Man in California Losing Nine Homes to Foreclosure

Posted on May 20th, 2008 by saman

A man name Shawn Forgaard who invested in real estate now considers it a big mistake because he has defaulted on nine houses. He expects the bank to begin foreclosure proceedings.

The thirty seven year old man who works as a project manager for a software company purchased one home for his family and nine more houses as investments. He may lose all the houses he invested in because of the mortgage crisis but he believes he is wiser now.

He states that everyone falls down once in a while and that he is not going to run and hide and live with regrets and denial. He says that though it looks like complete devastation, it is actually the opposite. He stated that the lives of him and his family will be better as a result of what happened.

The California man purchased a home in Santa Cruz, California, about sixty miles for San Francisco eight years ago. Years later he uses used eight hundred thousand dollars in stock options, he bought up investment properties. He put ten to forty percent down but the payments did not include interest, so the one who borrows the money has their balance grow over a period of time.

It was those loans that hurt him. The loans included triggers that made the payments increase if the debt gets to be a particular percentage of the beginning balance.

The man in California knew that the market was going to go down and the values of the properties would decrease but he believed that he would have the right amount of equity in the homes in order to survive the coming crisis and either sell the homes or absorb the loss and refinance.

What the gentleman did not expect was a downturn that would be as large as it currently is. He didn’t expect that the values of home would drop to forty percent less than they originally were.

The mortgage crisis has been growing for two years. It began with subprime loans and has left large numbers of Americans facing foreclosure.

The California gentleman bought his initial investment house in 2004 in the housing market of Las Vegas. He bought eight other homes two years after that in the markets of California, Phoenix and Palm Springs. In 2006 he realized that the housing situation was worse than he thought it was. He realized that the market was getting worse but he did not realize how ugly it could get and he began getting a bad feeling.

Shawn Forgaard believed that he would still have enough equity in the investment houses to take a big hit and he knew he may even lose the majority of the investment but he believed he could ride it out.

Forgarrd will end up losing his main home that he and his family live in and his car. He and his family will have to leave Santa Cruz where he was born and raised.

Financial experts say that those who speculate in real estate and count on the value of that real estate to increase and help them pay their bills are in a risky situation.