STEVE INSKEEP, host:
We mentioned some good data on the housing market, which does not mean that market is as hot as it was. Now when the market was booming, some people made good money flipping houses or condos. That means they bought properties and quickly sold them for tens of thousands of dollars in profit, sometimes hundreds of thousands of dollars. Experts say looser lending standards made it easier for just about anybody to do this, but now that the market is cooler, some people hoping to make some fast cash are stuck.
Here's NPR's Chris Arnold.
CHRIS ARNOLD: Casey Serin has a serious problem. It's one of those hold your head and curl up in a fetal position kinds of problems. He owes people a lot of money. But being a computer programmer in his early 20's, he's done the natural thing and started a blog about his troubles on the Internet.
Mr. CASEY SERIN: I thought, you know what, my story needs to be told. There's a lot of other people that are facing foreclosure who got in over their head. I want to share my story with the world. So I launched my blog, iamfacingforclosure.com.
ARNOLD: Yes, he actually has a blog called iamfacingforclosure.com where he details his odyssey of financial ruin. He's also listing a bunch of houses he wants to sell there. But here is Casey Serin's story. His family came to this country in 1995 from Uzbekistan when Serin was 12 years old.
Mr. SERIN: We've always kind of had a hard time getting up on our feet. My parents just recently bought their first home. They've been struggling for a long time. My dad's been working odd jobs from the very start. A lawn here, you know, lawnmower type stuff.
ARNOLD: By last year, Serin had a stable job near Sacramento, California working on a non-profit company's website. But he thought he could make more money and help his family by investing in real estate. So he signed up for some real estate seminars and then he bought a house in Sacramento. He paid $320,000 and quickly flipped it.
Mr. SERIN: I ended up selling the house for $360,000, okay? And I was in the transaction for about a month. After closing costs it was about a $30,000 profit.
ARNOLD: So Serin paid off his and his wife's credit cards, and then he started looking for houses he thought were bargains, and buying lots of them with no money down.
Mr. SERIN: Buying, you know, eight houses in a matter of about seven months in four different states.
ARNOLD: If this was two or three years ago, Serin might actually have made a lot of money. But the market stalled in many of the areas Serin bought houses -Albuquerque, Dallas, Sacramento - and now he's trying to bail out, but he's still stuck with five of the properties.
Mr. SERIN: I'm about $2.2 million in debt in real estate.
ARNOLD: Oh, and did we mention Serin quit his job along the way to try to be a full-time real estate flipper? He knows - bad idea. But the situation raises another question: What were the banks thinking when they loaned a 23-year-old guy with no assets that much money?
Holden Lewis is with Bankrate.com, which follows the mortgage industry.
Mr. HOLDEN LEWIS (Bankrate.com): Lending standards really did get pretty loose, and part of that is the way the mortgage market is constructed.
ARNOLD: These days it's a lot easier for banks to hedge their bets by selling off risky mortgages to big investors. So banks are bearing less risk. And to get more business, many began offering loans where an applicant doesn't even have to show any proof of income. Holden Lewis.
Mr. LEWIS: These low-documentation and no-documentation loans, they became extremely popular.
ARNOLD: On the one hand, this let more people buy homes to live in, but it also let people like Casey Serin gamble on investment properties. As long as house prices kept rising everybody was happy. But now prices are falling.
Nicholas Retsinas heads up Harvard's Joint Center for Housing Studies.
Mr. NICOLAS RETSINAS (Joint Center for Housing Studies, Harvard): In a cooling housing market, it essentially pulls back the covers, on these mortgage products, and they become exposed for the kinds of risky products that they are.
ARNOLD: Risky for the borrowers who got in over their heads, that is. One bank recently reviewed a hundred low-documentation loans and discovered that most of the borrowers exaggerated their income dramatically - by more than 50 percent. That became so common that these loans are now called liar's loans in the mortgage industry, and lenders say they're moving away from them.
Casey Serin admits he didn't exactly tell the whole truth either, and now he's considering bankruptcy.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
