April 11, 2007

The human face of the housing bubble - Kara Homes buyers lose their deposits ($100,000+)


Decide to chase the "American Dream" of home ownership - check
Find a home you want - check
Trust that nice realtor and homebuilder - check
Pool together your life savings and put down a deposit - check
Lose everything and have your financial life destroyed - check

Welcome to the human face of the late great housing bubble, circa 2007. Man, this has gotta suck. I truly feel sorry for regular folks who got taken in this great swindle. And there's a special place in hell for the conmen and liars who took advantage of their fellow man these past few years. And they know who they are.

Kara Homes buyers may lose deposits

Several prospective Kara Homes Inc. home buyers all but lost their deposits Monday
after a bankruptcy court judge approved the sale of six uncompleted developments to developers and a bank.

An option now is to try to recover a portion of their money as unsecured creditors in the bankruptcy case, said Barry W. Frost, a lawyer for some of the Kara buyers. They would only recoup their money once secured lenders, such as banks, are paid.

Jerrold Fried, 42, of Berkeley, who put down $135,000 on a house at Kara's Dayna Estates in Toms River, is not hopeful he'll see any money.

"Unfortunately, in the end of the big bankruptcy, my wife and I are the ones that are going to suffer, and my children," Fried said. "Everybody else goes before me even though he used my money to build the development."

Of the more than 20 prospective home buyers with deposits, four buyers at Woodland Estates have signed a new contract with its new owner, Fenix, with another expected to be finalized shortly.

U.S. Bankruptcy Court Judge Michael B. Kaplan said he hopes Magyar Bank will make "similar accords" with other home buyers.

"There are no great solutions," Kaplan said. "There are no great answers."

Kaplan resisted calls by lawyers for home buyers, some of whom put down more than $100,000 in deposits, to reject the auction's results. The deposits "for the most part are the life savings of the contract purchasers," Frost said.

14 comments:

serindippity said...

In the real world, Mister Potter won.

And he has a TV show about how to LBO and flip S&L's for great profits.

onemorebeer said...

People are soooo stupid, no wonder Einstein gave us the bomb (ok ok, at least hinted at how to make one).

Stuck in So Pa said...

In the real world, Mister Potter won.

Unfortunately that is so true, and will ALWAYS be true. No Hollywood ending for Zuzu Petals in the real world. Clarence didn't come through.

Anonymous said...

That is one heck of a deposit - where these 2 million dollar homes? And if so - then these people must be making $500,000 a year...

Marky Mark

Natural Eyebrows said...

Why do people sign $500,000.00 contracts without a lawyer? Because all they see is the granite counter top and the 14" ceilings.

a.creampuff said...

What's in a name? "Fried" all right. To a crisp.

Mc_Squelly said...

If you can put that much down you wont miss it. Cha ching, time to buy some bling...

Mort said...

Too bad, so sad. I'll put a deposit down for a house, car, rv, the day hell freezes over and I see the devil form a hockey league.

buy_high_sell_low said...

135k as a deposit on pre-construction? either these were some very expensive homes or these people let their greed the best of them.

Idiots.

Anonymous said...

They MUST have been very expensive homes to require that amount of deposit, but then, this was NJ at the height of the artificially inflated prices.

I doubt there were any publicly available signs that buyers could've found in time, to show that Kara Homes wasn't financially solid. Any builder who was doing business so stupidly that they go under the moment prices flatten out was definitely doing something wrong. Truly good builders always weather the ups and downs of the market, but i think we'll see quite a few go under.

Builders, lenders, investors, real estate others, are already trying to paint themselves as the victims right now. I think they're angling for a federal government bailout.

oogabooga said...

Shouldn't the deposits have gone in escrow or something?

Anonymous said...

.......And the DIX at ABCBSNBC,and FOKKT advertised it all the way,Trumped it up all the way,Paraded it all they way,as well as the stock market,never really warning anyone along the way of what was to happen. Either these ASSHATS are incompetent,or they all flat out went along with it knowingly ,and purposefully.Radio ,TV,and others in all the Major US Markets all went along.EFF them all too.There asses are in CYA mode to the hilt now.Only in the last two months have they sarted to really report some warnings.IDIOTS? or Accomplices? Look at it this way,You either were too stupid to warn the People of catastrophic consequences ,or you were in on it.This is destroying thousands as we speak ,and it's just the beginning.The government might let you off the hook ,but Karma won't,and niether will the millions of people that were warning Americans of this calamity on a grand scale.

Anonymous said...

I suspect someone with $135K sitting around and available for a deposit won't be all that hurt by this.

Anonymous said...

Tell the people who picked Judge Kaplan what you think of his decision.

http://tinyurl.com/2jz89s

http://www.google.com/search?q=cache:www.njlnews.com/notices/June/NOTICEKaplan%25206-19.rtf

Circuit Executive
22409 U.S. Courthouse
601 Market Street
Philadelphia, PA 19106-1721

Let me get this straight: a plumber can put a (secured) mechanic's lien on a property over a small billing dispute. Yet these buyers have neither title to the property nor a secured interest? Whether it is the law or the interpretation of the law, something is very wrong here.

Anon 3:18 pm: I totally disagree. For many people, a home down payment is their primary savings goal. I bet that, for most of these buyers, the down payment ate up most of their financial assets.