The Digerati Life

The harsh reality and aftermath of foreclosure: personal stories of financial loss from Foreclosure Alley.“You know you’re in trouble when the lawn is brown and the pool is green.”

Something making the rounds of the web is a haunting, somewhat gloomy video on foreclosures — the scenes of which show some surprising, unexpected details. We hear about the foreclosure statistics and the stories in the news, mostly on a detached level. But as I find out more about the personal stories of people whose lives have been greatly upturned by the real estate bust and what seems very much like an economic recession borne of the financial crisis we’ve been hit with, I can’t help but feel sadness and dismay for the things that have transpired.

Despite all the talk that we should just let the market do what it will do, it doesn’t change the fact that financial loss has wrecked people’s lives significantly. The news is littered with many such stories, including this one about a family with a toddler who is forced to live in a tent, and a desperate 90 year old woman who shot herself while in the process of being evicted from her foreclosed home.

For many, a home to live in has become harder to find, as people with damaged credit are finding it harder to find a place to rent. Landlords are becoming much stricter about whom they sign up as tenants, no doubt, due to difficulties with previous renters.

Remember the infamous poster boy for foreclosure and real estate decline: Casey Serin? From his example, we see that when things go wrong financially, it can escalate quickly and significantly. Once you make a few financial mistakes, it can be one short step from missed payments to homelessness: your credit gets damaged, your debt load spirals and before long, you’re evicted.

The Story Of Foreclosure Alley: Main Points

What struck me most about this video about foreclosed homes in Southern California (in a suburban development of large, spacious homes now dubbed as “Foreclosure Alley”) were these facts:

1. One in two homes sold last month was a home that was previously repossessed. 700 families lose their homes to foreclosure everyday.

2. The typical foreclosed home is a newer house in a newer neighborhood that was purchased over the last 5 years.

3. Many families that abandon their homes no longer care about what they leave behind. You’ll find so much stuff in these homes when the cleaning crew comes by. All the items they come across — even brand new large, flat-screen television sets, appliances, computers, printers and other electronic gadgets will be thrown out to a landfill! Ironically, the cleaners claim that it takes too much time and money to donate these items to charity. Some surprising materials that people leave behind: photo albums, pink slips for vehicles, birth certificates and other important documents, and in one case, even an urn carrying remains of a loved one. These latter items are eventually returned to their owners.

4. People leave behind many valuable material possessions during a foreclosure because they may no longer be able to pay for them (as they try to walk away from debt and financial obligations) or because they are at a low emotional point and just want to “get things over with”. It’s a point of despair and abandonment when they leave their foreclosed home still stuffed to the brim with their former lives.

5. The business of “trashing” is done by a cleaning company that specializes in cleaning out foreclosed homes. Such companies are doing very well at this time, with business currently booming.

6. Part of fixing up a foreclosed home (other than cleaning it out) is to spray paint a dead lawn to get it ready for resale. It’s done for instant curb appeal.

7. How far have prices gone down? Original prices for these foreclosed homes just a few short years ago: $399,000. Today, they’re worth $180,000.

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I came upon something quite strange and even creepy the other day. I am a huge crime story buff and I often watch shows like “Forensic Files”, “City Confidential” and “Cold Case Files” (yeah, along with reality television shows). I’ve mentioned before I was a big couch potato right? Well these crime shows tell you about real life cases, the crime investigation process and finally how these cases get resolved.

What took me aback though was that one show portrayed a case right smack dab in the middle of my neighborhood in Silicon Valley, California. It’s a bit of a surprise given that I live in a pretty boring area where nothing much happens. It’s the suburban countryside, so maybe that’s why it was considered a big deal — a peaceful setting contrasted with a weird crime must’ve made the story stand out enough for it to be televised.

And the clincher? My very own BLOCK was featured on the show. Ack! What’s more, the perpetrator (whom I believe grew up around here) got a simple slap on the wrist because he was a juvenile when he committed the felony. Hmmmm… goes to show that anything can happen anywhere, and it’s always wise to keep vigilant.

Now let’s move on to something more exciting, shall we? Like finding out if you’re stuck with a lousy retirement plan. A bad 401k? Now that’s a crime!

Recommended Personal Finance Reads

• Blueprint From Financial Prosperity reveals the details of Obama’s emergency economic plan, which includes a second stimulus check and growth funds.
• All Financial Matters reveals the four habits of financially peaceful people. If you know where your money goes and know what you want your money to do, you must be at peace.
• Lazy Man and Money is gearing up for football season and has his opinions on bundled football tickets and other forms of bundling.
• Money Smart Life tells us how to protect ourselves from commodity scams.
• Gen X Finance: Here’s how to find out if you’ve got a bad 401k plan.
• The Sun’s Financial Diary: In the heels of our latest portfolio update, where we got to share our stock portfolio returns, Sun now tells us how his net worth has fared in the past month.
• Mighty Bargain Hunter doesn’t care how much Exxon makes per second. For the record, it’s about $1,500 per second.
• No Credit Needed: NCN does a midyear retirement funding checkup using a colorful table.
• Million Dollar Journey: Frugal Trader is richer by around half a percent compared to the month of June. We haven’t been as lucky!
• Brip Blap: Should you stay away from political news? Steve rants about his addiction to the news. Thank goodness I’m only addicted to reality television shows.
• My Dollar Plan shares with us how to make early Roth IRA withdrawals.
• Life, Liberty and The Pursuit of Money: RacerX wants to be the first blogger in space!
• Weight Loss Journal: See how one fellow continues to lose a lot of weight. He’s even managed to lose 4 pounds last week despite not being able to exercise!
• Dividends 4 Life describes the perfect dividend stock.
• Value For Your Life shares 7 secrets for accomplishing your goals.
• Prosper Blog: Is it really time to chuck your checkbook? I guess I’m pretty old-fashioned because I still like using mine!

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This topic has been talked to death by the financial community and there are literally a zillion books on the subject, but being the paranoid that I am, I thought to add my own thoughts to the conversation.

I’d like to take a closer look at the subject of identity theft. What I found particularly worrying was how victims of this crime didn’t feel sufficiently supported by the government about their plight, and how perpetrators to the crime come in all shapes and forms: from illegal immigrants to one’s own family members — including, sadly enough, those parents who’ve decided to exploit their own children.

My Experiences With ID Theft

I’ve been a victim of credit card false charges and theft more than once, and I do know at least one person who’s been a victim of identity theft. In that situation it was such a blatant crime that involved the victim’s social security number becoming hi-jacked by no less than five foreign-sounding identities that were registered in the same bank as the victim’s. How crazy is that?

I also wrote about an experience I had several years ago about some very determined thieves who attempted to raid our trash bins in the middle of the night. And would you believe they did it even with our security lights flooding the location where our utility bins were located? Some of these low-lifes are not easily deterred, unfortunately.

We may try to do all we can to prevent identity theft from happening, but it could still very well happen to us. Here’s what a fraudster does to make you a victim:

• Work in a gas station or restaurant for a few days to get discarded credit card imprint carbons.
• Sift through trash cans and dumpsters to pick out bank records and credit card billing statements.
• Drive around suburbs with an inexpensive scanner and listen for people placing phone orders on cordless phones.
• Pay off “friends” who work in retail stores to steal numbers from customers. Obtaining names and SSNs from personnel or customer files in the workplace.
• Stand next to or behind patrons at the sales counter of any department store and read their number off the card as they present it to the clerk. “Shoulder surfing” at ATM machines and phone booths in order to capture PIN numbers.
• Wander through airports or bus stations where people routinely forget to pick up their receipts while worried about catching their flight or getting on their bus.
• “Dumpster diving” in trash bins for unshredded credit card and loan applications and documents containing SSNs.
• Stealing mail from unlocked mailboxes to obtain newly issued credit cards, bank and credit card statements, pre-approved credit offers, investment reports, insurance statements, benefits documents, or tax information.
• Accessing your credit report fraudulently, for example, by posing as an employer, loan officer, or landlord.
• Finding identifying information on Internet sources, via public records sites and fee-based information broker sites.
• Sending email messages that look like they are from your bank, asking you to visit a web site that looks like the bank’s in order to confirm account information. This is called “phishing.” (Visit www.antiphishing.org)

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“I’ve seen the enemy and the enemy is us.”

I’ve been following the subprime mortgage debacle for a while now, giving it a lot of coverage. This bust has left us with some tragic results, as homeowners far and wide are left holding the bag and in ruins, after losing their homes and whatever else they’ve got.

It’s common knowledge how much fraud has become a big part of this crisis, but in their own defense, insiders from the real estate industry have claimed that this crime is actually victimless. Is that so? Well you know what mainstream articles on this subject would like to have you think, since they’ve done a good job with putting a face on this crisis, profiling the many who have fallen victim to the trend.

Israel Medina admits he got too gung ho about the idea of getting rich by flipping Bay Area real estate.

Medina, a Concord resident who ran a limousine company before wading neck-deep into the housing market, has seen not one, but 11, of his Northern California properties move into foreclosure in the past year, he said.

“I was a real estate tycoon; I had everything,” said Medina. “Now I have nothing.”

There are many participants caught in this sordid financial drama but it seems that we’ve already made up our mind about who’s really at fault here.

The Accused

So who or what’s to blame for all this?

• The slimy real estate agent? These are the guys who give you cold calls and bug you to no end with the promise that you can buy houses without having to give up a single cent.
• The sleazy lender? They’re in cahoots with the agents, approving your loans in the blink of an eye.
• The big banks? Greedy capitalists (or so they say) who invested in a secondary, unregulated market based on loose and risky credit. That market is now shot.
• The Fed? The catch-all of blame for all things that have gone wrong with our economy, our system, etc. A favorite target for criticism from dismayed victims of foreclosure and loss.
• The developers? Hey we wouldn’t be in this mess if they didn’t build so many houses!

I’m sure you can tell (at least I hope) that my tone here is somewhat tongue-in-cheek. In reality, there’s not one element here that is solely to blame; what we’ve got is a cornucopia of reasons and factors and a clustering of events that have come together to conjure this disaster.

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What do you think of this photo of Katie Holmes shopping with her child? Easy targets perhaps?

Though Christmas is over, the winter retail season is still in full swing. I actually don’t shop very often since I don’t enjoy the activity very much, but this is one of those times when I do come out to make purchases. The main reason of course is the fact that large sales abound at stores trumpeting their heavily discounted wares (especially in the Holiday or Seasonal department).

But as you go about doing your after holiday shopping sprees, as I will be in the next few days, take note that the thieves and ne’er do wells are also out and about to prey on the unsuspecting. It’s quite obvious why this would happen — more crowds attract more opportunists of all sorts and the end result isn’t pretty: shoplifting, ID theft, returns fraud, gift card scams and organized retail theft, etc. Everyone is distracted and less vigilant — store personnel are busy attending to crowds while customers are busy checking out the merchandise and are less aware of their surroundings.

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Would you buy a house with a scary past? Not one that is deemed “historical” based on its lovely architectural features that peg a home to a particular time period, but rather one that has some kind of story behind it, which may not be all too pleasant.

Since I’m a huge crime buff, I thought I’d delve into some interesting points about buying a house with a back story. Imagine finding out a house is for sale for 20% below the comps in surrounding areas: you’d think it’s a steal but in reality, there’s a reason for that lower price. Something sinister just happened in that house, perhaps some kind of unsavory crime, or catastrophe that has a psychological effect on people. Would you buy it? I personally don’t think I can stomach a house that is tainted in some fashion because I tend to be slightly superstitious about the vibes found in a house, so I’d pass. In effect, this is exactly what we did when we once faced this type of situation.

When we were shopping for a home in late 2001, we came across a well-framed, spacious house we thought that could work out for us, but as soon as we stepped foot in the foyer, I felt a chill up my spine. I couldn’t explain it except perhaps that the house seemed “dark” and “cold”. I clearly felt it (and so did one other friend who accompanied us in the tour), and it was later on that I was told that one of the owners had just passed away in his hospital bed. Well whatever it is, I sensed something! And despite the 10% price cut they gave us relative to other homes we were considering, we skipped on it.

Definitely no regrets! But here’s the epilogue:

Other house hunters saw the situation through a different lens and decided to buy that very house. They then proceeded to give the residence a cosmetic facelift and ended up selling it for 36% more than the original list price that was offered to us, after just a mere 3 years. Surely the hot market had something to do with it, but also the significantly improved ambiance, as the house looked like a totally different place after minor improvements were made.

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Casey Serin’s feeling the pressure.

Seems like some bloggers, including myself, have received the same mass email message that Casey Serin has sent out to his contact list. This message reveals his latest plans. In case you’re not familiar with Casey, he’s the guy who’s been sadly branded as the “most hated blogger” and the person behind the I Am Facing Foreclosure blog. Here’s his Wikipedia profile:

Casey is a real estate speculator and blogger. In a newspaper article, USA Today called him the “poster child for everything that went wrong in the real estate boom”. In his early twenties, Serin worked as a web developer, but then decided to quit this job to pursue his dream of becoming financially independent through real estate investments. Beginning in October 2005 and continuing through the following year, Serin purchased eight houses in four southwest U.S. states, and then began blogging about the foreclosure process on the properties he was unable to resell.

About that mass emailing: I was a letter recipient since I somehow made it to his presumably far-from-short contact list after corresponding with him a little in the past as I prepped for my “Casey Serin inspired theme week”, a week that I spent on posts discussing mortgage fraud, real estate debt lessons, bankruptcy topics and the like.

I actually feel badly for Casey. I think behind all the mess he’s generated for himself, he sounds like a well-meaning person. He just seems to be quite misguided and lost and is more than a bit over his head with all the stuff that’s transpired in his life lately. It’s obvious he’s a media whore but one who’s very impulsive, naive and flaky altogether. Could we be mistaking his lack of financial sophistication and ignorance for criminal behavior and intent? Are we reading his stubborn incompetence as something much more sinister and despicable, like maybe his moronic behavior is really just a facade for something darker underneath?

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When you find yourself shopping in another part of the world, it’s not too difficult to come across a treasure trove of stuff that cost a tenth of what it normally costs at home. There’s obviously a huge market out there for this sort of thing and it’s not uncommon for consumers to take part in these “bargains” when they get the chance. Ask them about it and they either claim they were ripped off or they end up boasting about the purchase from the XYZ shopping district in so and so country.

Here are some samples of the fake and the real. Question is, who buys these fakes?

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