Update on Stopping Foreclosure

Quick update. We got another offer at 220 for the Larchmont property. Remember, the other 220 offer person got cold feet. And besides, the 1st is not willing to short sale below 240.

Well, Amy Coleman, my awesome short-sale-specializing realtor was not about to give up. She kept calling and going up the food chain. She got a hold of the loss mitigator’s boss’ boss. The big boss is willing to consider the 220 offer. I signed the offer and now we’re waiting to hear back from the bank - to see if the short sale is going to be approved and if I can avoid foreclosure on this thing.

Stopping foreclosure on the Burdett property is also going strong. Zack of LandMark told me his buyer opened escrow and things are going smooth so far. Hopefully the buyer will close and I will be able to stop foreclosure on this property as well.

The Modesto property is just sitting there right now. I’ve had it marketed on the MLS for a while now. Amazingly I haven’t received ONE call. I am using a limited service flat-free broker so I’m supposed to get all the buyer agents’ calls directly. I’m starting to think maybe I put in the wrong phone number. At 349 I am also a little overpriced for a quick sale. Or maybe there is also so much inventory, the buyer’s agents haven’t gotten around to looking at mine yet. I need to check into it.

At least my Special Financing for Credit-Challenged Buyers marketing strategy brought in some results. I had several people go through the house and I’m working with a buyer right now. I’m having my creative mortgage broker friend attempt to give this buyer a conventional loan so that I can get cashed out and not have to carry any financing. Besides, the buyer doesn’t have the $15k to catchup my loan in order to take over payments. And the buyer’s FICO score is very close to being able to go conventional. So that’s the first thing we are trying.

I shouldn’t be relying on just one buyer to take over the loan and stop foreclosure. I really need to spend some more advertising dollars and continue marketing the NO BANKS Seller Financing message. It works. There are many people out there who don’t have the credit for a conventional loan. But they do have stable income and would love to take over somebody else’s loan. This would give them time to repair their credit and refinance later. It’s a win-win and a great way to stop foreclosure. Selling the Utah property with an All Inclusive Trust Deed is an example of that.

The New Mexico property is still being marketed with an agent on the MLS. No activity either. That’s because it’s overpriced and there are tons of houses for sale in that area. The only reason it’s overpriced is because I have 100% financing on it and don’t have room to lower it AND pay the realtor fees. It’s a very nice house and I think it will sell quickly at a discount.

To stop foreclosure we’ll have to do a short sale on this one also. The agent has not done any short sales before. But that’s OK. I have enough knowledge and experience to do it myself. It’s actually pretty easy. I am having the realtor lower the price by 10,000 per week. After we get an offer I will submit the hardship letter and a short sale packet to the bank with the offer. Then it just takes a lot of phone calls and follow up. In other words: persistence.

So that’s the update on stopping foreclosure on my remaining 4 properties.
Facing Foreclosure at a College Real Estate Class
Finances Out of Control
70 Comments

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Rancid
November 19th, 2006 at 12:37 pm

Seen on another blog

I’ve already written a letter to Jerry Brown requesting that he take a long hard look at Mr Casey Serin. I’ll mail it as soon as he gets sworn in, along with a copy of the thank you note he sent me for contributing to his campaign.
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shadash
November 19th, 2006 at 12:44 pm

So…

1. You screwed the system and lied on your loans
2. Now you’re begging for short sales

I wonder why lenders have all those rules crazy?

If I was your lendor I would be doing the same thing they are. Something is better than nothing right?

Just a question. How do you intend to pay the IRS for all the shorted differences? You know they can garnish your wages.
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Free advice
November 19th, 2006 at 2:17 pm

Shadash:

Debt forgiveness counts as income UNLESS it fits one of several IRS exclusions.

One of those exclusions is when one’s liabilities exceeds one’s assets. Then debt forgiveness is excluded. (Note: bankruptcy is not required, just the fact that liabilities exceeds assets is enough)

That’s per IRS regs. California may not follow that exclusion, but they usually follow Federal guidelines.
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Sure
November 19th, 2006 at 2:57 pm

Shadash, I’m pretty sure Casey is not reporting any income to the IRS. I have asked him as well as others here and he just skirts the question.

BTW, he has a picture of this Chris guy on his flickr account. I Googled his name and something seems very fishy. I knew something was wrong when he mentioned being a fan of good ol’ RK, author of Rich Dad, Poor Dad.

It’s funny, for every blog that I’ve come across where some idiot opines about the ‘REI biz’, if they at all mention Rich Dad, Poor Dad, I just know they are headed for trouble.
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Gena Riede
November 19th, 2006 at 3:25 pm

Now is not the time for you to go with a flat-fee broker. Remember, you get what you pay for. There is no motivation for this flat fee person to put money up front for you to get the best visibility in order to sell. At this point, I would say that an experienced Realtor is who you need…experience doesn’t cost, it PAYS!
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Jill
November 19th, 2006 at 3:30 pm

I think you’re on the right track, Casey. You got a job, you’re working on getting rid of the houses and not wasting time on interviews and tv spots. But you still have 150k of credit card debt.
What are you going to do about that?
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SubKommander Dred
November 19th, 2006 at 4:26 pm

Yes, but that would mean Casey Serin actually had wages to garnish. His current ‘job’ notwithstanding (as some kind of errand boy for a fellow clueless punk). I don’t think the IRS can garnish the wages of Squeegee men (those poor wretches living on the street, numbing themselves with Thunderbird wine and washing windshields for spare change). The way things have gone for our hero so far, I wouldn’t be surprised to see Casey hanging out under a bridge someplace, warming himself by the light of a fire in an old oil drum, passing a bottle of vodka to his fellow squeegee men, eating barbecued squirell and trying to get them to invest in another real estate venture.
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Jonny Jon
November 19th, 2006 at 5:37 pm

Hey Casey, I guess you’re getting your $249 worth of MLS listing only service on your Modesto property. I can’t find your property in the Sacramento MetroList Services database.

I hope that Amy has luck with the short sale.
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Joseph
November 19th, 2006 at 7:27 pm

People:

No, IRS does *NOT* forgive when FRAUD is involved - which is the case here and Casey has admitted to doing.

Also, the Banks are not losing a penny with Casey. Banks already made their money.

The companies losing money are the PMI companies. These mortgage Insurance Companies are like any other Insurance business - they are in business to MAKE money. They really don’t like FRAUD!

Just think of what happens if you burn down your house to get your Home owners Insurance company to pay. They will investigate.

Golden rule of life: Don’t fruck with the IRS and especially don’t fruck with *ANY* Insurance Company.
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T.White
November 19th, 2006 at 8:17 pm

If you think about it, the real beneficiaries of the flipping bubble were those that bailed out before the music stopped (if indeed it has) and banks.
As a prior poster observed, the intrinsic value of a hard asset might not decline as the currency which underscores may.
With the recent flipper mania, has not the banks inventory simply been ‘upgraded’ on the backs of flippers,’end-users’ and (in our mutual friend’s case) less than successful flippers?
Not to mention contractors, suppliers, realtors, title co’s etc.

I just wonder if there’ll ever be an unsuccessful “Flip this house” or likewise show where they show someone really get their fingers burned. I’ve seen some where they rolled the credits with ’still waiting on a buyer’ but never ‘this couple are gonna bk’.

Think this might be the next ratings bonanza!?
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Dave
November 19th, 2006 at 8:25 pm

I’m no expert, but why would someone take the risk of taking over your payments? If the house (title, mortgage, etc) stays under your name and you end up filing for bankruptcy, won’t you be forced to possibly liquidate the house. Anyone know about this?
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Anonymous
November 19th, 2006 at 9:18 pm

Awesome, dude! I really didn’t think you’d survive this. However, piece by piece, you are clawin your way back!

I’m impressed. Good luck. even though many will hate your guts for pulling it off if you succeed, you’re a testament to what human hope can achieve.
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Steven
November 19th, 2006 at 9:41 pm

Chances are VERY slim that Casey owes any income taxes at all.

He obviously has tax deductions in excess of income. And he also obviously meets the solvency exception for foregiveness of debt to be considered taxable income - sec 108 of the tax code.

Casey has serious problems yes. But income tax problems are probably not one of them.
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UncleC
November 19th, 2006 at 9:53 pm

Excellent update — that’s what we like to see! Focus on that Modesto situation.
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Rat
November 19th, 2006 at 10:39 pm

Casey just ignore these trolls that keep bashing you. While I don’t condone some of your business actions, I applaude your current direction to make these loans good. Once you get out from under this debt, and YOU WILL, you will be a much better business man for having had this experience. I know I wouldn’t bet against your success. Keep up the good fight, you will beat this thing.
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Joey
November 19th, 2006 at 11:07 pm

Hi Casey,

You have the sunny optimism only found in retarded people, but I guess it works for you!

I hope you can make it, and only end up with that one foreclosure on your record.

Don’t let *most* of the negative comments bother you. I think most people would be glad to see yourself pull from out of this.

And if you don’t… please blog every gory detail, right up to the moment you end your own life.

But I don’t think it’ll come to that. I have faith in you.
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Sprezzatura
November 20th, 2006 at 12:48 am

The real question is not so much whether you’ll be able to unload your properties. One way or another, you will. The question is, what happens next?

What will you owe the IRS? Will you be able to pay the taxes on those short sales? What about all that credit card debt? Will you be able to keep servicing it or will that alligator become too insistent?

And most important, how will you make ends meet day to day? Will your friend keep you in his employ after your 6 week trial? Or will you plunge into another round of bad investments in hopes doing better this time?
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blah
November 20th, 2006 at 1:38 am

I can’t believe you spent some 30k you don’t actually have on useless idiot seminars, and yet you continue to defend the sharks and thieves who sold you these worthless lies. Do you think the credit card companies are giving money away for free? You giggled like a schoolgirl when you met that useless piece of lies named Rich Dad, Poor Dad. You should have punched him in his lying face.
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Mark
November 20th, 2006 at 2:08 am

if they’re not selling at high prices, and you need to sell …. lower the price and accept the losses. It’s about time anyway.
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Mr. Flipper
November 20th, 2006 at 2:32 am

“Joey” wrote:

“You have the sunny optimism only found in retarded people…
Dont let “most” of the negative comments bother you…
I think most people would be glad to see yourself pull from out of this…please blog every gory detail, right up to the moment you end your own life…
…I have faith in you.”
———————

Um, “optimism only found in retarded people” ?
…don’t let the negative comments bother you…er…please blog every gory detail, right up to the moment you end your own life…and, um, I have faith in you…”[?] What?!

Joey…I bet you make sense when you stay on your meds, huh?
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fijirobe
November 20th, 2006 at 7:17 am

I dont think Casey has any PMI on his houses. It looks like he went 80/20 on all of them, so PMI is not required. Thus, he is on the hook and the banks are going to try and get whatever they can. Accepting 220 instead of 240 just shows how weak the market it is in that area.
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teacher
November 20th, 2006 at 7:20 am

Steven,
I believe the loss to a bank is treated by income by the IRS, thus Casey’s income will exceed his deductions.
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Refinance foreclosure index_new
November 20th, 2006 at 7:22 am

links from TechnoratiBut they do have stable income and would love to take over somebody else’s loan. This would give them time to repair their credit and refinance later. It’sa win-win and a great way to stop … Post by: Update on Stopping Foreclosure
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Free advice
November 20th, 2006 at 8:47 am

Joseph:

The IRS doesn’t forgive tax obligations based on fraud. But Casey’s tax obligation based on debt cancellation is zero because he qualifies for the exclusion I’ve mentioned.

If Casey does not have the tax obligation, there is nothing to forgive. The IRS regs are clear on this. Look it up.

If you’ve made money based on fraud, you will certainly pay any relevant taxes, penalties, and interest. But if you happen to be over 65 or blind, they’re not going to take those exclusions away.

Why don’t you people get this?
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Jobu
November 20th, 2006 at 8:48 am

Here is the caveat on the IRS - they don’t like fraud!
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IRS Code
November 20th, 2006 at 9:09 am

Insolvency exclusion. You are insolvent when, and to the extent, your liabilities exceed the fair market value of your assets. Determine your liabilities and the fair market value of your assets immediately before the cancellation of your debt to determine whether or not you are insolvent and the amount by which you are insolvent.

- Casey, you will be considered insolvent most likely when you foreclose on all of your houses. HOWEVER your debt forgiveness may exceed your insolvency (140,000 worth of CC debt vs. several hundred thousand dollars in debt forgiveness when all is said and done). Of course you need to consult with your tax attorney to confirm this. If you had operated this as a real business you would have had many options for reducing your tax liability. Too bad.

More from pub 908…

Exclude from your gross income debt canceled when you are insolvent, but only up to the amount by which you are insolvent. However, you must use the amount excluded to reduce certain tax attributes, as explained later under Reduction of Tax Attributes.

Example.

$4000 of the Simpson Corporation’s liabilities are cancelled outside bankruptcy. Immediately before the cancellation, the Simpson Corporation’s liabilities totaled $21,000 and the fair market value of its assets was $17,500. Because its liabilities were more than its assets, it was insolvent. The amount of the insolvency was $3,500 ($21,000 — $17,500).

The corporation may exclude only $3,500 of the $4,000 debt cancellation from income because that is the amount by which it was insolvent. It must also reduce certain tax attributes by the $3,500 of excluded income. The remaining $500 of canceled debt must be included in income.
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Tracker
November 20th, 2006 at 9:54 am

Steven:

The IRS does not forgive tax fraud. The reason is very simple. If they do, everyone else would jump on it. So the IRS is forced into having to investigate and prosecute fraud.

Casey will very likely end up with multiple big capital tax gains. If he pays them off, all will be fine in my opinion. However, if Casey tries to seek the forgiving avenue of the IRS, the moment he files for that, he will be in a bad spot.

If Casey files with the IRS for dept forgiveness and the IRS discovers that fraud was involved, then that would not be good.
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Chris Johnson
November 20th, 2006 at 11:25 am

So where are the “multiple big capital tax gains” Tracker mentions? Is Casey really laughing all the way to the bank after all? Or am I not sophisticated enough to figure out how to get capital gains from foreclosures, short sales and $140k in credit card debt?

The IRS debt forgiveness information is right, by the way–it’s income only to the extent you have net assets, and I don’t see much in the way of net assets for Casey right now.
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Free advice
November 20th, 2006 at 12:23 pm

Tracker:

Certainly, the IRS does not forgive tax fraud (usually). For example, if you fail to report income, you’d have to pay the tax, the penalties, and the interest.

But if you file the form correctly, there is no tax fraud. There is no “multiple big capital tax gains” if those gains don’t exceed your insolvency. So there’s nothing to forgive.

As to “everyone would jump on it,” are you nuts? Who would WANT to be insolvent?

But maybe you’re right. I’ll bet there are people who poke both their eyes out to take advantage of the exemption for blind people.
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HungryBear
November 20th, 2006 at 12:46 pm

Just for fun, put the price of yourr Modesto property at $49,000 rather than $349,000. My guess is you will get a LOT more action - so much you may need to install a PBX to handle all the calls you get coming in…

The point? RE is all about the price. At the end of the day nothing else matters besides the price.
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Immigration
November 20th, 2006 at 1:01 pm

We’ll deport this scammer back to where he belongs and take away his green card
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standallamazed
November 20th, 2006 at 1:12 pm

What sweet skills does napolean serin have? How difficult is it to go out and buy overpriced items using somebody else’s money, with no risk to yourself…Shopaholics do things like this all the time.

I fail to see what risk Casey took. It is not like he was putting his own money up, or using his personal residence as collateral. Casey went out and overpaid for eight houses and blew through all of the cash back he received at closing and managed to run up a huge line of credit card debt. What special skill does this require? What is so risky about doing something so stupid? If your kids went out and ran up your credit card buying items at the mall for retail and then tried to sell them on ebay would you think they were go getters and risk takers too?

If you look at the case of the Larchmont home, the bank will lose $110,000 on the short sale on their principle loan, $10,000 in interest, and $15,000 in real estate fees for a total of a $135,000 loss for Casey to be able to walk away without foreclosure. The banks are looking at losing around $71,000 on the Burdett house with short sales, loss of interest and fees.

Not only did Casey not make money in his deals ( cash advances at closing is not making money) the banks will lose money on almost all of his deals as well. You call these skills, and risk taking that others should be proud of?
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speechless
November 20th, 2006 at 1:33 pm

Putting up those videos of yourself makes you seem more likeable, that is true. You come across as reasonable, even charming. But that does not change the fact that you are an unethical person who is constantly scheming to get rich. If you were a fat, sweaty, bald guy, you’d get a lot more hate. It helps that you’re cute. But that’s just on the exterior.

Maybe you will find a sugardaddy who will bail you out. But you may have to sell your soul in return. Or perform certain services. Which begs the question, how far would you be willing to go to get out of this mess you have created, Casey? Would you do anything? Do you have any integrity left? Did you ever have any to start?

I don’t hate you, and I don’t wish bad things on you. But I have not seen you do or write even one ethical thing yet. Besides writing stuff like “I want to do the right thing.” None of your reasoning I have read or actions you’ve described supports this claim. At all.

Here’s my advice: focus on the moment. Do the right thing this moment. Make a plan and follow it. Go to your church and see if there is a financial planner in your congregation who will sit down with you for a few hours, out of the goodness of their heart, and create a step by step plan. Or read some of the great advice people have given you here. There is a wealth of financial advice right on this website.

But stop living in lala-land. There is no such world where $10,000 just falls into your lap every week. And if it did, it would not make you happy. Believe me. In your greed to make lots of money fast, you’ve wasted what little assets you’ve had. At 24, all you should need is a small apartment, a decent job, some good cooking skills, a creative mind so you and your wife can have fun without spending too much money.

Rather than reading get rich books, I would suggest you start with “simplify your life” books. or “live like a pauper” type books. Read “The Power of Now”. You are 24, you should live in the present, not the future. That has been part of your problem. By focussing on getting rich, you’ve been getting ahead of yourself, you’ve focussed on the future only and forgotten to make good decisions in the present. Life is so much better when you live fully in the present. But you are too young to have learned that yet.

And stop whining. Stop blogging. Get a real life, not a virtual one.
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cLuStEr_fK
November 20th, 2006 at 1:54 pm

Maybe, like “prlinkbiz,” you need to learn how to do people!

I love meeting and connecting people. I am always looking for new opportunities to help others, create something, partner in something, etc. It’s how I got my catch phrase (”I do people”). I have included several books I recommend for schmoozing or networking. Maybe I’ll take a week and talk about connecting with and building relationships with people. Relationships are invaluable in all aspects of life, not just in business!
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Boyd
November 20th, 2006 at 2:04 pm

Casey,

Congratulations on your recent successes, you’re really good at selling houses for $100,000 less than you bought them for. Looks like those guru classes are really paying off.
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John Doe
November 20th, 2006 at 2:44 pm

Free advice Said…

Joseph:

The IRS doesn’t forgive tax obligations based on fraud. But Casey’s tax obligation based on debt cancellation is zero because he qualifies for the exclusion I’ve mentioned.

If Casey does not have the tax obligation, there is nothing to forgive. The IRS regs are clear on this. Look it up.

If you’ve made money based on fraud, you will certainly pay any relevant taxes, penalties, and interest. But if you happen to be over 65 or blind, they’re not going to take those exclusions away.

Why don’t you people get this?

Free advice… you are a menace to Casey and yourself. You have neither the ability or experience to offer advice in this scenario.

It is clear based on statute that forgiven debt is taxable, regardless of whether it is a recourse or nonrecourse loan. Here is a snippet from a bankruptcy lawyer when discussing debt forgiveness outside of bankruptcy:

In a true nonrecourse situation, there is no debt forgiveness because the debtor never has any legal obligation to respond personally on the debt. IRC § 61(a)(12) is, therefore, inapplicable. That does not mean, however, that no adverse tax consequences exist as a result of a nonrecourse foreclosure, because they most certainly do. A foreclosure on a nonrecourse debt is treated the same as a sale or exchange of the property securing the nonrecourse debt [Treas.Reg. § 1.1001-2(a)(1)]; a “sale” also occurs when a debtor voluntarily conveys (e.g., deed in lieu of foreclosure) [Freeland v. CIR, 74 TC 970 (1980)] or abandons [Middleton v. CIR, 77 TC 310 (1981) aff’d per curiam, 693 F2d 124 (CA11 1982)] the property. The amount of the nonrecourse obligation extinguished is treated as the amount realized. A taxpayer computes the amount of the gain (or loss) realized and recognized by comparing the tax basis in the property to the amount of the nonrecourse obligation extinguished at the time the foreclosure sale is completed [Commissioner v. Tufts, 491 US 300 (1983)]. The character of the entire gain (or loss) is determined by the character of the property securing the obligation: if the property is a capital asset, the gain (or loss) is capital [subject, of course, to the recapture rules of IRC §§ 1245 and 1250]; if the property is not a capital asset, the gain (or loss) is ordinary.

In a recourse debt situation the computation is infinitely more complex and the result frequently bizarre. Where debt is recourse, a debtor has personal liability and there is a potential for debt forgiveness. In any case where the creditor accepts the property securing a recourse debt in exchange for satisfaction or cancellation of the indebtedness, whether by deed-in-lieu or through foreclosure action, the transaction must, for Federal income tax purposes, be bifurcated into sale and exchange and debt forgiveness components. Unlike a nonrecourse debt, where the debt is recourse, FMV of the property is as important to the ultimate determination of tax liability as tax basis and the amount of the debt.

The sale or exchange component is computed in the usual manner. Gain (or loss) is determined by subtracting tax basis from the amount realized. However, amount realized for this part of the computation “does not include amounts that are (or would be if realized and recognized) income from the discharge of indebtedness” [Treas.Reg § 1.1001-2(a)(2)]. The amount realized is the FMV of the property and the excess of the obligation over FMV is treated as income from the discharge of indebtedness [see Treas.Reg. § 1.1001-2(c) Ex (8)]. Gain (or loss) recognized on a sale or exchange is the amount by which the amount realized (FMV) exceeds (gain) or is less than (loss) the tax basis of the property., The character of the gain or loss (capital or ordinary) is determined by the character of the property–capital or noncapital asset; and, if capital, also applying the recapture rules of IRC §§ 1245 and 1250.
…
The real “triple-whammy” exists where the foreclosed property is “personal use” property such as a residence or personal automobile. Losses sustained upon the sale or other disposition of property held for personal, living and family purposes are not deductible [Treas.Reg. § 1.262-1(a)(4)]. Accordingly, in Examples 2 and 3, if the property were a personal residence, the taxpayer would have no loss to offset any part of the taxable income either in the year the discharge occurs or any subsequent year. Therefore, in the case of a solvent taxpayer, the debt forgiveness income is taxed but the economic loss actually incurred is never recognized for tax purposes. An admittedly inequitable result, but one that is nevertheless mandated by the IRC and treasury regulations. In some situations the resulting disparity in tax treatment may be justified by deeming it a form of recapturing prior tax benefits [e.g., depreciation or the IRC § 1034 deferral of gain realized on sale of earlier residence(s)]. But for the average individual caught in this web there is no justification as a either a tax trade-off or in sound public policy.

Read up on the legal snafus here:
http://touchngo.com/lglcntr/us...../bnk34.htm
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John Doe
November 20th, 2006 at 2:47 pm

IRS Code..

Regarding the Insolvency exclusion… duh, did you actually read any of that yourself? Do you even know the meaning of insolvency? Let me make it simple for you:

Insolvency = formal bankruptcy proceedings.

If you havent’ declared BK, those rules do not apply. Consult a BK attorney you trust and you’ll see what I mean.

D*** you people are f***ing stupid!
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Steven
November 20th, 2006 at 3:13 pm

Posters above re fraud.

Casey has committed mortgage fraud, not tax fraud (at least based upon his postings).

IRS does not forgive TAX fraud. IRS has no authority or interest in his mortgage fraud activities - that is the FBI’s area.

You guys are more than a bit confused.

It’s very unlikely that Casey has tax problems, though he has plenty of other problems.

Read up on the regs on tax code section 108 for more detail.

signed,

CPA and former IRS agent
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Damn_the_torpedos
November 20th, 2006 at 3:56 pm

Casey,

Couple of questions: what would you have done if you hadn’t run out of money and the possibility of buying more homes? Did you stop only because you no longer had any realistic means of buying more homes?

Your serial buying spree conjures up images of a slow-moving bank robbery and police chase where the robber keeps making stops along the way to rob more banks until he runs out of gas. Too busy robbing to stop for gas, you see, or even to glance at the gas gauge.

Your exploits also conjur up parallels with the mess our Commander-in-Chief has gotten us into, using comparable quality judgement and tactics, so you’re in good company. The only difference is he effectively has had the Fed at his disposal to print $billions in funny money at will, while devaluing the Dollar, but you haven’t.

In all the RE “guru” courses you took, was the phrase “exit strategy” ever mentioned? Maybe your copies of the course materials were missing that chapter. You may want to check with the gurus on that.
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bmacgoo
November 20th, 2006 at 4:27 pm

Wow, you have a lot of problems!! I thought things were going kind of rough for me! Here is a marketing tool I tried recently that has really helped me. Go to http://www.smartstreets.net
and check out there site. They are offering a free trial on your first listing or you can buy a package deal for a very reasonable price. It helped me get a couple of listings in escrow. And from the sound of things you should turn your agent onto this site!
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Want A Bargain
November 20th, 2006 at 4:51 pm

Casey,

Can I sell my house to you and then buy it back in 8 months for $100K less?
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Diomedes
November 20th, 2006 at 5:10 pm

Some good comments so far.

One point that people often overlook, including those that applaud Casey’s “go go” spirit is that all of us eventually flip the bill for this type of conduct. However this debacle eventually ends for Casey, those in the food chain will have to pass on the loss in some form or another. Whether that turns up as loss to shareholders for a few missed quarters or increased costs to consumers, debt and losses do not simply “vanish”. They are absorbed in the system.

Unfortunately, we have this current “out of sight, out of mind (literally)” society that often fails to comprehend how economics and finance function. Our liberal bankruptcy laws and forgive and forget attitude are the perfect catalyst for the type of behavior that Casey exhibits.

I know the “Rich Dad, Poor Dad” book often appears in threads around here. I personally have not read it but judging by the response so far, it does appear that the book is simply a real estate cheerleading manual.

If I can suggest an alternative read, try “The millionaire next door” by Thomas J. Stanley and William D. Danko. Basically, the book talks about average people becomming independently wealthy by using tried and true old fashion methods. Being frugal, being fiscally responsible and living well within their means. They got ahead by working in REAL jobs, being private entrepeneurs (and I don’t mean realtors) and by saving and investing wisely. The underlying premise behind the book was that despite what the media embellishes on us in regards to wealthy celebrities, CEOs, “pimping” rap artists and high paid atheletes, these individuals are actually a very small percentage of the millionaires club. The majority of those in that club are regular people who knew that hard work and living with in their means leads to financial success. What a concept, eh?

So in conclusion, while I can have some degree of sympathy for Casey’s plight, I still cannot applaud his bright eyed optimism. Regardless of his statements to date, he still lives in bubble land. No different than the copious people I knew during the 1999-2000 dot com meltdown that continuously bought into these high priced, go nowhere stocks believing they could recoup their losses. In the end, Vegas always wins folks and its better to invest, not gamble your way to success.
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john
November 20th, 2006 at 5:27 pm

What about taxes on the cash back he received at closing? Correct me if I’m wrong but he goosed the equity by financing more than the actual sale price, but all the IRS will see is a check from the seller to Casey, which looks like income to me, no?
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BelowTheCrowd
November 20th, 2006 at 5:28 pm

Casey,

Just to throw a bit of reality on the situation, I looked at your “awesome short-sale-specializing” realtor’s website and noted that she has only been in the business since 1999.

You need to find somebody who was in the business in 1989-94. They know how to handle down markets because they’ve done it before. Anybody who didn’t live through a real hard down market and come out on top should not be giving advice now. Most of them (like most of the real estate agents who thought they were so hot in 1988), won’t be in the business anymore by the time things turn around.

Down markets are brutal at separating those who are good from those who are lucky.

Best of luck, and remember to never give too much credence to anybody in business who’s never been through really bad times and survived.

-btc
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Michael Cooke
November 20th, 2006 at 6:16 pm

Mr Immigration:

No doubt. You can make it look like your doing your job.

But really. You are just collecting a paycheck funded by Mr Taxpayer. “Immigration enforcement” is an oxy moron. The wheels fell off along time ago on that cart sir. Its just a showboat branch of the government. Hogtied and gagged with political correctness and fear of being called the “R” word.

Hey look! See! We are actually doing our job! Any questions?
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teacher
November 20th, 2006 at 7:01 pm

John,
“What about taxes on the cash back he received at closing?”

I’ll correct since you asked. You are wrong. Loan proceeds are not taxable; what’s taxable is the short sale amount.
When you pull money out of your house on a Home Equity Loan or a Second mortgage on your house, do you pay taxes on that? The answer is no.
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Free advice
November 20th, 2006 at 8:02 pm

Hi John:

Why don’t you read up on this and get back to me? It was written about 12 years after the article you posted.

2. Insolvency Exclusion. Code Section 108(a)(1) (B) requires an “insolvent” debtor who otherwise realizes COD income outside a bankruptcy case, to exclude from taxable income that portion of the COD income equal to the amount by which the debtor is insolvent immediately prior to the debt discharge in question. As with the bankruptcy exclusion, the insolvency exclusion also triggers Attribute Reduction.

a. Insolvency. Under Code Section 108, “insolvency” means balance sheet insolvency rather than mere inability to pay debts as they become due. See IRC §108(d)(3). A debtor is considered insolvent only to the extent its debts exceed the fair market value of its assets immediately prior to the discharge. Id. Determining the extent of insolvency can be difficult. Issues include proper valuation of assets (including intangibles), whether the debtor must count assets exempt from creditors in determining solvency (IRS says yes – See TAM 199935002), whether the debtor can count contested liabilities (IRS has said no in certain cases – See PLR 8348001), whether the debtor can count non-recourse liabilities that are only secured by exempt property and whether it can include non-recourse liabilities in excess of the fair market value of the property securing those liabilities (IRS has said yes – See Rev. Rul 92-53, 1992-2 C.B. 48)

b. Comparison To Bankruptcy Exclusion. Unlike the bankruptcy exclusion, the insolvency exclusion is limited to the amount by which the debtor is insolvent immediately prior to the discharge. As with the bankruptcy exclusion, in the case of entities taxed as partnerships, the exclusion applies at the partner level only (i.e., each partner excludes from its income the partner’s allocable share of partnership level COD income only to the extent the partner, rather than the partnership, is insolvent).

Oh, would it be safe to say from the above that the insolvency exclusion is different from the bankruptcy exclusion, or do you need more details?
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Mark
November 20th, 2006 at 9:29 pm

A colleague mentioned this site to me. You belong in prison for the mortgage fraud. As a person high within the industry I will forward your story to those who need to know. Your blog only makes the FBI’s case that much easier.

Ask Jerome Mayne or Kevin Barnes, both of whom I know personally and will know about you tomorrow. They both spent plenty of time in prison for mortgage fraud.

www.maynefelon.com
www.mortgagefraudawareness.com

In addition to the prison time you will recieve, the civil matter may be handled by Rachel Dollar at www.mortgagefraudblog.com who has tried cases for me before.

You are great one to make an example out of. Enjoy prison!!!!
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Tim
November 20th, 2006 at 9:34 pm

No, it’s not income. It’s more like borrowing:

“What about taxes on the cash back he received at closing? Correct me if I’m wrong but he goosed the equity by financing more than the actual sale price, but all the IRS will see is a check from the seller to Casey, which looks like income to me, no?”

It’s like refinancing a house, taking a loan out on the equity. Not a taxable event.

Of course, if the lender is _unaware_ that a house was bought for more than it is worth, and that the loan-to-equity ratio is above what was agreed to, then fraud may be involved.

But not the IRS.

(Needless to say, Casey was NOT “making money” on these deals just because he “got cash back.” He was just borrowing even more. And if did it with the intent to stiff the lenders, or with any kind of funny business with the appraisals, then he likely faces prison time.)

–Tim
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goZar
November 20th, 2006 at 9:38 pm

booooooorrrrrrrrrrrrrrringgggggggggggg *yawn*
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Ross Pruden
November 21st, 2006 at 12:05 am

CAVEAT EMPTOR: Buyers who assume loans can sometimes trigger a “due on sale” clause from some banks and it’s a black day when they have to suddenly pay off the full amount of a loan which isn’t in their name. As long as banks are paid on time and they don’t get curious, your buyers doing loan assumptions should be fine, but make sure they know the risks.
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Jobu
November 21st, 2006 at 7:34 am

“If your kids went out and ran up your credit card buying items at the mall for retail and then tried to sell them on ebay would you think they were go getters and risk takers too?”

This is a great analogy.

Casey’s motto should be ‘We don’t make any money on our sweet RE deals. In fact, we lose money on every one. However, we make it up on volume.
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Chris Johnson
November 21st, 2006 at 9:08 am

To John Doe: Insolvency is a bit more broad than “bankruptcy.” Insolvency = more debts than assets, or a net worth of less than zero. But thanks for your insults all the same.
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Rancid
November 21st, 2006 at 10:19 am

Nail his worthless hide to the wall MARK!!!!
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Jim
November 21st, 2006 at 11:26 am

Someone NOT in the know said……..
“CAVEAT EMPTOR: Buyers who assume loans can sometimes trigger a “due on sale” clause from some banks and it’s a black day when they have to suddenly pay off the full amount of a loan which isn’t in their name. As long as banks are paid on time and they don’t get curious, your buyers doing loan assumptions should be fine, but make sure they know the risks.”

Assuming the loan?
Nope, what casey is offering folks, is to BUY the houses subject to the existing financing.
To assume, would be to qualify for the mortgages, with the lender.
Why do that, when rates are decent?
So, nope, your wrong, due on sale jail does not exist, and with well over 500 transactions as a principal under my belt, I just might have learned a thing or two along the way.

To ASSUME a loan, and ‘take over payments’ are NOT always the same thing.

Just an F.Y.I. ,
Jim
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Ross Pruden
November 21st, 2006 at 12:58 pm

Thanks for the clarification, Jim — that makes total sense to me and I’m sorry if I wasn’t clear.

I’ve dealt with banks who discover that the person they leant money to is no longer paying their mortgage and demand their loan due in full, immediately (knowing full well they are forcing either a foreclosure or a refi, probably because of liability concerns). That is the only situation I was warning against. Though it doesn’t happen often, it can happen.

However, I can’t match your experience in this area, so I respect you and thank you for your input.
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The Man
November 21st, 2006 at 1:00 pm

From Wikipedia:

“Insolvency is a financial condition experienced by a person or business entity when their assets no longer exceed their liabilities, commonly referred to as ‘balance-sheet’ insolvency, or when the person or entity can no longer meet its debt obligations when they come due, commonly referred to as ‘cash-flow’ insolvency. The term is often incorrectly used as a synonym for bankruptcy, which is a distinct concept, except in Germany.”

This could also be called the “John Doe Is Either A German Or An Ignorant Jackass” article.
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Mr. Flipper
November 21st, 2006 at 2:00 pm

Jim is right. Assuming a loan vs taking it over are NOT the same things.

And there is no “due on sale” jail. Jim knows also that even though properties are purchased/sold “subject to” all the time, it is a specialized transaction type that few understand or accept as legitimate — until more recently. For instance, the NAR has just published an article on how RE agents can DO “subject to” transactions. If that’s not an admission of something, I don’t know what is….

I haven’t reached 500 “subject to” transactions like Jim has yet, but I do consider myself an expert with this buying/selling approach.

I’m certain that Jim will also tell you that Buying/Selling “subject to” existing financing is not only legal, but the only way some people can sell their homes when they have little or no equity and need out for any reason including a pending foreclosure. In the meantime, because “subject to” buyers are very picky about both the customers, houses, and loans they’re willing to deal with, very few sellers make the grade required by professional “subject to” investors to go forward.

So, sellers pretty much have to convince a “subject to” buyer to come in and bail them out of their predicament.
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john
November 21st, 2006 at 3:22 pm

I understand that a loan from a bank is not taxable; however, if I understand the process correctly, the seller receives a check from the bank for the goosed purchase price and then the seller kicks a portion of it back to Casey - so what the IRS sees is a 400k mortgage and then a PERSONAL check from the seller to Casey for let’s say 50k - how does he explain the 50k deposit into his bank account? Its not from the bank, it’s from an individual, is it not? He’s not paying the individual back, so what you’re saying is that he can link the seller’s check and the mortgage amt to declare that they are one and the same - sorry, but i don’t see it. It looks like a gift or income to me……Thx for your previous responses…….
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john
November 21st, 2006 at 3:34 pm

Teacher - just to clarify, the way i see it there is something due to the irs on the cash back because casey did not receive the money from the bank as part of his mortgage. The seller is getting an amount for his house and then cuts a check to casey - in my eyes its a stretch to say to the IRS that that money is part of the mortgage. It looks like income to Casey and a gift from the seller, in which case the seller would then owe gift taxes (% of 50k minus whatever the exclusion is, or he could “give” the exclusionary amount to both casey and his wife thereby lowering the tax due). Anyway you look at it it’s a stretch to say a check from the seller is part of the amount being financed as part of the purchase.
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Chris Johnson
November 21st, 2006 at 5:03 pm

Now we know why John Doe is anonymous. I’d say his brain is insolvent, but he’d tell me it never filed bankruptcy.
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Ross Pruden
November 21st, 2006 at 5:04 pm

Flipper, that sounds right to me. A further point of clarification: I never said anything about jail. I suspect nobody here is using the phrase “‘due on sale’ JAIL” *literally* — i.e. going to jail for triggering the “due on sale” clause — but I wanted to make sure I wasn’t being misunderstood. No bank can prosecute in criminal court because there is no legal violation, but they can demand their money in full if they find out the lendee has violated the terms of their loan.
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Well...
November 21st, 2006 at 5:44 pm

john,
If I understand correctly, I think Teacher’s point us that all the IRS sees is that there is a mortgage for $400K.

Whether Casey uses the $400K for a house or for cash to burn in the fireplace is irrelevant.

In other words, the “mortgage” is the amount the bank lends, not the amount actually needed for the purchase.

Hope that helps.
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Free advice
November 21st, 2006 at 6:14 pm

Cash at closing:

The interesting part of this would be how the seller (who Casey bought from) accounts for it.

For example, if I sell a house for $300,000 and give the buyer a personal check for $50,000 outside of closing, I’d be damned pissed if I had to take the extra $50,000 capital gain.

Or maybe not. Maybe I’d be damned glad I sold the thing.
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john
November 21st, 2006 at 7:32 pm

Well….Believe me, I understand how Casey and the seller are accounting for it, but under an audit I think the IRS would see it differently. Its a technichal point, but you simply can’t declare a check for 50k from an individual to be part of your mortgage simply because you will it to be that way. At all of my closings, every lending institution involved has always had a representative present, so I can’t imagine the seller telling the bank to cut a check for 50k out of the proceeds to Casey would be kosher. The seller, therefore receives 400k for his house - done, finished, end of transaction. Then we have the seller cutting a separate check for 50k to Casey - separate transaction. So my point is that we have two distinct transactions, no different than if casey went to the seller two years after the close and asked for money - well that money would have to be accounted for by someone - at least legally, in my opinion.
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standallamazed
November 21st, 2006 at 9:42 pm

What really would have been funny, would have been the seller closing on the house for the extra $50,000 and then just walking out of the title office without ever writing Casey a check for the extra amount.

Just turning around with a smile and saying, “see ya turd.”
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Free advice
November 21st, 2006 at 9:45 pm

john:

I understand what you’re saying. But even if the 50K isn’t “part of the mortgage” (and it’s not a gift), does it represent a discount?

It may be an “under the table deal,” but I’m curious whether it’s “secret under the table” ordinary income or (what I think it really is) a “secret under the table” reduction in basis –thus a capital gain.

If Casey’s tax return and the seller’s tax return don’t match up on purchase price, I’ll bet both get kicked out for a closer look.
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Michael
November 21st, 2006 at 11:41 pm

Mark

You are a tool.

I detest bad language in any form and I make a big effort not to cuss or say inappropriate things. I really mean that.
It only happens when I make a get a parking ticket, get my car towed, or stub my fingernail…ouch.

You want to look for the “big fish” to fry and make an “example” out of. Not to enforce the laws but to save face, take credit, and make it look like you are “hard at work” to the public “doing your job”.

I deal with your kind all the time. You are just a lazy sack of shit that collects a taxfunded paycheck and is hard to fire.

Go make your threats on another website. Jerk.
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john
November 22nd, 2006 at 6:51 am

Free - maybe we should just head to the Learning Annex…….anyway, if held for less than a year, I think the seller would owe punative cap gain taxes on the 50k - you have a contract that says he sold the house for 400k - that is what the IRS would see……you can’t say to one of those nice gov’t types,”But….but…don’t you see I kicked back 50k to my buyer, so I didn’t actually receive 400k.”
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SacramentoRealEstateVoice.com » Blog Archive » Fraud in Real Estate?
November 29th, 2006 at 9:25 pm

[…] Recently, Casey Serin , a 24 year old young man, here in Sacramento who went to one of these “get rich seminars” is finding that the piper must be paid. He is learning a very valuable lesson…if it’s sounds too good to be true, it is. Casey finds himself in foreclosure. Casey thought he could turn property quickly and make a killing. Not so simple as he found out. Investors /sellers whose goal is to make money regardless of the law are committing fraud for profit. Casey Serin of Sacramento fits into this scenario. […]
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Real Estate Blog - Fraud in Real Estate?
November 30th, 2006 at 8:54 am

Kramer auto Pingback[…] Recently, Casey Serin , a 24 year old young man, here in Sacramento who went to one of these “get rich seminars” is finding that the piper must be paid. He is learning a very valuable lesson…if it’s sounds too good to be true, it is. Casey finds himself in foreclosure. Casey thought he could turn property quickly and make a killing. Not so simple as he found out. Investors /sellers whose goal is to make money regardless of the law are committing fraud for profit. Casey Serin of Sacramento fits into this scenario. […]