Village idiot goes bankrupt, remains optimistic

Shawn Forgaard is completely unfazed by the fact that his investment idiocy (9 homes with neg-am loans? with 800k in options to invest?) lost his family everything. Apparently he knew all along that the housing market was shaky as he bought properties in all the "hottest" (i.e. most overinflated) markets, but dismissed the law of buy low/sell high as "so Web 1.0". Now about to go into bumcracy somewhere in the Tenderloin this fellow is planning on starting a business with all his free time. Which begs the question - with whose money? I just can't see VCs lining up to his door ...or lack thereof. That being said, I've prepared a pitchbook to help Shawn on his path:

clipped from www.reuters.com Shawn Forgaard, a 37-year-old software company project manager, bought one home for his family to live in and nine more as investments. He stands to lose all the investment houses in the mortgage meltdown but says he has come away wiser from the experience. "On the surface it looks like total devastation but it's just the opposite. I'm confident our lives will be much, much richer as a result." Using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative amortization loans -- in which payments do not cover the interest so that a borrower's balance grows over time. Forgaard bought his first investment home in the booming housing market of North Las Vegas in 2004, followed in the next two years by eight others in such hot markets as Phoenix and Palm Springs, California, before he realized in 2006 that the situation was worse than he had feared. "I knew I was sitting on time bombs," Forgaard said. "I knew the market was going to go soft and I knew that property values would decline. But I figured that I had enough equity to survive the storm. It really wasn't until five months ago that I realized, 'Hey, you know what? Not only am I going to lose everything I have invested but this is going to force me into bankruptcy," he said. "I'm going to lose my car and my primary (home) and we're not going to be able to live in Santa Cruz, where I was born and raised, and live by the beach. And that was pretty tough to take." The Forgaards likely will sell their Santa Cruz home and declare bankruptcy before banks start foreclosing on his properties. With a newborn son, they intend to start over in his wife's Northern California hometown. Forgaard said that some good has come out of the experience and that his family is optimistic. He is relieved that he no longer has to deal with 10 homes at once and now will pursue a lifelong dream of starting his own business.