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?

So what happens when we run out of land? Perhaps we will develop the moon; although, we will run out of land even faster there since it is so small…

Address: 20 Moonstone Irvine, CA 92602
Asking Price: $529,000

Mars ain’t the kind of place
To raise your kids
In fact, it’s cold as hell
And there’s no one there to raise them
If you did

And I think it’s gonna be a long, long, time
‘Til touchdown brings me ’round again to find
I’m not the man they think I am at home
Ah, no no no…
Imma rocket man
Rocket man
Burnin’ out his fuse
Up here alone

Rocket Man — Elton John

I would love to go to the moon. If I live long enough (and make enough money), I will visit the moon. Would the moon be an interesting final resting place?

It is not legal to own extraterrestrial real estate. Wikipedia noted the following:

Extraterrestrial real estate is land on other planets or natural satellites or parts of space that is sold either through organizations or by individuals. Ownership
of extraterrestrial real estate is not recognised by any authority.
Nevertheless, some private individuals and organizations have claimed
ownership of celestial bodies, such as the Moon, and are actively
involved in “selling” parts of them through certificates of ownership
termed “Lunar deeds”, “Martian deeds” or similar. These “deeds” have no
legal standing.

A number of individuals and organisations offer schemes or plans claiming to allow people to purchase portions of the Moon or other celestial bodies. Though the details of some of the schemes’
legal arguments vary, one goes so far as to state that although the Outer Space Treaty,
which entered force in 1967, forbids countries from claiming celestial
bodies, there is no such provision forbidding private individuals from
doing so.

Many states and countries have corollaries to their real estate and
property laws to prevent wanton claiming of new-found lands, that state
that a simple claim to the territory is not enough; the claimant must
also demonstrate “intent to occupy,” something that, at this time, is
obviously difficult to do with the Moon or any other celestial body.

Considering these facts, legally, the schemes’ “deeds” have only
symbolic or novelty value and no official governing body in the world
has yet granted any legal validity to them.

When you are ready to start your search for moon property, you can start with Google Moon. Since there are no surveyed properties, you will have to explore and stake your claim on your own. There are organizations (Lunar Registry and Moon Shop among others) willing to take your money and give you some paper saying you own a piece of the moon, but as noted above, these claims have no legal standing.

Address: 20 Moonstone Irvine, CA 92602

Asking Price: $529,000

Income Requirement: $133,084
Downpayment Needed: $105,800

Purchase Price: $595,000
Purchase Date: 11/10/2005

Net Gain (Loss): -$97,740
Percent Change: -11.1%
Annual Appreciation: -2.8%

Monthly Payment $2,740
Monthly Cash Outlays $3,458
Monthly Cost of Ownership $2,348

Property Details for 20 Moonstone Irvine, CA 92602

Beds 3
Baths 2 full 1 part baths
Size 1,500 sq ft
($353 / sq ft)
Lot Size n/a
Year Built 2001
Days on Market 32
Listing Updated 9/11/2009
MLS Number P701348
Property Type Condominium, Residential
Community West Irvine
Tract Mand

Quiet inner location and very desirable open floor plan, rarely on the market. Oversized Master bedroom + 2 larger bedrooms, upstairs laundry room. Walk-in closet in the Master bedroom and one of the bedrooms. Plenty of storage spaces throughout, in addition to storage cabinet in the garage. Custom painting throughout and designer carpet upstairs. Porcelain tile in Living room & kitchen area.

Today’s featured property was purchased on 11/10/2005 for $595,000. The owners used a $476,000 first mortgage, and a $119,000 downpayment. They are hoping to recover some of their downpayment and get out without this becoming a short sale. Unfortunately, the property next door has an even more motivated seller; twenty-one Moonstone is being offered for $499,000. They competition puts the owners of today’s featured property underwater.

Buying in 2005 cost these owners their substantial downpayment, and they too may end up as a short sale.

Come fly with me, let’s fly, let’s fly away
If you can use some exotic booze

Once I get you up there where the air is rarefied
We’ll just glide, starry-eyed

Come fly with me, let’s fly, let’s fly
Pack up, let’s fly away!!

Come Fly With Me — Frank Sinatra