Help me out here, folks. I was reading this article about former Kings basketball star Kevin Martin being sent a notice of default on his million-dollar Rocklin home and I am left curious.
Martin, who will earn $10 million this year playing for the Houston Rockets, first missed a payment on his $1.5 million home loan in June, according to Foreclosures.com. His lender filed the notice of default last month…Martin’s Rocklin home is listed for $1.1 million as an “active short sale,” meaning that if someone buys at that price, his bank could take a loss…Martin paid about $1.9 million for the home in the gated Whitney Oaks subdivision in July 2007.
Is the 1.5 million number referring to what he owes on the house still? And how does someone making 10 million a year allowed to short sell his home? And we’re supposed to rest assured knowing that Kevin is not going to walk away from this home because he’s a stand-up guy? What if this property had gained in value? Would he have donated the profits of the sale to a local charity? You know, because he’s a stand-up guy? I wonder. You invested in a property that went south, you have to live with the consequences, right? At least you do when your income hasn’t been severely altered like so many others in this country. Obviously I am no expert and do not know the details of this particular case, but it sure is tough to read as a tax payer and Sacramento resident who is upside down on his home that someone with the means to pay his bills is finding away to get around them.
Help me out here. Am I way off base? I am assuming I can blame Obama here though.
The Sac Rag 
Your not off base for being upset about this. I think way too many people are getting away with this type of abuse because they can buy their way out of bad credit situations. I don’t think we should blame Obama. Kevin is the responsible person here!! It’s wrong!
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Thanks for checking in, Becki. I was having fun at the common response of blaming Obama for everything. We like to have fun on this here web log from time to time.
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http://jdeanicite.typepad.com/i_cite/2010/10/the-white-house-and-the-us-mortgage-racket.html
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On the numbers … The $1.5 million outstanding loan balance is less than the $1.9 million he paid for the home because he made a down payment, and because he paid on the loan until June … The difference between the $1.5 million and $1.1 million his home is selling for is the “short” in the short sale … Best, Phillip Reese, sacbee.com
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Thanks for clarifying, Phillip.
Looking back my point wasn’t so much the confusion in the price of the home (the “Math” part), but what Martin was doing with it.
@jo “The Obama administration’s housing policy, in other words, is to push millions of people out of their homes.” Yeah, we can blame Obama again. Sorry, Becki.
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So the problem remains. Say the house sells short for $1.1 Million. Does Kevin be a “stand up guy” and pay $400,000 to the bank or do they have to eat the loss and maybe we bail them out later?
Seems to me a fellow making $10M a year could pay that difference. Maybe that kind of money feels different.
I like to believe that this won’t be a case of the rich taking advantage of a financial letdown, but just moving forward with a clean conscience.
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Maybe he got the idea from the Mortgage Bankers Association?
Mortgage Bankers Association Sells Headquarters at Big Loss
“On Friday, CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. The price is far below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also is far below the $75 million financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. to finance the purchase.
John Courson, chief executive officer of the trade group, declined in an interview Saturday to say whether the MBA would pay off the full loan amount. “We’re not going to discuss the financing,” he said. A spokeswoman for the MBA added that the MBA has reached “an agreement with all relevant parties” regarding the outstanding amount on that loan but declined to provide any details.”
A year earlier, here’s what the same John Courson had to say about people defaulting on loans and short-selling their properties:
“John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message†they will send to “their family and their kids and their friends.†Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay.”
But when Courson’s organization does it, apparently that’s okay.
Turns out it is not uncommon in the business world:
“Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with.”
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Good one, wburg. We’re all doomed. Imagine if there really is a hell? Boy are a lot of people going to be sorry!
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Looks like Tom Sullivan is joining the short sale party.
http://www.sacbee.com/2010/10/21/3120279/financial-guru-tom-sullivan-seeks.html
Interesting sacbee comments on this one too. I’m wondering why people are so eager to defend the banks in this.
The bank agreed to loan Tom, Kevin and Ron money. Under the terms of that contract, Tom Kevin and Ron could pay the bank back in money or give them the house.
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