no third solution

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B-Listers Do Not Need Your Money.

June 15th, 2006

Via Radley Balko, it seems that Dustin Diamond, of “Saved by the Bell” fame, is about to lose his house. And he wants your help. Do not dignify this idiot with your money, no matter how clever you think his fundraising t-shirts are. (Note: They’re not clever.)

“I’m Dustin Diamond and you probably remember me from the hit TV show Saved By The Bell. After the show ended I decided to leave Sunny Cailfornia for the midwest. My shitty credit meant that getting a loan for a house would be tough. I began looking and finally purchsed one on a land contract. I was thrilled! Now I call Wisconsin my home.

During the past years the land around me has developed for the better and my property value went way up. Now that the house is worth a lot more they want it back. Knowing my credit is bad, getting a straight mortgage would take some time. I received a letter stating that I had 30 days to pay $250,000.00 or get out. I was not thrilled…

That’s right, yours truly gets served with a notice to foreclose…At this point I have less than 40 days to save my house and I’m calling out to anyone who will listen.”

Setting aside the issue of why a pseudo-celebrity has “shitty credit” to begin with, If anything, the rising property values ought to make it easier for him to sell, and make a tidy profit. A land contract vendee can always sell his interest. (I’m not sure if this is still possible if foreclosure proceedings have been started) Additionally, the land contract is a means by which sub-prime borrowers can establish credit. If he still can’t get a loan, it’s probably because he’s behind on his payments. When property appreciates like this, the land contract vendor gets boned – unless he anticipated the appreciation and built in a sufficiently high interest rate. But land contract rates are usually capped by usury laws, and typically have a lower maximum than mortgages, for example, in 1982 my parents bought a house on land-contract, paying 11%. Mortgages at the time would’ve cost them 16%.

Poor fucking Dustin Diamond. Should’ve hired a better accountant while he was making Saved by the Bell, Saved by the Bell: The College Years, and whatever other spinoffs they spawned. He also travels the country speaking for audiences. He visited my Alma Mater back in 2003 – I didn’t see him, but my friend Shawnk did, and he got to meet him; said he was a “total dick.” I’m not sure what his appearance fee is, but for christ’s sake, if Dustin Diamond can’t make his house payment, I don’t think anyone should feel sorry for him.

I’m not saying Dustin Diamond didn’t get screwed by this lawyer, but if the property value has gone up, his Land Contract Purchaser’s Interest ought to be worth significantly more than the remaining balance due. If this is the case, then he should easily be able to find someone to purchase his interest. So get a clue, Screech: Sell it. Take your proceeds and use them to put a down-payment on a more modest house. The equity will help you weather future emergencies, and give you a little security, and it should be able to secure you slightly better financing.

The only thing worse b-list celebrities with lots of cash, is broke, b-list celebrities who, having squandered their own incomes, feel they now deserve your money, too.

Comments

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  • KipEsquire says on: June 15, 2006 at 10:59 am

     

    The last thing any bank ever wants to do is foreclose on mortgaged property. They are in the lending business, not the real estate brokerage business, and it’s a huge and costly hassle for them.

    If they’re foreclosing, it’s because he has been pulling shenanigans with them.

  • doinkicarus says on: June 15, 2006 at 12:24 pm

     

    This is a land-contract – so it’s probably an arm’s length transaction between two individuals, or an LLC and mr. Diamond. Now, alot of land contracts are short term, and require a massive balloon payment at the end of a 24 or 36 month period. If this is the case, and he’s simply unable to secure the necessary financing to pay off the vendor, tough shit. There is no guarantee, express or implied, in any land contract, as to the vendees future ability to secure financing to repay the indebtedness.

    It’s still a foreclosure though, and you’re right – The extent to which banks (and LC vendors) go, in order to avoid foreclosure is often enormous. Nobody (bank or otherwise) wants to foreclose unless he’s been pulling shenanigans, in fact, they can’t foreclose unless he has defaulted on the contract.

  • Anonymous says on: June 18, 2006 at 1:40 am

     

    Actually, in a land contract, no equity is gained by the lesee until the entire loan is repaid,. therefore, he CANNOT sell his interest. Also, Jackie Coogan laws only protect only a small percentage of earnings. In his case, his parents spent 75%+ of his money, and “invested” a lot more improperly, leaving him with his self described “shitty credit”. As for apearance fees… most schools pay an average fo $350, so…. that will NOT make him rich, considering it probably cost him more for travel, hotel, etc.

  • Anonymous says on: June 18, 2006 at 11:03 am

     

    still, as was said int he post, if there were any value in his Right To Purchase he could easily find financing. Once the payment is made, he woiuld have title to the property (and there would be equity, if any).

    The problem here appears to be that he a) an idiot and/or b) not able to find competent representation and/or c) has a purchase contract option in excess of the home’s value.

    Published news reports indicate he would not elaborate on his income or the specifics of the contract.

    It is hard to get motivated to help him if he won’t provide answers and the situation is so clearly easily solved (unless the facts are not as they seem – but again he won’t elaborate).

    How stupid will these t-shirt purchasers feel when he comes up with “unexpected financing” on the last day and there money goes towards soemthing else (a new car?). Or worse, when he says, I couldn’t raise the money and I lost the house but of course the t-shirt profits will go to him anyway (the real reason he would not buy the house in the case being the purchase option is worthless and he chose not to borrow to execute it and be under water on the house)

    Anyway, absent any new facts from Mr Diamond, there are clearly more worthy cases in need of help.

    So buy the T-shirt if you like it, but don’t do it to help Mr Diamond.

  • doinkicarus says on: June 18, 2006 at 10:36 pm

     

    “Actually, in a land contract, no equity is gained by the lesee until the entire loan is repaid,. therefore, he CANNOT sell his interest.”

    Trust me bro, I’ve been working in real-estate Title insurance for 3 years. I am absolutely certain that you can sell/assign the purchaser’s interest in a land contract. You simply execute and record a document called an “Assignment of Purchaser’s Interest in Land Contract” and usually also a “Quit Claim Deed.” Land Contract purchasers can even mortgage their interest in property, but this is rare. It is not, however, rare to see an “Assignment” in a land contract, by which the current “buyer” transfers the contract to another party. Happens all the time. It’s kind of like assuming someone’s mortgage, which used to be commonplace, but is now pretty rare.

    For example, let’s say I enter into an L/C for the purchase of a $250K home. After a few years in the home, comps in the neighborhood go for $500K. I have several options, one is to sell the house outright – collect the 500K and pay off the remaining indebtedness, keeping whatever remains as my profit. The other, is to assign my interest in the property. And if the value of the property is $500K, and the remaining indebtedness is say, $200K, there is certainly plenty of room for arbitrage there.

    In fact, if you were presented with the opportunity to buy my land contract for $300K, you’d be a damn fool not to, knowing with reasonable certainty that you could then sell the house for $500k.

    As far as the details about dustin diamond are concerned, well, that is just too bad. He’s certainly old enough, and ought to be smart enough now to figure out his own finances. If they’re foreclosing his house, it’s because he’s defaulted on the contract, or he’s unable to secure financing to make the balloon payment.

  • Anonymous says on: June 19, 2006 at 3:17 pm

     

    I think Dustin Diamond is being quite a jerk to ask people for money so he can pull himself out of his own troubles. From what I read, he was always the calling the cops whenever someone called out to him, walked on his lawn, or there were baby mice in his garage. I would respect him more if he sold and bought a modest house or if he used the money to help the family of a cancer patient pay medical expenses.

no third solution

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