Coto Housing Blog

9 Rocky Mountain

11 Lyra Way

52 Panorama

16 Hubbard Way

We did not get a decent photo of 17 Douglass or 24311 Fairway Lane, but there were two late model white Mercedes Benzs parked in the driveway of Douglass and a newer white BMW parked in the driveway of Fairway Lane.

So many thoughts came to mind whilst researching this post.

The records accessible to us on line without physically paying a visit to the county recorders office only go back to 1999, so the facts as we observe them will have to start in 1999.

The subject of this post is a married couple who, through loans and leverage, ended up owning probably over twenty homes.  We will not include over twenty because some of the properties that appear to be owned by this couple are not verifiable by middle name and it is possible that there is another home owner in Orange County with the same first and last name.  Six of the twenty listed homes are located in Coto de Caza and twelve of the twenty homes listed are in the foreclosure process as of two weeks ago.  Five of the six homes in Coto are in foreclosure.  None of the homes located in Coto de Caza are listed for sale and other than 16 Hubbard Way, I do not remember any of the properties having been listed for sale by the present owners.  This couple may “own” more homes outside of Orange County and more of the homes listed may have had a Notice of Default filed against them within the last two weeks.  None of the homes listed are owned without a mortgage and most, if not all, appear to be underwater.

A quick synopsis for those who are wondering what this post is about and how these folks managed to become land barons and why they are losing their properties to foreclosure:  They bought a home.  They borrowed on the equity in their home to make a down payment on another home.  They borrowed on the equity on both homes to use as down payments on more homes. They may have paid for this exquisite formula for becoming land barons to a late night TV infomercial professing how to buy real estate with “No Money Down”.  The rents they collect pay some of the mortgage payments, but not all.  The rest of the rental expenses comes from equity withdrawal as do living expenses.  This process continues as long as residential real estate appreciates and the land barons can continue to borrow money against the “equity” in their properties.  As soon as they can not borrow money to pay their debts, their debts do not get paid.  They are taking their example from the federal government, except that the land barons do not have the ability to print more money.

This post does not surprise me.  I grew up in a So Cal beach town where there were always a few land barons who purchased properties using equity in other properties as down payments and leveraged up until such time the market stopped appreciating and the house of cards came tumbling down.

Some of my thoughts: Are these land barons applying for loan mods?  I certainly hope not.  And if so, I hope there is some type of fraud involved.  Since almost all these properties were refinanced, will the lenders pursue recourse by recovery through other assets and wages for the rest of the land baron’s lives?  Does declaration of bankruptcy negate recourse?  I hope not.  Will the lenders end up having to pay for this?  I doubt it; my cynical nature tells me the taxpayers will pay for it, either directly or through currency devaluation.  Do the folks renting these homes know that the homes are in foreclosure, in default, and how do they feel about it?  What portion of the rents that the land barons are collecting are they using to pay the mortgages and association fees, and property taxes?  Did you know that banks enter and treat uncollected monthly mortgage payments as income until such time they foreclose?  And you were wondering why the banks kept on postponing the trustee sale.  Let that sink in for a few moments.  Do these land barons have any other occupation other than pulling equity out of homes they are collecting rent from?  If you want to know who to blame, blame the voters who vote for representation that supports a central bank with the ability to print money and manipulate interest rates.  Only with a fiat currency and fractional reserve banking can banks loan money, (debt), they do not have.  Regulation will not and can not stop this behavior.  Regulation caused it.

What are your thoughts?

This first list shows the homes located in Coto de Caza first and shows the transactions associated with each home.

This second list shows the transactions by date of recording, which for me gives an idea of how busy the transactors must have been and graphically illustrates when the leveraging behavior was terminated.