Shaq Wants To Save Orlando From The Mortgage Meltdown

Shaq has a plan to save Orlando from the mortgage meltdown. Sort of. The Orlando Sentinel says that word leaked out that Shaq was working on a plan to buy the troubled mortgages of Orlando homeowners and refinance them so that families could stay in their homes — and hopefully turn a small profit by doing so. The trouble is, the demand is overwhelming and Shaq doesn’t have anything set up yet. That’s not stopping him, though.

From the Orlando Sentinel:

The problem is, O’Neal does not yet have a concrete plan. He wasn’t planning an announcement, and word leaked out when he made an impromptu visit to Orlando City Hall last week.

For the people reaching out for help, the need is immediate. And because the news circulated across the country, calls and e-mails are coming from far and wide.

Even so, O’Neal will pursue the as-yet undefined plan, Cooper said. The two met to discuss how to proceed on Saturday and again Monday.

“He said, ‘Let’s just go out and help as many people as we can,’ ” Cooper said. “He’s sincere about it.”

For more information, contact Cooper by e-mail at uc3n1@cfl.rr.com

Thousands in Orlando want Shaq to help with mortgages [Orlando Sentinel]
(Photo: City of Orlando)

Comments

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  1. GavinEstecado says:

    Now all we need is Bill Gates to jump on that bandwagon…

  2. dman19 says:

    Shaq can just give me a couple hundred thousand and i’ll be ok with that.

  3. jscott73 says:

    I have a house in Vegas he can buy, I hear he likes to go to the Strip…

  4. How come nobody ever wants to help people buy their FIRST homes? I sat on the sidelines during subprime but I could sure use some lenient financing right about now.

  5. Pro-Pain says:

    @GavinEstecado: That sir, is very, very funny. Steve Jobs anyone? Apple Ihome?

  6. ViperBorg says:

    @GavinEstecado: Seriously. Him and I’m sure Steve Jobs and give some too. Right along with Balmer. Oh, and this should be REQUIRED for Oil Execs.

  7. riverstyxxx says:

    Sounds like he just wants to make money and turn it into a PR stunt. This might have something to do with his divorce and how his spending habits have become more open.

  8. a plan to buy troubled mortgages from Orlando homeowners and refinance them

    He would not be buying the mortgages from the homeowners, he would be buying them from the lenders.

  9. ViperBorg says:

    @jscott73: Where in Vegas? I’m looking for a place there.

  10. Murph1908 says:

    @ViperBorg:
    Welcome to the Socialist party.

  11. Recury says:

    Shaq will refinance people’s mortgages but he’s going to insist on wearing a cape.

    Elsewhere, Nick Anderson is helping someone pay off their sofa.

  12. jscott73 says:

    @ViperBorg: Seriously? North Las Vegas just off the 95.

    [tinyurl.com]

  13. darksunfox says:

    @A.W.E.S.O.M.-O I agree with you – My buddy just bought his first house but it took him forever because people would put stuff on the market, then pull it off right away if they could refinance, stuff like that. Also I don’t think he got a great interest rate even though he’s a first timer and should be able to get a decent one. It’s a weird market right now.

  14. That’s why I went with Wu-Tang Financial. More trustworthy than Shaq a.k.a KaZam.

  15. This is not any different than what most RE investors are doing now.

  16. lalaland13 says:

    If only he was a genie. A genie could solve this.

  17. Bagels says:

    @Recury: Never thought I’d see a Nick Anderson reference on the consumerist. Well played, that had me laughing for awhile

  18. happysquid says:

    With Shaq Mortgages, you can rest assured that there will be…

    no hooks.

  19. sir_pantsalot says:

    I wouldn’t trust Shaq and his mantal capabilities to take my order at a drive thru. I wouldn’t let him anywhere near my mortgage.

    Really they guy makes millions to play basketball but can’t be bothered to practice and make 1/2 of his free throws. Dumb and lazy.

  20. happysquid says:

  21. Farquar says:

    Lenny Dykstra can help. Lenny Dykstra is a financial genius.

  22. Bladefist says:

    I’ll be more convinced when he figures out how to log into his computer. This picture is obviously an image of him on tech support, trying to figure out what ctrl+alt+del means.

  23. lalaland13 says:

    For every free throw he makes, he’ll buy out a mortgage. Great deal, right?

  24. BlueTraveler says:

    @A.W.E.S.O.M.-O: I know exactly how you feel. Those of us that were smart enough to know we couldn’t afford a house a few years ago are no longer offered good deals on a first time mortgage. The idiots that spent money they didn’t have are now keeping us first time home buyers from buying a house with little or no money down.

  25. chucklebuck says:

    Man, no love for Shaq. Love him or hate him as a basketball player/actor/rapper, but I’m at least going to give the guy credit for trying to help people. Maybe it really is a big Shaq PR stunt, but if in the end someone in need benefits from Shaq getting PR, then I don’t see the bad in that.

  26. Farquar says:

    @Bladefist:

    Imagine how big that desk and chair must be to make him look like a normal sized human being. If I sat at that desk I would look like a 6 year old.

  27. ShadowFalls says:

    @riverstyxxx:

    Perhaps, but mortgages tend to have a 30 year term, quite awhile to wait still to get the initial investment back. You had to admit, you don’t see others stepping up like this though… He is actually taking a risk with his own money.

  28. ChrisC1234 says:

    He’s just going to get screwed instead of the mortgage companies. People will still figure out that they’re paying more money than they should because the value of their homes is so inflated. He’d probably be better off just buying the houses from people at the value of the mortgage, then selling the homes back for what they’re really worth.

  29. nutrigm says:

    Great idea and it benefits Shaq too in the long run. This should become a new trend: celebrity and sports stars buying your home and let you live in them as tenants! So the celebrities will own more property (which will only go up in value in the looong run) banks are spared the loss, people’s credits are spared and the celebrity gets even more popular! Why hasn’t more celebrities thought about this instead of wasting their money on $1000 bottle of wine?

  30. legwork says:

    Next crash: Bank of Shaq.

    Plenty of bottom feeders are running around taking on ballast. While this might be smart for strategically important property, somebody ought to let Shaq know this correction has very long legs.

  31. nutrigm says:

    @Recury LOL @ Nick Anderson comment! Sigh.. if only he didn’t miss those 2 damn free throws in the first game of the finals!!!

  32. danthefreakinman says:

    @sir_pantsalot: Actually I heard somewhere a couple years ago after Shaq was traded to Miami that he has a real estate empire worth something like $500 million. Worth noting…

    Source: My memory

  33. donkeyjote says:

    Basketball Player, Policeman, Genie, Rapper, Club Owner, and now Real Estate Mogul. What next, a superhero?

  34. KassiaIdomeneus says:

    This is the way it should be. Well done shaq. Keep welfare out of the
    hands of irresponsible buyers, and if a few charitable or
    well-intentioned millionaires want to help them out, let them. Better
    Shaq than your tax dollars, no?

  35. humphrmi says:

    @riverstyxxx: If this is such a selfish move, why isn’t everyone doing it?

  36. ret3 says:

    @donkeyjote: Already happened: [www.imdb.com]

  37. donkeyjote says:

    @ret3: I stand correct :D

  38. donkeyjote says:

    @ret3: What next then, president of the earth?

  39. Is Shaq going to be able to report to the credit bureaus of borrowers’ payment histories?

  40. Skiffer says:

    @Bladefist: Actually, he’s asking tech support where his soda’s at….even though he pressed the Tab key 20 minutes ago…

  41. donkeyjote says:

    Re: Image: Shaq either needs to stop wearing high-waters, or buy longer socks….

  42. Angryrider says:

    Fan freakin’ tastic! To have Shaq as a landlord. Those tenants are living the American Dream.

  43. stevejust says:

    I don’t understand why commentors here think this could work. Suppose I bought a house for $250,000 in Orlando in 2006 with an ARM with a low teaser rate. And I put $12,500 down, or 5%. With the negative amortization on the minimum payments I’ve made on the ARM, in the past 2 years a lot of that 5% has been eaten up with accelerated interest. The housing market is down about 14% in Orlando, so my $250,000 house, that I about $250,000 on because the minimum payments I’ve been making resulted in a growing principle that swallowed the 5% equity I had put into it, is now worth $215,000.

    Shaq can do basically one of two things to help me:
    1) Buy the house from the bank and sell it to me for $215,000. Hope it doesn’t keep dropping in value and that I don’t walk away from the loan. He loses $35,000 on that one transaction.
    2) Buy the house from the bank and drop the interest rate to one I might better be able to afford. He owns a $215,000 house he paid $250,000 for, and I might or might not be able to make the payments at the lower interest rate as long as I don’t lose my job or get sick. No financial advisor would recommend that as an investment, and it’s hard to see how to structure a business like that as a charity.
    3) Subsidize the payments I’m making to the bank, so that he’s giving me a little bit of money each month to help me make the payments. Bank wins, I don’t.

    Really, those are the only options I see. Maybe I’m not being creative enough? My payment on the house would be about $2,000 a month with PMI insurance and taxes. At the end of 30 years, I will have paid $740,000 for that house worth $215,000 as of today. This is how the numbers actually work. Sorry to… you know… interject a little reality into this.

  44. cmdrsass says:

    Other than dropping fists full of dollars from an orbiting blimp, I can’t think of a faster way for Shaw to go broke than “investing” in these troubled mortgages.

  45. Bladefist says:

    @stevejust: He is probably getting help from people smarter then himself. The only way it could work is if he made his own Shaq bank and let people refinance their loans with him at a low rate. He then puts himself at risk of people walking away from their loans. So then he has to raise his rates for everyone to cover the dead beats. Next thing you know, its countrywide all over again. I appreciate his effort, but he needs to just do what he does best, which apparently isn’t shoot 3-pointers. I dont know, I’ve never watched basketball.

  46. Bladefist says:

    @stevejust: Also, I know he is rich, but he aint that rich, so I’m assuming he will concentrate his money on the people with much cheaper houses.

  47. humphrmi says:

    @stevejust: He doesn’t have to buy the house or subsidize the payments. He could simply buy the loan from the bank at a discount, convert the exotic ARMs into conventional fixed’s, and sit back and collect payments for 20-30 years.

    At the end of 30 years, I will have paid $740,000 for that house worth $215,000 as of today.

    BTW It’s not really all that valid to compare total payments over 20 years to today’s value. Everyone pays more than their house is worth today over the life of their loan. Otherwise, even without “subprime borrowers”, banks would have no incentive whatsoever to write mortgages.

  48. stevejust says:

    @Bladefist: I used $250,000 because that was the median price of a house in Orlando circa 2007. I live in Los Angeles, where you can’t buy a closet for $250,000. But $800,000 might get you a 1 bed/1 bath 700 sq ft condo in Santa Monica, with no off-street parking. So when I used the $250,000 example, it seemed really low to me. I don’t know what the low-end housing situation is like, but the principle illustrated is the same. If the house is worth 14% less than what you paid for it, and next year it might be worth even less, the only way Shaq can bail these people out is by throwing his money at the situation. He can’t help people refi their way out of the mess.

    What will happen circa 2011 is people will stop focus on how to get people who are walking away from their mortgages to have payment structures that will allow them to keep their houses, and instead local, state and the federal governments might focus on how to get smart people who knew they couldn’t afford those houses into the glut of repossessed houses cheaply. This life-line attempt to help people try to tread water who jumped into pools too deep when they didn’t know how to swim has an inevitable conclusion.

  49. howie_in_az says:

    “For the people reaching out for help, the need is immediate.”

    Perhaps they should have considered this prior to taking out an Adjustable Rate Mortgage with an interest rate that changes, or… whats the word… oh right. Adjusts.

  50. karan1003 says:

    Buying up all of these loans and hoping to make a profit off collection would imply that he has a greater ability to collect than the banks/institutions/whatever the hell else that actually issued the loan. Somehow, as tall as he is, i don’t think Shaq’s that intimidating.

    I don’t think he’s doing it to turn a profit. I think he’s actually doing it to help.

  51. @stevejust: It doesn’t matter what you’ve paid, how much equity you have, blah, blah, blah.

    People buy discount notes and mortgages all the time. Investors have access to lenders regular homebuyers do not. Even IF you walk away or otherwise default on your payments, the investor owns the asset. They’ll just sell it or rent it out.

  52. Bladefist says:

    @stevejust: I didn’t know it cost so much there. Thats stupid. Move to KC. For 250,000 you can get a house you can put on Cribs.

  53. stevejust says:

    @ceejeemcbeegee: Umm… yes, it matters what people have paid, how much equity they have, etc.,. The idea that fundamentals don’t matter is exactly how we wound up where we are. You don’t happen to work at Bear Sterns, do you?

  54. stevejust says:

    @humphrmi: Converting the exotic ARMs at this point doesn’t help if by operation of making minimum payments, the pinciple has grown to more than the house was “purchased” for, and the house is now worth 14% less than that. Here, this will show you why Shaq can’t save the day:

    [www.doctorhousingbubble.com]

  55. @stevejust: When it comes to investing, no, that doesn’t matter much. Deals like this are primarily concerned with how much the bank is willing to lose on the house, the investors exit strategy, etc. YOUR payment, YOUR interest rate, YOUR credit isn’t part of this equation because YOU are not negotiating the deal, the investor is. Put it like this, if you could get a lower payment on your own house, why would you need Shaq? You can’t because you do not have the money, time, access to lenders, nor the knowledge to work the deal so that it’s lucrative and beneficial for all parties.

  56. jscott73 says:

    @stevejust: Nice article, the consumerist did a write up about this awhile back, it has one of my favorite graphs. You can clearly see we are just getting through the first wave of subprime resets with the option-arm resets just around the corner…

    [consumerist.com]

  57. donkeyjote says:

    @stevejust: Exactly. Last thing we need is another showboat basketball player with no fundamentals….

    Now the WNBA players, they have great fundamentals.

    Oh, and ceejee was talking about the thirdparty buyers/lenders/owners, not the people buying and living in the house.

  58. bilge says:

    @A.W.E.S.O.M.-O: I just bought my first home and they didn’t even bother verifying my employment. What problems are you having in getting a loan?

  59. @donkeyjote: Thank you!

    Buying your own home, you need to care about “the fundamentals.” Buying investment property elevates the game to a whole new level.

  60. stevejust says:

    @donkeyjote & ceejee: I understand exactly what Ceejee was talking about. Unfortunately for all of those people holding all of those traunches of mortgages, they’re all going down like lead anchors no matter what the rating. There’s too many bad loans floating around. Just sayin’.

    As for me, Ceejee, I sold my house in 2006 because it was SO PLAINLY OBVIOUS to me that the market was going to crash. If the median income family and mean income family can’t come close to affording the median or mean house value in a given geographic location — there is a bubble, and it must pop. And it has started to. But values will continue to decline until houses become affordable according to the traditional fundamentals (i.e., the people buying them have a prayer of actually being able to afford them). Here in Los Angeles, we still have about $100,000 more for houses to fall until they start to realign with those fundamentals. It would make me LOL if it weren’t having such a huge impact on the economy in general.

  61. donkeyjote says:

    @donkeyjote: DAMN DAMN DAMN.

    I forgot to add “Now the WNBA players, they have great fundamentals. Who cares if they can’t dunk

    I fail at the internets.

  62. stevejust says:

    @jscott73: Indeed. I saw that post back in the day on this site. May I humbly suggest this as the best graphic to explain what’s going on from a national perspective?

    [bp2.blogger.com]

    All anyone needs to do is ask themselves how much more money people are making today than in 1998, and you can then see how much further home prices HAVE to sink before they reflect… I’ll say it again… the basic FUNDAMENTAL element of being affordable to the persons purchasing them.

  63. @stevejust: I hear you. Hopefully, Shaq and his team know how to convert bad loans into good ones. ;-)

    I’m in LA too, and folks here aren’t waking up quite yet. Mostly it’s people in the IE and Riverside County screaming “Help me, please”. But in LA County, it’s still overpriced.

  64. stevejust says:

    @ceejeemcbeegee: Uhh… right, like having a lower mortgage than prevailing market rate that you can rent the property for?

    So, let’s take that $2,000 a month payment on that house bought for $250,000 now worth $215,000. The average rental price for a 2 bedroom in Orlando is $927. Don’t have data on a three bedroom $250,000 house, but do you think you can get more than $1073 extra for the house because of an extra bedroom and a yard? If you do, maybe I want to start doing business with you because it would be easy to take your money.

    And yes, investors don’t buy rental properties with 5% down, but the fact of the matter remains that you have to make significantly more money than the mortgage on the rental to cover the costs of maintaining the rental. So at the end of the day, investors are still dealing with fundamentals. They’re different than the owner-occupier’s fundamentals. But they still exist. That’s why they’re the FUNDAMENTALS.

  65. donkeyjote says:

    @stevejust: You rent to individuals instead of couples or pairs. 600 a month per small room, and 900 for the bigger room (So 4 people), and you got 2100 a month.

  66. ImCrying says:

    @ViperBorg: Why do people hammer on oil executives when a MSNBC anchor pointed out that petrol companies were pumping out 8% profits while hedge funds put out 80%+?

  67. @stevejust: If the investor buys that house with a $2000 mortgage, knowing that the market rent in only $1000, they are a moron. You are calculating the mortgage based on financing YOU can get thru a traditional loan at a bank. If I were to buy that house, I wouldn’t have a $2000 mortgage!

    You say it’s “worth” $215K: define “worth.” Is that what’s owed on the note? Or what the comps say it’s worth?

    If it’s what’s owed and it’s in foreclosure, I’d propose a short sale to the original lender and probably get it down to ~$170K-$185K, depended on my inspections and the comps. Why are they going to sell it to me for less? Because they want it off their books ASAP. They could put in on the market, but then they have to deal with realtors and the national average days on market is 240. So I’m helping them by buying the house, even if it’s at a discount.

    I put $50K down and finance the rest, and my mortgage is ~$600/mo. And I only plan to pay the interest on the note? I repeat, I’m not getting a traditional loan. Private lenders lend money based on how much you’ll profit from your exit strategy, not just your earned income. And if I default, they get the house.

    Now, I have a few options with this house.
    Option 1. I have investors lined up to purchase the home at ~$200K. This investor has financing and they see the numbers (rent – mortgage = profit) work for them. I’ve made a profit. The bank sold the house. The investor has an asset. Everyone is happy.

    Option 2. I keep the house and rent it out for ~$900. I’m making about $300/mo minus expenses. When the market takes an upswing, be it 5, 10, 15 years from now, I can “re-fi” my loan if I wish. Or pay it off. Or sell. I have options.

  68. ImCrying says:

    I will quote somethingawful once again:

    Who do you blame for the mortgage meltdown?

    “Are you having trouble making your mortgage payment? Do you have the same salary you had when you bought the house? If you answered ‘yes’ to both of those then it’s you. I blame you.”

  69. stevejust says:

    @ceejeemcbeegee: My friend, the $215k is defined here as current market value. We’re going with present-day “comps.” In my example, the purchaser paid $250k for it, and has an outstanding loan balance of @$250k, even though they’ve been paying on it for two years, because of negative amortization.

    If you’re getting short sales from banks where the bank is taking a $80,000 loss, let me know where to sign up. There’s a lot of houses I’d consider buying in LA at that kind of discount, even with the enevitable hassles of dealing with a short sale (in terms of delinquent taxes, etc.,). Maybe there are short sales that reflect an $80k loss to the lenders, but I haven’t seen any that big. At least not yet.

    You took the $215k number and subtracted $45,000ish from that. That might be more realistic, but in my example that’s you getting the house for $205,000, not $170,000.

  70. stevejust says:

    @ImCrying: There are a lot of stupid people in the world. Can stupid people be blamed for being stupid? Yes. But who’s dumber? The person who manages a blockbuster video and buys a $450,000 house, or the bank that lent the guy the money in the first place? You know who gets my vote? The people who supposedly went to school, got fancy MBAs, gained some sort of financial expertise, and should understand the business they’re in.

    I can’t for the life of me understand why you’d blame the more ignorant party as between the two of them. Most people grew up in an era where banks wouldn’t loan people money if people couldn’t afford to pay the money back. They think that if they’re credit worthy and being extended credit, the banks know what they’re talking about. You think banks are too stupid to realize that?

    I blame entities like Countrywide, WaMu, Bear Sterns and CitiFinancial 100% for the flippin’ mess they made. I kind of think people who don’t are kind of stupid.

  71. @stevejust: They are not in LA, of course. Like I said before, the IE is most lucrative right now. Also Riverside, Kern, and Orange counties. And they ARE offering that much off, but the houses start at $1mil. $250K houses in LA are very, very, very rare.

    Regardless of what I’m getting the house for, I’m ALWAYS going to ensure my mortgage is LESS than the rent rate.

    Because you friend is upside down, why don’t you wholesale it or lease option?

  72. squablow says:

    Shaq seems like a really nice (although maybe a bit idealistic) guy. He’s also a volunteer police officer in his community too which I think is neat.

    I’m not sure how this plan is going to work but if he can make some money and prop up some soon-to-be forclosures I say more power to him. I got your back, Shaq.

  73. BlackFlag55 says:

    I see Shaq understands “markets” as well as McCain

  74. moosetoga says:

    @stevejust: Also, don’t forget that some of the affected homeowners weren’t even the victims of their own ignorance; some got truly conned.

  75. mzs says:

    @A.W.E.S.O.M.-O: For me it was the IL HUD and the FHA that looked-out for me when I bought a first home. You should look into those and the equivalent of the HUD in your state. I was able to get a loan at a reduced interest rate with only 15% down. The IL HUD also had areas where you could get discounts on your loan. Some areas were not horrible, just aging population such as Sycamore which is near Dekalb and NIU and an hour and a half from Chicago.

    Just like everything there were numerous catches. I had a modest income that did not go above certain limits. Also your income could not increase more than a certain percentage from year to year over ten years. If it did you needed to pay penalties. There are mortgage brokers with experience with putting together loans under these types of plans and the free county legal services can point you to them.