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)
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Comments:
Shaq can just give me a couple hundred thousand and i'll be ok with that.
I have a house in Vegas he can buy, I hear he likes to go to the Strip...
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.
@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.
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.
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.
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.
@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.
That's why I went with Wu-Tang Financial. More trustworthy than Shaq a.k.a KaZam.
This is not any different than what most RE investors are doing now.
If only he was a genie. A genie could solve this.
@Recury: Never thought I'd see a Nick Anderson reference on the consumerist. Well played, that had me laughing for awhile
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.
Lenny Dykstra can help. Lenny Dykstra is a financial genius.
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.
For every free throw he makes, he'll buy out a mortgage. Great deal, right?
@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.
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.
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.
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.
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.
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?
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.
@Recury LOL @ Nick Anderson comment! Sigh.. if only he didn't miss those 2 damn free throws in the first game of the finals!!!
@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
Basketball Player, Policeman, Genie, Rapper, Club Owner, and now Real Estate Mogul. What next, a superhero?
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?
Is Shaq going to be able to report to the credit bureaus of borrowers' payment histories?
@Bladefist: Actually, he's asking tech support where his soda's at....even though he pressed the Tab key 20 minutes ago...
Re: Image: Shaq either needs to stop wearing high-waters, or buy longer socks....
Fan freakin' tastic! To have Shaq as a landlord. Those tenants are living the American Dream.
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.
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.
@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.
@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.
@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.
@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.
"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.
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.
Now all we need is Bill Gates to jump on that bandwagon...