Sex and the subprime market…

November 12, 2007

images-7.jpegLate Friday, Countrywide Financial (CFC) filed its 10-Q that contained new warnings about its ability to access public debt markets, sending the stock down sharply today.

As most people know, Countrywide is the poster child for lenders gone wild. And how better to illustrate that than with this house (scroll down to the third house) at 5601 Flotilla Drive in Holmes Beach, Fl? A quick scan of Countrywide’s REO listings for Florida, which now stand at 879, compared with 817 just three weeks ago, shows that Countrywide now owns this house, which was listed at $1.89 million on the broker’s site and $904K now that it’s owned by Countrywide. I happen to know this part of Florida because I used to live there, so I’ve been checking Countrywide’s site pretty regularly and this is the first time a house in Holmes Beach — a sleepy little beach community that was way over-developed in recent years — has shown up. My guess is that given the frenzied development down there, it won’t be the last.

But here’s the punchline: according to this article from the local paper, the house was used to host — wait for it — Internet sex parties.

“The party Web site states that anyone can attend any of the parties if they pre-register and pay a fee, or attend free if they agree to have their photo taken during the sexual activities that take place at the events. The site shows in detail photographs of “activities” sponsored by the club, registered attendees, the schedule of parties and other “events.”

So it wasn’t just Countrywide’s mortgage brokers who went wild. – valuing a house for about 50% more than it is now worth. It was the people inside the house, too. Maybe they should have charged more for the parties!

UPDATE: A subsequent search of Manatee County records shows that the people who owned the house owed $1.1 million when a judgment was entered against them in late July, and not the $1.89 million the property was listed for. Still, this one example shows just how crazy real estate was in this part of Florida.

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