Gratitude for Casey Serin

I've just connected with Casey Serin on Facebook. For housing bubble followers, Casey Serin is a household name. For those who don't know him, Casey is the poster child for easy lending standards in the bubble years.

Casey bought approximately seven houses worth more than two million dollars as an unemployed kid in his early 20's with no assets. The first I heard of him was when Old Zeke sent me a Craigslist ad of a New Mexico house that Casey was trying to do a short sale on. I later became aware of Casey's blog iamfacingforeclosure-dot-com (now defunct) and was shocked at the lending standards revealed there.

What I read led me to my first housing bubble trade:

I shorted Countrywide (CFC). They are a sleazy subprime lender, one of the biggest promoters of toxic option ARMs, and highly vulnerable if the housing bubble really bursts. [...]

- pushers of option ARMs, AKA Darwinian euthanasia. Darwinian euthanasia is fine, except when Dr. Kevorkian is stuck by the deceased with an underwater house.
- they take unsecured promissory notes from broke and unemployed 24-year-olds to avoid foreclosing on bad loans

... and further:

The losers? Lenders stupid enough to lend 90%, 95%, or 100% of an inflated price and end up foreclosing on a deeply underwater house.

I don't want to point fingers, but Countrywide (CFC) did this, with no questions asked, for Casey Serin, an unemployed 24-year-old who lied about his income and who took cash back from the seller based on the appraiser-inflated price.

The chickens are coming home to roost. The roosters are shorting CFC.

So I owe Casey a big debt of gratitude for showing me what would have been obvious to any Wall Street analysts who cared to do actual research instead of just cheerleading the housing bubble and the bad lenders who fed it.

To many bubble bloggers, Casey is a villain. To me, he's a hero. Casey saw the corrupt game set up by Countrywide, Wall Street, Fannie and Freddie, the FHA, and the Federal Reserve, and he played that game hard, by their rules. Casey got a free option on the housing market, and could easily have become a multimillionaire if the bubble had only lasted a little longer. (As I've pointed out before, FHA subprime lending is now offering another huge free option on the housing market, with the taxpayer taking all the risk.) Casey is a visionary to have seen that opportunity and carpe'd the diem as such a young man. And, unlike a lot of housing speculators, he's not whining for a government bailout. He stuck it to the bad banks good and hard and walked away.

So here's to you, Casey Serin, to your big dreams and your eye for an opportunity.

Casey's latest dream (which I will admit I do not understand) is Island2012, apparently a plan to get a bunch of people together to buy a private island. He's having a kickoff party today.