Seattle Times “$1.5M condo on 20K income” Story Full of Gaping Holes

Last Friday, the Seattle Times ran an interesting story about a “limousine driver, earning little more than minimum wage” being approved for a loan on a $1.5 million condo in Bellevue Towers. The story was also picked up by at least one of the local television news outlets, and has been making the rounds on the internet all weekend.

Here’s a brief excerpt from the piece, titled $1.5M condo on $20K income? Prospective buyers lose $175K in Bellevue.

When Uzbek hot-dog vendor Danil Kasimov thought of America, he thought of the place portrayed in movies — a Land of Plenty where anyone’s dreams could come true.

In 2000, he emigrated to the U.S., settled in Redmond and became a limousine driver, earning little more than minimum wage.

Two years ago, a real-estate agent suggested he consider purchasing a condominium at the luxurious Bellevue Towers. To Kasimov, it seemed his vision of America was unfolding with the ease of the touch-screen showing eventual views from his dream condo on the 32nd floor.

Delighted that he prequalified for a $1.5 million condo on his $20,000-a-year income, he put down more than $75,000 in earnest money he borrowed from a friend.

But that money — and nearly $100,000 from five other prospective condo buyers — soon evaporated. The six filed a lawsuit in King County Superior Court this week against Bellevue Towers and JP Morgan Chase Bank, alleging the lender falsified documents, making it possible for them to prequalify for loans they could never actually get.

Now, before I get into the numerous problems with this article, I want to say up front that I’m not attempting to stick up for the banks, the real estate agent, or anyone else. Far from it. My purpose here is merely to point out the incredible one-sidedness and poor reporting in this Times article. I would also like to point out that most of these facts were brought to light by a number of commenters on the Seattle Times story, including “cocoas” and “Vesta.” I’m just highlighting these issues here because I think the full story should be heard.

All of the information in this post can be found in publicly-available records, accessible to anyone online in a matter of minutes. Links are provided for all sources.

Claim: Danil Kasimov is “a limousine driver, earning little more than minimum wage.”
Reality: Public records show a Danil Kasimov as the owner of a limousine company named Action Towncar.

A simple search of Washington State business licenses reveals that Mr. Kasimov is in fact the owner of Action Towncar, LLC, a Redmond-based limousine company, not merely a “limousine driver,” as stated in the article. Of course, this does not tell us how much Mr. Kasimov is earning, so it is possible that the “little more than minimum wage” part could be true.

Claim: Danil Kasimov was unwittingly duped by a real estate agent and a flashy sales presentation into signing paperwork he had no way of understanding.
Reality: Public records show three different purchases of real estate in the Redmond/Bellevue area by a Danil Kasimov over the last five years, totaling nearly $1.6 million.

July 2004—Danil Kasimov purchases a condo for $240,000. February 2007—Danil Kasimov purchases a 4-bed, 1,800 sqft house for $665,000 and a 3-bed, 3,100 sqft house for $686,000. The address listed on two of the parcels matches the address for the Danil Kasimov that owns Action Towncar, and the signatures on the paperwork of all three home purchases match each other.

Both of the $600k homes were foreclosed on in January of this year. Mr. Kasimov appears to still own the 2004 condo. Should Mr. Kasimov have been given any of these loans? It would appear not. However, it is also evident that Mr. Kasimov was not as naïve about the home buying and financing process as the article makes him out to be.

Claim: “…they were never given a copy of the contract — which was written in English, a language they didn’t understand…” and “Kasimov and the other plaintiffs, Yuri and Dora Aleksandrov and Davud Kasparov, none of whom are fluent in English…” (emphasis mine)
Reality: It is unlikely that any of these individuals are ignorant of the English language.

Danil Kasimov’s LinkedIn profile (the first result on a Google search for his name) reveals that he attended a school in his native Uzbekistan called the Uzbek State World Languages University, and according to the article, he has lived in the United States for nearly 10 years. Davud Kasparov attended the UW school of engineering and is now employed at a local aircraft engineering firm. Yuri & Dora Alexsandrov purchased a $336k home in 2001 which was refinanced six times between 2002 and 2008. None of these people are likely to be the confused and helpless foreigners that the article portrays them as.

I will point out that it is possible that there is another Danil Kasimov unrelated to the individual in the Seattle Times story, who just happens to own a limo company in Redmond and have a penchant for dabbling in real estate with dangerous loans. Possible, but highly unlikely, in my opinion.

The story printed in the Seattle Times portrays a starry-eyed, helpless group of individuals that were taken advantage of by a slimy real estate agent (who is inexplicably not named by the Times), shady lenders, and overzealous salespeople. The “angle” on the Times story is clear: Danil Kasimov and the others listed in the suit against Bellevue Towers are unwitting victims. It would appear that Nancy Bartley, the author of this article, had a story in mind that she wanted to tell, and did not bother to even spend 30 minutes researching the supposed victims online and in public records.

Danil Kasimov and the others involved in the lawsuit against Bellevue Towers may have a valid legal case, or they may not. But when we are given a more complete picture of the individuals involved in this story, it becomes clear that it is not as cut and dry as the Seattle Times has made it out to be. In reality, it would appear that everyone in this story likely attempted to victimize everyone else, and in the end, they all lost.

Update 02/25: The Seattle Times has corrected some of the errors and omissions in the article. See below for details.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

79 comments:

  1. 1
    DavidB says:

    Tim, in my opinion the facts you found make a far more interesting story. Even if only half of what you found relates to the same guy, it shows how anyone was able to by a home they couldn’t afford and how some people bought multiple homes. I think people think this was a problem in other parts of the nation but it didn’t happen in Seattle.

    Thanks for taking the time to do this research. It’s too bad we can’t trust our local papers to write an objective story.

  2. 2
    Kary L. Krismer says:

    The story smelled of being a one-sided piece that was mainly the result of one side’s attorneys getting in contact with the paper. It’s seemingly one-sided reporting that on it’s face should raise more questions than answers for anyone thinking about it even a bit.

    Who knows what the actual facts turn out to be when the litigation proceeds. But when I read about someone making minimum wage (or I think there was one claim that one of them only made something like $2,500 the prior year) AND coming up with thousands of dollars for earnest money, something just didn’t sit right when I read that.

  3. 3
    Kary L. Krismer says:

    By DavidB @ 1:

    I think people think this was a problem in other parts of the nation but it didn’t happen in Seattle..

    This sounds more like the condo flipping that occurred in Vegas and other places, where people buy during construction never intending to move in. It’s a sign that a market is overheating.

  4. 4
    Ray Pepper says:

    Excellent excellent research. I was sitting in Les Schwab reading that article in the paper and was thinking………What the heck??? Great research.

    Reminds me of King 5 on Feb 15th at the Home Show. They interviewed all the vendors up and down our aisle and asked them what they thought of attendance at the Home Show. They had an obvious agenda. When they got to me, I was ready and didn’t feed their appetite. I did tell my opinion based on talking to vendors because I wanted 500 Realty in the news. Of course they placed that in the clip. But, they took everything else out. All they televised was my big bald head stating what they wanted to hear.

    What an absolute joke!

    (Btw-Bubble heads I placed tickets for all of you in will call. I got calls from some of you that the tickets were gone. Appears some readers here just went in and asked for 500 Realty tickets and “scooped” the ones I had in the 500 Realty envelope. I’m sorry. )

  5. 5
    Mama says:

    What makes me sad is that stories like these give bad names to all immigrants…There truly are people who don’t understand/speak english, but I doubt these folks are among them.

    The most interesting part of the story for me was the “loan” for 75K from “a friend”. I happen to be from the same part of the world as these gentlemen, and can tell you that if I were him I’d be _really_ worried about paying that money back.

  6. 6
    Shaq says:

    I am totally enjoying the crashing Hindenburg that is the print media business. Journalists are lazy, insolent, agenda-driven idiots…and they have the nerve to speak dismissively about bloggers.

    It’s fast reaching the point where I ONLY consider turning to bloggers for news.

  7. 7
    Dave Lincoln says:

    DavedB (#1): I don’t even think your average reporter would care to make the story more interesting, by, for example, getting both sides of the story. These people usually start with their opinion and put in a few facts and a lot of BS that support the original opinion, and hey, it’s miller time.

    Mr. Pepper exclaims “great research”, but I mean, I doubt it was that difficult for The Tim to find this information in 2 hours of his spare time. So, we appreciate it, but why couldn’t the reporter do it? Wait, I’ll tell you: laziness, total lack of knowledge, and, as stated above, any additional facts might not support the reporter’s original mind-set and the politically correct view of the times.

    Reporters are just some of the stupidest people you will run into in daily life. There is no future in newspapers for this reason; the future of journalism is on the web. This post is an excellent example of that – Tim could have written the story from the beginning, and I would trust him more than anything I read in a newspaper (excepting obituaries, because when they say someone is dead, he usually is indeed dead. I’ll give em kudos on the obituaries.)

  8. 8
    The Tim says:

    Just wanted to point out again that while I did search the public records myself and compile all of this information in one place, I can’t take credit for being the first to bring these facts to light. The commenters on the Seattle Times story get all the credit there.

    I think just about the only new piece of information I added to the story in this post was the signature comparison that verifies the fact that the same Danil Kasimov (owner of Action Towncar) was the purchaser of all three Bellevue / Redmond homes.

  9. 9
    David Losh says:

    The point of the article is that these people whoever they are lost a sizable earnst money on a real estate transaction they could not close. The bank knew they could not close and went ahead anyway. The bank and the builder have a relationship.

    It’s a legal swindle. It’s an attachment of the earnst money for no other reason than the builder can get away with it.

    The agent did have a duty to point the swindle out, but it looks like an agent got a commission on two other occasions.

    It is wrong. The system that allows it is wrong. It’s just another thing that needs to be fixed.

  10. 10
    Dave Lincoln says:

    “The point of the article is that these people whoever they are lost a sizable earnst money on a real estate transaction they could not close.” If you just write an article to make this point, that is indeed it. Call it an editorial then. If your going to write the story (the who, what when, where, and how) you, as a reporter, should get the story.

    It turns out that this guy is a businessman, has bought 3 properties already, etc. as Tim says. So, may have indeed got swindled out of his earnest money, but that is not nearly the whole story of what happened with his real estate dealings.

  11. 11
    kfhoz says:

    This kind of reporting from the Times does add fodder to my wondering about the merit of the “save the newspaper” efforts going on around the country. I know The Tim is on a panel to discuss the complicated issues. But one un-researched article like this one casts skepticism on everything published by the news media.

    I found Aubrey Cohen’s recent article where he made it extra clear that he was reporting what someone said had said about bottom prediction without judging the statements to be an interesting note in the news. Why is it “objective jornalism” to print and distribute statements from known-liars (or at least known bad-information-sources) such as the NAR?

    The news I like the best is that with analysis, such as The Economist, NPR, and Tim’s blog here. The question is how to pay for it. I know people who read Seattle Bubble often, and listen to NPR every day but who will not open their wallets for anything short of the “jaws of life” tool, so the voluntary-contribution model is not very satisfying.

  12. 12
    The Tim says:

    RE: kfhoz @ 11 – I just want to point out that the No News is Bad News group is not really a “save the newspaper” effort. Its purpose is to simply explore “the future of Seattle news,” whatever form that may take. In fact, most of the people involved are primarily bloggers.

    Oh, and I totally agree with your comments about the poor quality of journalism in today’s traditional newspapers.

  13. 13
    EconE says:

    By Kary L. Krismer @ 3:

    By DavidB @ 1:

    I think people think this was a problem in other parts of the nation but it didn’t happen in Seattle..

    This sounds more like the condo flipping that occurred in Vegas and other places, where people buy during construction never intending to move in. It’s a sign that a market is overheating.

    It happened PLENTY here.

    How many MLS listings of empty/staged flipper condos would you like me to list?

    I live in one of the flipper infested condos.

    Other projects have had 98% of the pre-sale suckers walk away.

    Didn’t happen in Seattle?

    HA!

  14. 14
    shawn says:

    What The Tim has shown is that this guy needs to be bailed out with my money ASAP. Thank goodness I showed restraint and did not buy into the bubble so that I am now solvent enough to spend my savings helping out these poor saps.

  15. 15
    shawn says:

    RE: Mama @ 5 – 100% agree. It is amazing how there is no “self” analysis. No looking at how we got into this mess and the hand that the media played. Just like the dot com bust. It was 95% press saying it was not a bubble, and just a few “nuts” saying the market was over valued and the values were not based on sound financial reasons, such as producing anything anyone was going to pay for.

    The Tim has shown that age old truth that every story has two sides, or is he showing that the buyers are not all innocent lambs? Either way, this lends great credibility to this site.

  16. 16
    Kary L. Krismer says:

    By EconE @ 13:

    By Kary L. Krismer @ 3:

    By DavidB @ 1:

    I think people think this was a problem in other parts of the nation but it didn’t happen in Seattle..

    This sounds more like the condo flipping that occurred in Vegas and other places, where people buy during construction never intending to move in. It’s a sign that a market is overheating.

    It happened PLENTY here.

    How many MLS listings of empty/staged flipper condos would you like me to list?

    I live in one of the flipper infested condos.

    Other projects have had 98% of the pre-sale suckers walk away.

    Didn’t happen in Seattle?

    HA!

    I wasn’t trying to say it didn’t occur here, and in fact was pointing out that this appears to be an example of it.

    Personally I have no idea how common condo flipping was here. I don’t think these people typically use buyers’ agents, and I try to steer clients away from new condos even if they intend to live there, unless it’s constructed and 90%+ sold out.

  17. 17
    98115_Renter says:

    RE: shawn @ 14

    Please point to how/where your savings will be used to pay for this case and/or any of the bailouts. Last I heard, everyone has been getting tax cuts and stimulus checks left and right.

  18. 18
    Lake Hills Renter says:

    Be sure to send this information to the media that ran the original story — Seattle Times and KOMO, i think it was.

  19. 19

    I AGREE KFOZ

    The newspapers [and most of mainstream media for that manner] deserve their fate, bankruptcy.

    If they printed the truth: that uncontrolled debt with no trade/federal surplus and an increased pay/tax base is like mapping a plan with no paper; “We the People” might buy their rags.

    They aren’t even fit for wrapping fish.

  20. 20
    DavidB says:

    I’m not surprised to hear that this kind of real estate speculation happened here. You don’t hear many stories about this happenning here though. It seems the media has only recently started talking about the bad real estate market here. Up until a couple months ago they were simply month pieces for the real estate industry saying things like, “it’s a great time to buy a home now because selection is high and interest rates are low”. They were trying to scare people into buying now because if they didn’t interest rates would increase and their monthly payments would also increase.

    I don’t think the media does buyers or sellers any favors by with their misreporting.

  21. 21
    TheMightyQuinn says:

    By Lake Hills Renter @ 18:

    Be sure to send this information to the media that ran the original story.

    I agree, but does anyone think they would actually run/print this scoop?

  22. 22
    Scotsman says:

    More proof that the media is dead to the idea of traditional journalistic standards. The country will be the worse for it. It’s sad, since this is a time when we need more honesty and real reporting from them.

    Thank God for the internet!

  23. 23
    Lake Hills Renter says:

    By TheMightyQuinn @ 21:I agree, but does anyone think they would actually run/print this scoop?

    They would if they were responsible journalists. So, no.

  24. 24
    Kary L. Krismer says:

    By Mama @ 5:

    The most interesting part of the story for me was the “loan” for 75K from “a friend”. I happen to be from the same part of the world as these gentlemen, and can tell you that if I were him I’d be _really_ worried about paying that money back.

    If the two properties foreclosed involved loans from federal entities, then they might have some other concerns too.

  25. 25
    TJ_98370 says:

    Good detective work, Tim.

  26. 26
    Joel says:

    RE: 98115_Renter @ 17
    It’s all financed with debt. Debt, by the way, eventually has to be paid off with interest, as many homeowers around the world are suddenly realizing. Who pays off the U.S. government debt? The taxpayer. So it’ll be everyone that pays taxes for the next 50+ years that will have to pay for the bailouts.

  27. 27
    98115_Renter says:

    RE: Joel @ 26

    Yes I know we are all responsible for paying off the gov debt. It was more of a provocation to show that we all have been paying less and less tax over the last few years.

    Anyway, Clinton somehow managed to erase the deficit with not too much pain for the average taxpayer, so it can be done.

  28. 28
    jon says:

    RE: 98115_Renter @ 27

    “Anyway, Clinton somehow managed to erase the deficit with not too much pain for the average taxpayer, so it can be done. ”

    Do you think the end of the cold war had anything to do with it? That triggered a recession, which Clinton used to travel back and forth across the country berating Bush I for, and then he reaped the peace dividend. The savings and loan debacle was paid off around the time Clinton began his term. It was well known that there was going to be a surplus even before Clinton took office.

  29. 29
    Sniget says:

    I’m not surprised to hear that this kind of real estate speculation happened here. You don’t hear many stories about this happenning here though.

    Actually, real-estate speculation has been rampant in the Seattle area for years! The stastics of the percentage of homes bought with loans that weren’t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).

    We’ve had a massive wave of home-buyers who had no skin in the game (i.e. no equity) and who were clearly going to wind up walking away if the market turned south. There is just NO historical precedent for this scale of pure real-estate speculation in the Seattle area, which is why I maintain that comparisons to previous downturns (in the ’70s, etc) are a waste of time.

  30. 30
    98115_Renter says:

    RE: jon @ 28

    You’re just jealous that for all the talk, republicans create deficits and dems eliminate them ;-)

  31. 31
    David McManus says:

    “So it’ll be everyone that pays taxes for the next 50+ years that will have to pay for the bailouts. ”

    I say over the next hundred years.

  32. 32
    Ubersalad says:

    RE: jon @ 28
    History has shown that GOP presidency is always swimming in deficit, can’t deny that fact.

  33. 33
    jon says:

    RE: Ubersalad @ 32

    Yes, but the Democrats’ specialty is to create entitlements that grow like weeds long after they have left office.

  34. 34
    Lanny Poffo says:

    RE: Sniget @ 29

    “The stastics of the percentage of homes bought with loans that weren’t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

    I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

    Lanny

  35. 35
    Jillayne says:

    Hi Tim,

    Thanks for taking the time to follow up on this story. Dori on Kiro 97.3FM did a segment on the hot dog/limo driver-owner this past Friday and it was very entertaining. I’m going to forward your post to him.

  36. 36
    Eric says:

    I’ve been thru the home buying process only once so I am admittedly no expert, but I thought not being able to get financing was an acceptable way to break a contract to buy that did not require forfeiting earnest money. Why did these people lose their earnest money?

    note: the house I bought was in IL so maybe the rules are different there? otherwise I don’t get it.

  37. 37
    anna says:

    Kudos to Seattletimes commenters and Tim for shining light on the other side. When seattletimes cut staff, the reporter of this story be aware, she deserves the boot on her lazy ass.

    By jon @ 33:

    RE: Ubersalad @ 32

    Yes, but the Democrats’ specialty is to create entitlements that grow like weeds long after they have left office.

    Well Iraqi war II will bleed money and benefits for the wounded and sick veterans for 30 years to come (can’t say i begrudge them that) and military will be so stretched and weakened, that it will end up resembling mexican army instead of US army. Go Bush, blame dems that. You retard.

  38. 38
    deejayoh says:

    By Lanny Poffo @ 34:

    RE: Sniget @ 29

    “The stastics of the percentage of homes bought with loans that werenâ��t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

    I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

    Lanny

    “33% of all new” – does that mean new construction only?

    So if there were 15k homes built/sold in King county in 2006 (a reasonable estimate based on building permits) does this mean a whole 5000 of them had IO/neg-am loans?

    Some perspective please

  39. 39
    Jillayne says:

    Dori covering this blog post as we speak: Tune in: 97.3 FM.
    Thanks, Dori! Accidentally listening for a long time.

  40. 40
    Monsoon says:

    (I used to really like Dori, but I left his fold when he became a right-wing war-hawk Bush-venerating nutjob after 9/11. Just needed to say that.)

  41. 41
    Mike2 says:

    The “33% IO and option ARM” figure is from Ivy Zellmans February 2007 report on the housing market for Credit Suisse. It is for all loan originations in 2006, both purchase and re-fi. The report is titled “Mortgage Liquidity du Jour: Underestimated No More”. The document itself is linked in ths post on Calculated Risk.

    http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

    I have not seen any stats for 2005 or 2007.

  42. 42
    CCG says:

    RE: Shaq @ 6

    The mainstream media is good for only one thing – letting you know when a trend has topped.

    The blogs actually give you a chance in hell of getting in at the beginning of one.

  43. 43
    EconE says:

    By deejayoh @ 37:

    By Lanny Poffo @ 34:

    RE: Sniget @ 29

    “The stastics of the percentage of homes bought with loans that weren�t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

    I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

    Lanny

    “33% of all new” – does that mean new construction only?

    So if there were 15k homes built/sold in King county in 2006 (a reasonable estimate based on building permits) does this mean a whole 5000 of them had IO/neg-am loans?

    Some perspective please

    People refinanced too…not just purchased.

    Some perspective please

  44. 44
    Sniglet says:

    I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

    This data was posted on SeattleBubble forums a while back (see the link below). Unfortunately, I don’t know what the numbers were for other years, neither do I know where to find it.

    By the way, I should stress that this data clearly demonstrates how the real-estate bubble was NOT a subprime issue. The Seattle area subprime loans never exceeded 20% of the total at the peak, so clearly a lot of these negative amortization and no interest payment loans were Prime and Alt-A. Keep in mind that not every subprime loans was of a negative amortization variety (some actually had downpayments).

    http://seattlebubble.com/forum/viewtopic.php?f=1&t=466&hilit=scariest&sid=547fd91d5dadc59f8cad935d3caf9bb0

  45. 45
    deejayoh says:

    By Mike2 @ 39:

    The “33% IO and option ARM” figure is from Ivy Zellmans February 2007 report on the housing market for Credit Suisse. It is for all loan originations in 2006, both purchase and re-fi. The report is titled “Mortgage Liquidity du Jour: Underestimated No More”. The document itself is linked in ths post on Calculated Risk.

    http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

    I have not seen any stats for 2005 or 2007.

    go back and read the report. It does not say this at all. Exh 29 shows 23% of mortgages were IO/Negam in ’06 on a nationwide basis, and says this was disproportionately weighted to Calif, Fla, and AZ.

    So where does the claim come from. How is Seattle 10% higher? It is BS… Refinances or not.

    PIROOMA

  46. 46
    Sniglet says:

    People refinanced too…not just purchased. Some perspective please

    These numbers don’t include re-financings, just the mortgages used for home purchases. This would include both existing and new home sales. I would hate to see how bad things would look if the re-financings/equity extraction deals were included.

  47. 47
    Sniglet says:

    go back and read the report. It does not say this at all. Exh 29 shows 23% of mortgages were IO/Negam on a nationwide basis, and says this was disproportionately weighted to Calif, Fla, and AZ.

    So where does the claim come from. How is Seattle 10% higher? It is BS…

    This chart clearly shows Seattle as having 10% more negative amortization and interest only loans than the nation as a whole. Are you questioning the data used in the report?

    http://www.recharts.com/reports/CSHB031207/e31.GIF

  48. 48
    deejayoh says:

    ok. not to self. Page down.

    sorry, I am in a bad mood today

  49. 49
    Sniglet says:

    sorry, I am in a bad mood today

    No problem. I tend to have that effect on people (i.e. putting them in bad moods).

  50. 50
    David Losh says:

    RE: Sniglet @ 44

    Thank you once again for clarification.

    The bubble, the housing market, real estate bubble, comes down to a credit bubble. Loans far exceeding the value of the properties is the problem.

    It’s always interesting that people want to blame the buyer or borrower. They should have known better, or they were trying to make money, oh my goodness!!!!!

    No, this article clearly demonstrates that there was a orchestrated swindle of a person or persons. That seems to be OK with the people here. It’s OK that these people lost earnest money on a real estate transaction that was unable to be closed.

    The mechanism exists to allow this to be done legally. That’s why the attorney went to the press.

    It makes no difference if these people were trying to speculate. The earnst money is in the hands of the builder with the help of Chase Financial. That’s not OK. It’s wrong.

    It is a micro example of the greed the builders and banks have had in the collusion of boosting prices, for higher loan amounts.

  51. 51
    mukoh says:

    David,
    You are so far out of whack with reality. Every single builder has a preferred lender. The lender prequalifies the buyer in hopes of closing the loan. They don’t qualify to later renag on the loan and let the builder keep earnest money. Stop smoking la la grass before you type here.

  52. 52
    S-Crow says:

    Quick drive by comment between signing clients this evening and my last is at 9pm (yes, today is the last signing day of the month for refi’s and it has been nothing short of , -converting to PG-13 mode- “challenging” )…….

    Sniglet mentioned- “The Seattle area subprime loans never exceeded 20% of the total..”

    I have no data on hand other than what our office was closing and am too darn tired to get data from Metroscan or my favorite title company, but there is no way in hell only 20% of the Seattle AREA (whatever that means) loans were subprime. My gut tells me it was much more. When over 70% of all purchase transactions our office closed in all of 2006 were 100% financed (and more than 20% for crying out loud were clearly from sub-prime famous implode-o-meter lenders, it leads me to believe the number is much higher.) And I’ve said it a million times before but our office is but a tiny fragment of dust compared to what the title companies were closing in terms of volume. They have been excruciatingly quiet (other than their own scandals and massive layoffs/office closures and consolidation) during this whole debacle, but the data on home sales and lending they have is beyond huge. They have the Holy Grail of data.

  53. 53
    David Losh says:

    RE: mukoh @ 51

    Of course you touched on the simplistic idea that a lender is generating loans. The lender is looking for a large supply of loans from a builder. They are making attractive loans with fees to match. One stop shopping in your Real Estate purchase.

    Of course I have heard the argument that lenders are not trying to grab earnest money. It’s an old, tired, worn out, dodge. Lenders can string a sucker along while the builder sets the hook.

    That seems to be OK. It’s OK for a lender like Chase to tell a buyer they qualify for a loan long enough to get the earnest money. Then it becomes the buyer’s problem to get the loan closed or lose the earnst money.

    Some buyers have had relatives cosign for them. Others have brought in even bigger down payments.

    It’s all a part of the game. You set the hook and reel them in.

    As a big time investor you should know how it works rather then quote from the hand book.

  54. 54
    Ubersalad, Ph.D says:

    RE: David Losh @ 53

    No one is doubting the situation you are describing as scam by builder/lender, which is the reason why any sensible agent would advise client to avoid condos in pre-sale phase.

    This story is something else, with borrowers playing dumb when they were obviously gambling on the potential pre-sale profit. All those pre-sale condo stories that struck gold during 04-06 would entice most idiots to follow the same path.

    We are talking about these borrowers and their frivolous lawsuit, let’s not argue for the sake of arguing.

  55. 55
    Mikal says:

    RE: Sniglet @ 49 – Do you have a podcast for that?

  56. 56
    Kary L. Krismer says:

    By 98115_Renter @ 27:

    Anyway, Clinton somehow managed to erase the deficit with not too much pain for the average taxpayer, so it can be done.

    A booming stock market, with lots of trades and gains, helped out a great deal.

  57. 57
    Kary L. Krismer says:

    By Mike2 @ 41:

    The “33% IO and option ARM” figure is from Ivy Zellmans February 2007 report on the housing market for Credit Suisse. It is for all loan originations in 2006, both purchase and re-fi. The report is titled “Mortgage Liquidity du Jour: Underestimated No More”. The document itself is linked in ths post on Calculated Risk.

    http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

    I have not seen any stats for 2005 or 2007.

    Sniglet’s post was a bit ambiguous referring to 100% interest loans. At first I thought he meant zero down, but perhaps he meant interest only loans. That would fit better with negative amortization.

  58. 58
    Scotsman says:

    My god, people, it’s only the economy and politics- lighten up!

    Things are starting to get tense out there, that’s for sure.

  59. 59
    b says:

    RE: Mikal @ 55

    The podcast schtick was funny the first 35 times…

  60. 60
    David Losh says:

    RE: Ubersalad, Ph.D @ 54

    I’ve seen this a lot. The agent may have been some one who spoke the native language and was in awe of the doing business with Chase bank and a big time builder. Most of the people I deal with speak Spanish and I have seen this same dodge run on lawyers, more than one.

    I’ve seen it a lot. It’s gut wrenching cheap, tawdry, and the absolute worst of the business, any business. it’s little scams like this that give the United States a bad name.

    What about the low life builder? Why is it OK for this guy to do this kind of swindle? Why is it every body elses fault that this builder, with the collusion of Chase Bank, the home of 30% consumer credit rates, that this scam was committed?

    It makes me sick that any one can think this is OK in a business.

  61. 61
    Sniglet says:

    Sniglet’s post was a bit ambiguous referring to 100% interest loans. At first I thought he meant zero down, but perhaps he meant interest only loans.

    Yes, I meant interest only loans. Sorry for the confusion.

  62. 62
    Sniglet says:

    RE: b @ 59

    The podcast schtick was funny the first 35 times…

    I am glad I stopped at 35 then. :)

    Seriously though, it is just not practical to keep repeating the same points again and again as they come up in discussions, that’s why I decided to make podcasts (or blog entries) that cover key issues and then just point people to them.

  63. 63
    The Tim says:

    RE: Sniglet @ 62 – I’m pretty sure he was referring to Mikal’s incessant sarcastic references to your podcasts. At least I’m pretty sure Mikal is being sarcastic/derogatory. Tone is hard to read online.

  64. 64
  65. 65
    Mikal says:

    RE: Sniglet @ 62 – He was making fun of me. That was still the best one though. I will stop when he does.

  66. 66
    vermillionsky says:

    By anna @ 37:

    You retard.

    Is that necessary? I’ve noticed people on this blog are starting to get personal/nasty when they disagree with someone. Lighten up.

  67. 67

    […] Seattle Bubble is claiming that it’s full of holes: Claim: Danil Kasimov is “a limousine driver, earning little more than minimum wage.” Reality: […]

  68. 68
    mukoh says:

    RE: David Losh @ 53 – David the cleaning supplies must be getting to you. LENDER DOES NOT KEEP EARNEST MONEY. Builder does.
    Every builder that I know of keeps the earnest money only in cases of real liquidated damages.

  69. 69
    Michael says:

    Thanks for helping bring this to light to your readers…still waiting for another cover story to bring light to the whole issue in the Seattle Times.

  70. 70
    David Losh says:

    RE: mukoh @ 68

    We’re only talking about the low life builder. What are you talking about?

  71. 71
    Erik says:

    Man – am I disappointed with the Times. I take the Times and knew something sounded weird when I read the story. Sloppy, irresponsibly sloppy… It would have taken 15 minutes to pull the info found for this blog entry. A few easily accessible pieces of info turns this from “big, bad, builder/realestate agent takes advantage of poor immigrant” to “greedy, get rich quickster gets burned by his own match”.

  72. 72
    Ubersalad says:

    It appears that Times has updated the article “slightly”.

  73. 73
    The Tim says:

    RE: Ubersalad @ 72 – No kidding… look at that.

    Key: subtractions, additions:

    In 2000, he emigrated to the U.S., settled in Redmond and became a limousine driver, earning little more than minimum wage, but enough to buy a condominium in Redmond four years later.

    Two years ago, a real-estate agent suggested he consider purchasing a condominium at the luxurious Bellevue Towers. To Kasimov, it seemed his vision of America was unfolding with the ease of the touch-screen showing eventual views from his dream condo on the 32nd floor. and he picked one on the 32nd floor. About the same time, he also started the purchase of a house in Bellevue and another in Redmond.

    “I normally wouldn’t think I could afford this,” Kasimov said. “But there was all this excitement … Hollywood all over the place.” He says he was told there were only a few units left, and the real-estate agent, knowing what Kasimov did for a living and that it was his first purchase, said, “Let’s see if they’ll approve you.”

    Left in the article: the references to English being a “language they didn’t understand,” as well as the claim that he is merely a “limousine driver.”

  74. 74
    The Tim says:

    Also, two years ago was February 2007. That’s when Kasimov was closing on the two $600k+ houses, not when he “started the purchase.” So even in the correction they can’t get it right.

  75. 75
    David Losh says:

    This article has been a topic of conversation in my household since it ran,

    These people along with thousands, probably millions, of others have been swindled, legally, by low life builders.

    It’s legal and disgraceful. The mechanics of it are to get people to buy by holding the earnst money hostage. It is a nausiatingly cheap trick to hook people into bad buildings.

    Legitimate builders don’t need to resort to ripping off the public, but hey, this is how the game is played.

  76. 76
    mukoh says:

    David, you are once again off the amonia smell I think. Every single builder will keep earnest money when they have allowed a buyer to sit on a contracts for months and months. It is plain fact. The only ones who don’t are broke. You have no clue what you are talking about.

  77. 77
    cc12 says:

    David — please consider the long-term negative ramifications of fully refundable earnest money deposits. You think the last several years saw a lot of flipping? Think about how much worse it could have been. A refundable deposit would be a fairly cheap call option on the value on an asset that has proven to be very volatile over last decade.

  78. 78

    […] The original article in the Seattle Times was incredibly one-sided where they were portrayed as duped, first time buyers that were new to the country and wanting the American dream. Much was said that one of them made a salary of $20,000 a year for a $1.5 million condo.  Readers in the comments section and other blogs quickly found out more information on the buyers.  It turns out that the main person in the story was a limo company owner, not just a driver, and had bought at least 3 homes just prior to purchasing with Bellevue Towers. Seattle Bubble has an excellent summary of the story here. […]

  79. 79

    […] may recall that Bellevue Towers was the subject of some lousy reporting by a different Seattle Times reporter back in […]

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