NBA Player bails on mortgage

[Gan]

SACRAMENTO, Calif. -- Houston Rockets (http://sports.espn.go.com/nba/clubhouse?team=hou) guard Kevin Martin (http://sports.espn.go.com/nba/players/profile?playerId=2394) has defaulted on mortgage payments on a house in California.


http://a.espncdn.com/i/headshots/nba/players/65/2394.jpg Martin


The Sacramento Bee reports that Martin owes about $44,000 in late payments and received a notice of default -- the first step in a possible foreclosure. He bought the 5,000-square-foot home in Rocklin for $1.9 million in July 2007.
His attorney says Martin has no intention of walking away from what he owes but is in a legal dispute with the lender as he pursues a short sale on the property.
The home is currently listed for $1.1 million. A short sale means if someone buys the home at that price, the lender could take a loss.
The Sacramento Kings (http://sports.espn.go.com/nba/clubhouse?team=sac) traded Martin to Houston in February. He has a $10 million salary for the coming season.

http://sports.espn.go.com/nba/news/story?id=5687782
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Way to go asshole.

Lets add another reason why I don't watch or support the NBA.

*Heard update on radio today. Looking for recent print update to post.

[Archigeek]

Actually doesn't a short sale typically mean the owner takes the loss, not the lender? I suppose "could" is the operative word here? I'm not excusing him being late on his payments just because he's in a dispute.

[Tgo01]

Actually doesn't a short sale typically mean the owner takes the loss, not the lender?

No.

[Latrinsorm]

Lets add another reason why I don't watch or support the NBA.NBA - a player engages in a contentious real estate transaction.

NFL - players get drunk and kill people.

Yeah... I see your logic here.

[Keller]

Lets add another reason why I don't watch or support the NBA.


What is the reason again?

[Kembal]

SACRAMENTO, Calif. -- Houston Rockets (http://sports.espn.go.com/nba/clubhouse?team=hou) guard Kevin Martin (http://sports.espn.go.com/nba/players/profile?playerId=2394) has defaulted on mortgage payments on a house in California.


http://a.espncdn.com/i/headshots/nba/players/65/2394.jpg Martin


The Sacramento Bee reports that Martin owes about $44,000 in late payments and received a notice of default -- the first step in a possible foreclosure. He bought the 5,000-square-foot home in Rocklin for $1.9 million in July 2007.
His attorney says Martin has no intention of walking away from what he owes but is in a legal dispute with the lender as he pursues a short sale on the property.
The home is currently listed for $1.1 million. A short sale means if someone buys the home at that price, the lender could take a loss.
The Sacramento Kings (http://sports.espn.go.com/nba/clubhouse?team=sac) traded Martin to Houston in February. He has a $10 million salary for the coming season.

http://sports.espn.go.com/nba/news/story?id=5687782
_________________________________________

Way to go asshole.

Lets add another reason why I don't watch or support the NBA.

*Heard update on radio today. Looking for recent print update to post.

Um, do you think the fact that you work in the mortgage industry might be a reason you're so offended by this? Because seriously, it's just a financial transaction.

[Tgo01]

Um, do you think the fact that you work in the mortgage industry might be a reason you're so offended by this? Because seriously, it's just a financial transaction.

I think it's the fact that this guy makes 5 times what his home is worth and still managed to get behind on his payments and might even default on the loan, meanwhile people who can only dream of making what he does are struggling to make their house payments.

[Parkbandit]

I think it's the fact that this guy makes 5 times what his home is worth and still managed to get behind on his payments and might even default on the loan, meanwhile people who can only dream of making what he does are struggling to make their house payments.

Bingo

[Kembal]

I think it's the fact that this guy makes 5 times what his home is worth and still managed to get behind on his payments and might even default on the loan, meanwhile people who can only dream of making what he does are struggling to make their house payments.

Alternative scenario:
He bought the house in 2007 (before housing really crashed) and then got traded to Houston 3 years later. He no longer needs the house, and thus is trying to sell it. Of course, housing prices have dropped, and the market value of the house is now lower than the loan amount. He'd like to do a short sale and get it over with, and the lender is refusing to allow him to do it.

Thus he's decided to stick it to the lender and make them take responsibility for the house by no longer paying for it, since they're not letting him sell it.

In that scenario, why should he keep dumping a monthly payment into a house he does not use or want?

[Gan]

NBA - a player engages in a contentious real estate transaction.

NFL - players get drunk and kill people.

Yeah... I see your logic here.
I don't really follow NFL either. Yeah... I see your logic there.
*In addition to wondering how you can logically compare one instance of fraud in a single point in time as relating to the NBA to multiple aggregious acts over a large time span as relating to the NFL without giving any consideration to the other acts committed over a large time span by other participants of the NBA? Or are you just trolling for the sake of trolling?


What is the reason again?
Which reason?

[Gan]

Um, do you think the fact that you work in the mortgage industry might be a reason you're so offended by this? Because seriously, it's just a financial transaction.

Um, I actually work for the title industry, so I'm not financially biased in any way towards lenders.

I"m offended because the guy makes a shit load of money and is going to bail on his obligation which will in turn cost the lender who will pass along the loss to other borrowers in the form of higher fees, higher interest rates etc., which will in the end receive some form of taxpayer support or bailout in order to cover the loss.

The positive side is that the guy will take a hit to his credit, thereby forcing him to pay cash for everything. Not that it matters a great deal in comparison to his salary.

[Tgo01]

Alternative scenario:
He bought the house in 2007 (before housing really crashed) and then got traded to Houston 3 years later. He no longer needs the house, and thus is trying to sell it. Of course, housing prices have dropped, and the market value of the house is now lower than the loan amount. He'd like to do a short sale and get it over with, and the lender is refusing to allow him to do it.

Thus he's decided to stick it to the lender and make them take responsibility for the house by no longer paying for it, since they're not letting him sell it.

Yes, you got it, the lender can tell someone when they can and cannot sell their home.

"I'm going to stick it to the man by not paying my bills that I created on my own!"

[Gan]

Alternative scenario:
He bought the house in 2007 (before housing really crashed) and then got traded to Houston 3 years later. He no longer needs the house, and thus is trying to sell it. Of course, housing prices have dropped, and the market value of the house is now lower than the loan amount. He'd like to do a short sale and get it over with, and the lender is refusing to allow him to do it.

Thus he's decided to stick it to the lender and make them take responsibility for the house by no longer paying for it, since they're not letting him sell it.

In that scenario, why should he keep dumping a monthly payment into a house he does not use or want?

Because the borrower is contractually obligated to do so?

Short sales are when a lender takes a loss (reduced payoff amount) on the existing loan.

Thinking the lender will absorb the loss is fundamentally flawed. The loss will be spread over higher interest rates or in worst cases - by the tax payer.

[Keller]

Doesn't a home mortgage essentially give the borrower a put option with the house? Can't Kevin Martin just put the hosue to the bank and walk away?

I don't understand why this is wrong. Each party is acting within their commercial rights.

[Tgo01]

Doesn't a home mortgage essentially give the borrower a put option with the house? Can't Kevin Martin just put the hosue to the bank and walk away?

I thought put options had a time frame and a specified amount? This is assuming this guy had a put option with his mortgage. This is assuming I know what I'm talking about.

[Archigeek]

Any sale for less than the amount owed is a short sale, regardless of whether or not he's willing to pay the balance owed. In fact, a short sale in no way removes the obligation to pay the remaining balance... unless the bank agrees with that. If, (and none of us really know the details), he wants to sell and pay the remaining balance and the bank won't let him then the scenario is one thing, and I tend to lean towards his side, since he's basically bleeding money, making payments on a house he can't use. If he's just trying to shift his bad investment to the bank, that's another.

[Keller]

I thought put options had a time frame and a specified amount? This is assuming this guy had a put option with his mortgage. This is assuming I know what I'm talking about.

Sure.

He can put the house against the remaining mortgage at any time there is a balance on his mortgage.

It's not a de jure put option, but more of a de facto put option based on the mechanics of a note that is nonrecourse to the borrower and secured by property.

[Gan]

Options are usually relevant in relation to the market value of the home that is securing the mortgage at the time they are exercised. If the lender reclaims the property and the market value at that time is less than the amount owed on the mortgage then the lender has the right to go after the borrower for the difference - or 1099 them for it.

CA mortgages are a little different than TX mortgages, so I'm unclear on the exact terms of the Mortgage instrument.

[Ardwen]

If you troll the news you can find constant streams of stories of current and former athletes that have all the financial sense of a wallaby, and a not very smart wallaby at that. I'd bet that half of the professional athletes wid up beyond broke at some point in their lives. Hell, Mike Tyson blew what 300 million dollars in 5 years?

[Latrinsorm]

I don't really follow NFL either. Yeah... I see your logic there.
*In addition to wondering how you can logically compare one instance of fraud in a single point in time as relating to the NBA to multiple aggregious acts over a large time span as relating to the NFL without giving any consideration to the other acts committed over a large time span by other participants of the NBA? Or are you just trolling for the sake of trolling?There is causing a person's death, and there is "It's not a de jure put option, but more of a de facto put option based on the mechanics of a note that is nonrecourse to the borrower and secured by property." If every single player in the NBA defaulted on a mortgage, it wouldn't be as bad as a single player in the NFL killing someone and continuing to draw a paycheck.

I also missed the part where Martin was charged with fraud. Did the guy run over your dog or what? Unless there's something more going on here you're really overreacting.

[Gan]

There is causing a person's death, and there is "It's not a de jure put option, but more of a de facto put option based on the mechanics of a note that is nonrecourse to the borrower and secured by property." If every single player in the NBA defaulted on a mortgage, it wouldn't be as bad as a single player in the NFL killing someone and continuing to draw a paycheck.

I also missed the part where Martin was charged with fraud. Did the guy run over your dog or what? Unless there's something more going on here you're really overreacting.

Dude, sometimes you should know when to stay out of a conversation.

This is one of those times.

[Kembal]

Because the borrower is contractually obligated to do so?

Short sales are when a lender takes a loss (reduced payoff amount) on the existing loan.

Thinking the lender will absorb the loss is fundamentally flawed. The loss will be spread over higher interest rates or in worst cases - by the tax payer.

We don't know that he's asking the lender to absorb the loss. But coming up with $1.9 million (or whatever the balance is) in cash is something different as opposed to selling the house for $1.1 million and then paying off the remaining balance of the note. The latter is manageable for someone with $10m in annual income....the former is still pretty damn difficult. People don't keep that much liquidity on hand, even at that amount of income.

If the bank were a normal (nonfinancial) company, I'd assume they'd negotiate on this without Martin resorting to this tactic. I negotiate trade credit terms all the time with customers, and I'm willing to be flexible even if the customer's credit isn't stellar. Banks and other financial institutions, though, generally behave as they have a ton of power due to the legal documentation.

[Kembal]

Yes, you got it, the lender can tell someone when they can and cannot sell their home.

"I'm going to stick it to the man by not paying my bills that I created on my own!"

Um, lenders can very much tell someone they can't sell their house if they can't get a market value above the value of the note. The mortgage industry can own your ass pretty well if you're not careful.

[NocturnalRob]

Why has no one pointed out the fact that this article is from October 15th of last year?

Who cares at this point?

[Gan]

We don't know that he's asking the lender to absorb the loss. But coming up with $1.9 million (or whatever the balance is) in cash is something different as opposed to selling the house for $1.1 million and then paying off the remaining balance of the note. The latter is manageable for something with $10m in annual income....the former is still pretty damn difficult. People don't keep that much liquidity on hand, even at that amount of income.


His attorney says Martin has no intention of walking away from what he owes but is in a legal dispute with the lender as he pursues a short sale on the property.


It appears as if Martin's attorney is negotiating to get a short sale approved by the lender (meaning the lender would take a loss on the principal balance owed.) However, if the negotiations fall through then the attorney states that Martin will not 'walk away' from the debt.

I've seen no update so I'm curious to see how things turned out.

[NocturnalRob]

I've seen no update so I'm curious to see how things turned out.
Google is tough.

http://abclocal.go.com/ktrk/story?id=8054927

[Gan]

Why has no one pointed out the fact that this article is from October 15th of last year?

Who cares at this point?

It was implied in my edit of the OP. :(

[Gan]

Google is tough.

http://abclocal.go.com/ktrk/story?id=8054927

Hmm. It appears I need to take some google lessons.

Thanks!

*And I stand by my sentiment stated in the OP.

(He is an) ASSHOLE!

[NocturnalRob]

It was implied in my edit of the OP. :(
Well fine then. Perhaps I was just being helpful while making an opinionated statement about Google.

[Kembal]

http://nationalmortgageprofessional.com/news19809/class-action-suit-filed-against-aurora-loan-services

http://www.rockymountainnews.com/news/2008/Sep/18/aurora-loan-contributed-to-downfall-of-lehman/

http://mrwavetheory.blogspot.com/2007/03/aurora-loan-services-how-lehman.html

After reading the above links, I don't think I can get that upset.

[Tgo01]

Um, lenders can very much tell someone they can't sell their house if they can't get a market value above the value of the note. The mortgage industry can own your ass pretty well if you're not careful.

He can put the house up on the market and pay whatever is left over on the loan. But yes it's easier to expect the lender to take the loss.

[Bobmuhthol]

Dude, sometimes you should know when to stay out of a conversation.

This is one of those times.

I don't know, I'm agreeing with Latrinsorm 100% here. It's neither criminal nor unethical to stop making payments on a mortgage, but you're having a fucking stroke because an NBA player did it.

[Jarvan]

I don't know, I'm agreeing with Latrinsorm 100% here. It's neither criminal nor unethical to stop making payments on a mortgage, but you're having a fucking stroke because an NBA player did it.


I don't know... lets say that I bought a 8x blessable battle axe from you in GS 2 months before they changed it to allow wizard enchants to be blessable.

I bought it for say 50 mill. I was paying you 5 mill a month as you know I am good for it. Then the change comes in, and the axe is now worth no where near the 50. So instead of paying you the rest, I just give you the axe back. Sure I am out 10 million, but I don't have to pay the other 40 on something that isn't worth it.

Would that be ethical? Certainly not criminal. But it would be very shady.

[Bobmuhthol]

That's not exactly a mortgage. You're obligated to pay a mortgage, unless you decide not to, and then you're subject to clearly defined and predictable consequences. So you stop paying it and accept those consequences. You didn't "surprise" anyone, otherwise those rules wouldn't be in place.