to adhere to the payment schedule?

Well, let's see. He bought a $1.5M house, and he's guaranteed to make $24M over the next two seasons on top of the $35M he has already made in his basketball career. I think he's got it covered.

 

[Capt. Factorial]

Why should property taxes go down? That's the deal in California, you pay taxes based on the price you paid for it. Certainly nobody complains when their taxes don't go up (for the record I am no fan of prop 13, but it's funny to see the shoe fall on the other foot).

When I was looking to buy a condo a year ago, I found one on the market that was about 10% below typical market value. I asked my realtor to schedule a walk-through, and we found out that the seller was refusing to allow a walk-through without a signed and accepted offer. Then, a few weeks later, the property was quietly sold. I'm almost certain it was a property tax scam of some sort - bought in the boom, sold to a partner in the trough due to the opportunity to slash taxes.

 

[chief bromden]

When did Kevin Martin die, again?



Well, let's see. He bought a $1.5M house, and he's guaranteed to make $24M over the next two seasons on top of the $35M he has already made in his basketball career. I think he's got it covered.

It was a very poor analogy, thanks for calling it out.

I would also assume and agree that he has not spent the money and can afford the loan payments, but I am not ready to call him an immoral douchebag without knowing the facts. After all, JaMarcus Russell is going through the same thing with his California home and I wouldn't be surprised if he is running dry on his 30-40M. Antoine Walker is another example. Pippen is an example of being hurt badly by certain investors. On top of that, next year's salary isn't forthcoming if a lockout occurs, correct? Just trying to find out why Kevin can be held to stricter grounds than the bank/lender who extended the loan.. that loan wasn't made out of good faith, it was extended as a profitable endeavor with inherent risk.

 

[rhythmless]

The point of me posting the article was to point out that he has a MORAL obligation to pay the debt. I understand that legally he may have an out but I still think it's a douche move to do what he did when his yearly salary is nearly 6x what he paid for the house (and how many people can even come close to saying that). What if the house appreciated? He, of course, would have cashed out and pocketed the cash. So why should the bank eat it when he can afford to pay? Every foreclosure ends up costing taxpayers money whether it's through higher interest rates, higher bank fees, TARP money, etc. We pay it somehow.



Another depressing thought is thinking about all the other houses that will probably go into foreclosure if the Kings leave town.

Your first post:

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

The guy makes 11M a year and he lets his house go to foreclosure. The fact that he was even trying to short sell it is a huge douche move IMO. Just because a house is underwater doesn't mean you can legally give it back to the bank without being on the hook for the balance. Of course, tons of people who are broke and/or unemployed have done this but when you make 11M a year, pay your debts and move on. I hope the lender goes after him for the unpaid balance.

So, what I really think is that you originally thought that this was something underhanded and illegal and decided to post here for all of us to ban together against Kmart. When you found out that it was in fact not legal, but prudent as far as financials go, you decided to backtrack to the moral argument.

 

[pdxKingsFan]

It was a very poor analogy, thanks for calling it out.

I would also assume and agree that he has not spent the money and can afford the loan payments, but I am not ready to call him an immoral douchebag without knowing the facts. After all, JaMarcus Russell is going through the same thing with his California home and I wouldn't be surprised if he is running dry on his 30-40M. Antoine Walker is another example. Pippen is an example of being hurt badly by certain investors. On top of that, next year's salary isn't forthcoming if a lockout occurs, correct? Just trying to find out why Kevin can be held to stricter grounds than the bank/lender who extended the loan.. that loan wasn't made out of good faith, it was extended as a profitable endeavor with inherent risk.

Those guys are no longer earning the money they used to make and there's no reason to believe Kevin squandered his money here, in fact you gotta figure he's getting sound financial advice to pull off this kind of move. But he's ignoring the harm it does to the community in the process.

When you loan a guy making $11mil/year a fraction of that to buy a house that is most certainly extended in good faith and considered low risk. Again we aren't talking about a predatory lending situation here, or even some fly by night hack that sells someone on a loan that far exceeds the accepted debt:income ratios.

 

[LWP777]

Your first post:


So, what I really think is that you originally thought that this was something underhanded and illegal and decided to post here for all of us to ban together against Kmart. When you found out that it was in fact not legal, but prudent as far as financials go, you decided to backtrack to the moral argument.

You're so clever. First of all, it's not 100% that they can't go after him legally. It depends on a lot of factors, probably most of which are over your head. Instead of debating with you, I'll just throw you in the pile with the other guys who choose to defend dirtbags instead of holding people accountable.

 

[rhythmless]

You're so clever. First of all, it's not 100% that they can't go after him legally. It depends on a lot of factors, probably most of which are over your head. Instead of debating with you, I'll just throw you in the pile with the other guys who choose to defend dirtbags instead of holding people accountable.

So from the bolded part, you are saying, "I have no actual ground to stand on, so I'm going to insult you personally while I run away instead of refuting valid points of legality."

Accoutnable for what, exactly? The mortgage agreement never stipulated that he HAD to make all the payments. The contract states that he will make payments every month. If he does not, the bank can take the house back. He chose to have the bank take his house back. That is a choice, a decision, the terms of which are clearly laid out in his, your, mine, and everyone's mortgage. This is his option. What about that don't you get?

You are saying that he is a dirtbag because he defaulted? So he is a dirtbag because he violated his contract? The terms of default are IN the contract. He is still abiding by the contract. No one has breached contract (as far as we know). The penalties for not paying your mortgage are; loss of payments, credit. Kevin agrees with these penalties. Again, still within the contract. So, if he pays, he abides by the contract. If he doesn't pay, he is still abiding by the contract.

 

[pdxKingsFan]

Why is it hard to grasp that just because something is legal it can't be unethical, or vice versa? The laws are set up to protect people from becoming defacto indentured servants, not so that rich people who will suffer no penalty (credit destroyed) can worm out of their bad investments. Not to mention that foreclosures destroy neighborhood property values causing direct harm to those who were his neighbors, some of whom may have been in similar situations and trying to get out honorably. And in the long run they cause all of us to pay more to borrow money in the future.

 

[rhythmless]

Why is it hard to grasp that just because something is legal it can't be unethical, or vice versa? The laws are set up to protect people from becoming defacto indentured servants, not so that rich people who will suffer no penalty (credit destroyed) can worm out of their bad investments. Not to mention that foreclosures destroy neighborhood property values causing direct harm to those who were his neighbors, some of whom may have been in similar situations and trying to get out honorably. And in the long run they cause all of us to pay more to borrow money in the future.

How is it unethical? He is still going by the BANK'S stipulations. The bank set out the mortgage terms, Kevin agreed to them. The bank and he tried to work out something in addition to the mortgage. That fell through, so both he and the bank go back to their original agreement, the mortgage. The mortgage that the bank made. The mortgage that the bank decided to give him, with terms of default, which he is now going through. Is an opt out clause unethical? An opt out clause is designed to allow the signee to get of of the contract by forfeiting their pay and risking that they could get more. Kevin opted out of his mortgage by forfeiting all equity that he had put in the house. He lost too. Is it also unethical to dump a stock when it's going down?

As for repercussions on the economy, we could argue about who is more at fault; greedy lenders, idiotic hoemowners, people who have no business owning homes in the first place, etc. We could debate as to who hurt the economy more; people who walk away from a bad investment, banks who did not have the proper risk evalutaion in place, the government who bailed out these bad loans, or the people who elected said government in the first place. Let's not go down that road, shall we?

 

[cfechter]

Why is it hard to grasp that just because something is legal it can't be unethical, or vice versa? The laws are set up to protect people from becoming defacto indentured servants, not so that rich people who will suffer no penalty (credit destroyed) can worm out of their bad investments. Not to mention that foreclosures destroy neighborhood property values causing direct harm to those who were his neighbors, some of whom may have been in similar situations and trying to get out honorably. And in the long run they cause all of us to pay more to borrow money in the future.

Great post here -

Tom Sullivan recently did the same thing. I find both of their behavior to be despicable.