Casey Serin - Background

Background

Between October 2005 and May 2006, Serin purchased eight single-family homes using stated income loans. These loans required no documentation of income, nor any down payments. Before quitting his web design position in January 2006, Serin claimed an over-inflated income (roughly five times his actual pay) on his loan applications, reasoning that many other borrowers were using similar strategies to obtain mortgages for which they would not otherwise qualify. He continued to claim the same income on loan applications completed after he had quit his job. Serin stated that several of the properties were purchased with owner-occupied loans; these generally provide more favorable terms than loans for investment properties. A Voice of San Diego article suggests that Serin's initial loans may not have appeared in credit reports pulled for subsequent loans because he purchased properties in several states over a relatively brief period, so that "the banks couldn't trace the pending loan documents to check up on his story." Serin received cash back at closing on six of the properties, sometimes exceeding California's legal maximum of three percent of the selling price. A contributor to the Scotsman Guide, a trade publication for the mortgage industry, stated in an article discussing fraudulent practices within the mortgage industry, that the largest amount of cash Serin received for a transaction was $50,000, and that the money was paid either to the seller or a third-party company (which the contributor alleges was bogus), and then returned to Serin after closing. The author, CEO and senior legal counsel of Investors Mortgage Asset Recovery Co. LLC, concludes that responsibility for fraud in cases such as Serin's lies with "everyone who knew about the undisclosed cash and knowingly assisted in the scheme, including the sellers and any real estate agents, appraisers or closing agents." Serin disclosed on a Sacramento news program that he likely would not have been able to qualify for loans under more traditional terms.

Months later, as the United States housing bubble began to rapidly deflate, Serin became unable to pay the mortgages or sell the properties; at one point, he estimated that he was approximately $2.2 million in debt, with a net worth around negative $600,000. Serin's house buying spree ultimately ended when a lender rejected a loan application for what would have been his ninth property, after discovering his blog. Because of the sheer magnitude of Serin's debt and the improbability of his story, some observers had initially questioned its veracity, alleging that the blog was either performance art or a viral marketing campaign. An article at The Motley Fool expressed doubt over "whether or not this just a somewhat elaborate hoax.". However, public records confirm that Serin did purchase the properties in question and did subsequently default on most of the mortgages (see table below).