I have profiled many stories of the capricious nature of the housing bubble and how it impacted people for better and for worse. The daily HELOC abuse posts have covered the odious behavior of borrowers from all walks of life. Usually I relegate those stories to the bottom of the daily posts because they are so common they no longer rise to the definition of “news.” However, when I discovered today’s featured property I was astounded at the scale of the HELOC abuse. When I did a search on the name of the owner I came across an interesting back-story of divorce, deceit, and elder abuse. The story is so compelling, I decided to make it the focus of today’s post.
July 19, 1995 — GREG HERNANDEZ — TIMES STAFF WRITER
SANTA ANA — An Orange County woman who won $12.6 million in the California Lottery last year is suing her son and daughter-in-law in an effort to regain the money, which she claims they coerced her into signing over to them.
Joan F. Markham, 66, a British citizen who was living in Buena Park when she won the prize last summer, alleges that the couple, who are now divorcing, threatened to have her deported or sent to jail unless she gave them the money. They also threatened to keep her away from her grandchildren, whom she baby-sat regularly, according to the lawsuit filed Monday in Orange County Superior Court.
This divorcing couple allegedly harassed an old lady into giving them her lottery winnings by threatening to prevent her from seeing her grandchildren. Real nice.
“She’s just really upset about all of this,” Markham’s attorney, Milford W. Dahl Jr., said Tuesday. “I think she wants to have control of the money so she can make sure her grandchildren get it rather than have her son and daughter-in-law spend it on themselves.”
She was right to be concerned. As we will see when we examine the amazing HELOC abuse on her property, the daughter-in-law has a sense of entitlement that is big even by Orange County standards.
There are two sides to every story, and the events as described by the attorney for Ms. Markham may not be accurate.
Dispute Over Lottery Winnings Heard in Court : Lawsuit: Woman contends that the action involving her estranged husband and mother-in-law is a scheme to keep her from getting her share of $12.6 million.
July 20, 1995|GREG HERNANDEZ | TIMES STAFF WRITER
… An attorney for the 41-year-old Nicole Markham, relating her side of the story for the first time, said the lawsuit is really a scheme by her estranged husband to cheat her out of her share of the winnings.
“I firmly believe that this is just another step in Brian’s scheme to exclude his wife, Nicole, from community property proceeds,” attorney George C. Rudolph said.
“Brian went out and bought a lottery ticket. He doesn’t know what to do when he wins because he doesn’t want to share the proceeds with his wife. So, he held the ticket for three weeks until his mother came back from England and concocted a scheme where Joan went to the lottery office and claimed to be the winner,” Rudolph said.
That sounds very plausible. Who would want to give millions of dollars to someone they’re divorcing? Unfortunately, whether the guys wants to turn over the money or not, they were still married when he won, and the soon-to-be-X-wife still gets half.
The elder Markham, who is a British citizen, contends in a lawsuit filed Monday that the couple coerced her into signing over her 1994 lottery winnings last fall by threatening to keep her from seeing her grandchildren and threatening to have her deported. She is suing to have all the winnings returned to her.
In her lawsuit, Joan Markham, who lives in South County on a long-term visa, claims that she gave her son money to buy lottery tickets for her while she was on vacation in her native Great Britain.
Sounds a bit too convenient, doesn’t it?
Her attorney, Milford W. Dahl, said Monday that Brian Markham held onto the ticket for three weeks until his mother returned to claim the prize, which amounts to $631,000 a year for 20 years, or $454,320 annually after taxes.
Dahl said that after a “campaign of harassment and intimidation” by her son and daughter-in-law to get the money, Joan Markham signed her winnings over to her son in order to preserve her health and her relationship with her grandchildren. The attorney said his client is diabetic and had to be hospitalized after a confrontation with her daughter-in-law last September.
If true, the perpetrator is a real piece of work.
Rudolph said the elder Markham’s version of events is simply not true.
“Then only thing that we can do is sit back and wonder why we are here a year after this alleged incident has occurred,” he said.
The timing does look rather suspicious, and although I couldn’t find a follow-up story, it appears the former daughter-in-law and ex-wife won and got to keep her half of the winnings.
… On Wednesday, Fell scheduled a preliminary hearing for Aug. 11. She ordered that a lottery disbursement of more than $454,000, scheduled to be paid to the estranged couple this week be given to their respective attorneys until the matter is resolved.
Rudolph argued against any delays, saying his client needs her share of the money to live on. He said she spent most of her first payment to buy a new home in Coto de Caza. He said Nicole Markham did not ask for financial support in the divorce and does not have a job. …
Does not have a job? And she is buying a Coto de Caza mansion? How did she plan to make those payments?
Well, she must have won the case, but even then, the $315,500 yearly split of the lottery winnings were not enough to satisfy her sense of entitlement, so she turned to her HELOC.
She hit the lottery twice
By purchasing a house at the bottom of the last real estate cycle, the former daughter-in-law and ex-wife managed to ride the equity wave of the housing bubble. As a consummate free-loader, she didn’t work and overspent her lottery allowance and turned to her HELOC to indulge her expensive tastes.
- This house was purchased on 1/18/2005. The actual purchase prices is not given, but the seller provided a carry-back loan for $1,403,000. I assume the buyer put 20% down with her first payment from the lottery money as stated in the news article. The purchase prices was likely $1,750,000.
- On 3/11/1998, the paid off the original seller by refinancing with a $1,590,000 first mortgage. She also netted $187,000 for her troubles. I guess that lottery money wasn’t going far enough.
- On 1/27/1999 she refinanced again for $1,725,000 pulling out another $135,000.
- On 4/16/2001 she obtained a $250,000 HELOC.
- On 7/5/2002 she obtained a $500,000 HELOC.
- On 1/7/2004 she refinanced with a $1,614,171 first mortgage.
- On 3/14/2005 she refinanced with a $2,465,000 first mortgage.
- On 2/27/2006 she opened a $100,000 HELOC.
- On 7/21/2006m she refinanced with a $3,850,000 Option ARM.
- Total mortgage equity withdrawal was a whopping $2,447,000 plus negative amortization and three years of squatting.
- She was served a Notice of Default on 9/29/2009 which means at the latest she quit paying in May of 2009. In all likelihood given the slow pace of high-end foreclosures, she was delinquent even before then. She was allowed to squat for nearly three years in this beautiful Coto de Caza mansion.
A crushing fall from entitlement
How will this woman adjust? She only has about two years left on the lottery payout, then she will have nothing. No lottery money. No house. No HELOC money. Nothing.
At 59 years old, she hasn’t worked in nearly 20 years, so it doesn’t seem likely she will start earning $500,000 per year to support her habits. What will she do? Will she pull herself up by her own bootstraps?
I foresee a truly crushing fall from entitlement in her future.
When famous people fall, it makes news, but when plebs fall, no notice is given; no ritual is performed. The silent souls quietly abandon their perceived privilege while the raucous proles forcefully defend their binding birthright through procedural delays and faithlessly modified promises. In the end, all fall to the support of their own resources and suffer to the degree they resist reshaping their lives to reflect reality.
We witness this fall as HELOC abuse posts, short sales and Trustee Sales. Like forensic examiners, we follow clues in the property records looking for what methods were used and what motivated homeowners to borrow and spend their family homes. This work is consequential because unless we see conditions for what they are, unless we see people’s defective reasoning and overriding emotional gambits for what they are, we may fall victim to the same Siren’s Song.
Who will fall, and how much will they suffer?
Suffering is a spiritual concept; suffering is a negative judgment of experience exacerbated by attachment, delusion and aversion. Suffering and attachment directly relate; each soul suffers in proportion to the attachments formed to objects, people, beliefs and ideas, or anything the mind’s grasping can’t bear to lose or give up. Are you aware of your own suffering?
Homedebtor suffering directly relates to their over-indebtedness and HELOC dependency; each suffers in direct proportion to (1) their debt-to-income ratio, (2) the magnitude to which they consistently outspend their wage income, (3) and the extent to which they must have that which they must lose. Rapid appreciation and HELOC spending to supplement lifestyle is not coming back, and all who hold their breath will give up, pass out or walk away. In the interim, they suffer. Quietly and anonymously they hatch fantasies of golden geese and high-flying home prices not to be.
Coto de Caza Overview
Median home price is $789,000. Based on a rental parity value of $883,000, this market is fairly valued.
Monthly payment affordability has been improving over the last 9 month(s). Momentum suggests improving affordability.
Resale prices on a $/SF basis increased from $242/SF to $246/SF.
Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.
Median rental rates increased $134 last month from $3,530 to $3,664.
Rents have been falling for 3 month(s). Price momentum suggests unchanging rents over the next three months.
Market rating = 1
Proprietary OC Housing News home purchase analysis 
22431 AVENA Ln Coto de Caza, CA 92679
$2,899,000 …….. Asking Price
$1,750,000 ………. Purchase Price
1/18/1995 ………. Purchase Date
$1,149,000 ………. Gross Gain (Loss)
($140,000) ………… Commissions and Costs at 8%
============================================
$1,009,000 ………. Net Gain (Loss)
============================================
65.7% ………. Gross Percent Change
57.7% ………. Net Percent Change
2.8% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$2,899,000 …….. Asking Price
$579,800 ………… 20% Down Conventional
4.17% …………. Mortgage Interest Rate
30 ……………… Number of Years
$2,319,200 …….. Mortgage
$593,146 ………. Income Requirement
$11,301 ………… Monthly Mortgage Payment
$2,512 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$725 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$785 ………… Homeowners Association Fees
============================================
$15,323 ………. Monthly Cash Outlays
($1,676) ………. Tax Savings
($3,241) ………. Equity Hidden in Payment
$860 ………….. Lost Income to Down Payment
$382 ………….. Maintenance and Replacement Reserves
============================================
$11,647 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$30,490 ………… Furnishing and Move In at 1% + $1,500
$30,490 ………… Closing Costs at 1% + $1,500
$23,192 ………… Interest Points
$579,800 ………… Down Payment
============================================
$663,972 ………. Total Cash Costs
$178,500 ………. Emergency Cash Reserves
============================================
$842,472 ………. Total Savings Needed
——————————————————————————————————————————————-
We're sorry, but we couldn't find MLS # S701223 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
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$14,500,000 31651 MANZANA Way |
0.24 miles 8 bd / 9 ba 13,444 Sq. Ft. |
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$6,800,000 31781 SECOYA Way |
0.3 miles 6 bd / 8.5 ba 10,000 Sq. Ft. |
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$5,900,000 31742 CONTIJO Way |
0.44 miles 5 bd / 6.75 ba 8,000 Sq. Ft. |
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$6,995,000 31361 TRIGO Trl |
0.53 miles 8 bd / 9.5 ba 10,394 Sq. Ft. |
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$8,900,000 31951 VIOLETA Ln |
0.55 miles 7 bd / 11 ba 15,000 Sq. Ft. |
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$5,995,000 31381 TRIGO Trl |
0.61 miles 5 bd / 7 ba 9,000 Sq. Ft. |
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$7,900,000 31801 VIOLETA Ln |
0.71 miles 6 bd / 5.5 ba 9,000 Sq. Ft. |
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$6,250,000 23201 PRADERA Rd |
0.83 miles 6 bd / 8 ba 10,000 Sq. Ft. |
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$3,249,000 31152 VIA COLINAS |
1.59 miles 5 bd / 7 ba 9,631 Sq. Ft. |
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$2,999,999 31232 VIA COLINAS |
1.65 miles 6 bd / 7.75 ba 10,548 Sq. Ft. |
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25 Responses to “Woman wins lottery, buys house, HELOCs $2M+, and spends it all”
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Is not paying your mortgage in the OC the sign of coolness?
Cool? No. Intelligent, or perhaps a better word, prudent, in the right circumstances…yes. 5 months w/o paying and still no NOD, and of course, they are working on a loan mod, I will post and let people know how this shell game comes out. If the mod is permanent, and equivalent to rental prices, I will keep the home, if they kick the can down the road, I’ll short sale or deed in-lieu….which have both been offered via the mail by the House of Morgan.
Slowly scratching and clawing my down payment back.
How long do you need to go without payment to get back your down payment?
“I will post and let people know how this shell game comes out”
It is sort of a game, isn’t. Well good luck on the loan mod.
Here is your shadow inventory.
The “benefits” of the ban on dual track foreclosures. The banks can’t proceed with both a loan mod and a foreclosure at the same time. Since you are “working” on a loan mod, you are safe from foreclosure.
Turned down for a loan mod or don’t like the terms? No worries, just wait until right before the auction date and take them up on the short sale offer…. I’m betting you can pull off another 18 months easy.
I’d like to scratch & claw your deadbeat eyes out.
That’s a bit harsh.
Sounds like a bitter renter.
Cool? Not in the least.
Maybe I am in the minority, but I look at those skipping out on their mortgage payments as greedy, fiscally irresponsible and morally bankrupt enough that they feel it is fine to transfer their stupidity onto the backs of the rest of us tax payers.
Curious Swiller if you’re not making your house payment, what sort of savings have you built up or are you using the cash to pay down other debt? If you’re saving it, won’t that need to be disclosed to the bank?
Is the bank asking for pay stubs or tax returns to show you cannot make the house payment?
Right, if Swiller’s financials don’t support the current housing cost, he may receive a modification; but if his financials are fine, and improving every missed mortgage payment, then will he receive one? That’s what I’d like to hear about if/when this period is complete for Swiller.
The servicing settlement requires my servicer to reduce my rate or refinance my loan, but nothing’s been offered yet. I’ve even offered to reduce the second’s principal by half in exchange for a rate reduction… No bites…
“I look at those skipping out on their mortgage payments as greedy, fiscally irresponsible and morally bankrupt enough that they feel it is fine to transfer their stupidity onto the backs of the rest of us tax payers.”
If it weren’t for the transfer of the obligation to taxpayers, I wouldn’t have any problem with what Swiller is doing. The banks inflated this bubble and put him into the difficult circumstance he’s in today. The bank should bear the brunt of the fallout from the problems they create. Swiller is going to lose his home, his downpayment, and his good credit, so he is being punished for his actions. What’s the fallout for the bank? Another bailout?
If Italy, Spain, and the rest of the PIIGS start to default or “modify” their current obligations, probably the 5 big US banks will get hit with loses. Therefore the former Vice Chairman at Moody’s said there would be a TRAP 2.O, but maybe through Federal Reserve this time (no congress approval). So, the 5 biggest banks will never have losses ever again?
Plenty of blame to go around IR. People like Swiller are as morally bankrupt as the the banks my eyes.
Household Net Worth Plummeted After 2005, Alongside Income
The middle class seemed to take another drubbing Monday with news that U.S. median household net worth fell 35 percent between 2005 and 2010.
Excluding home equity, the Census Bureau found that median household net worth ticked up by 8 percent during the financial crisis.
Who got hit the hardest? Of the many age groups, heads of households from 35 to 44 accounted for nearly 60 percent of the decline in net worth during the five-year period.
But they weren’t alone. Median net worth also declined for all age groups between 2005 and 2010, with householders 65 years and older feeling the brunt of it, as theirs slid from $195,890 to $170,128.
Although heads of households under 35 saw their net worth fall from $8,528 to $5,402 – much less in real terms – percentages tell a different story: Younger homeowners saw their net worth decline by 37 percent, compared with older homeowners, whose net worth fell by only 13 percent.
Census Bureau economist Alfred Gottschalck said in a statement that the overall decline “reflects drops in housing values and stock market indices.”
Government data found that the declines also slammed educational groups across the board. Net worth plunged by 39 percent for those with only high school diplomas and 32 percent for those with bachelor’s degrees.
Even so, the data correlated higher education with higher net worth, with median net worth at $245,763 for heads of households with graduate or professional degrees. Those with bachelor’s degrees saw their median net worth hover at around $142,518.
The dismal news for householders seems to reflect a widening gap for those in the middle class. Last week the Federal Reserve released a survey of consumer finances that found similar results for householders between 35 and 44, whose median worth fell by 54.4 percent.
The survey also found that heads of households with more education saw their median income shrink between 2007 and 2010. Those with college degrees saw their pre-tax income dip from 81.9 percent to 73.8 percent, for example.
Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin at Madison, tells us that housing and financial crises slammed emerging middle-class families with a one-two, sizably reducing their home equity and net worth.
“The major asset of the middle class is their home,” he says. “Their own home – and that got clobbered.”
The professor says that historically low interest rates allows someone with his background to refinance – he has done so twice in recent years – but that younger householders enter a down market without the equity needed to save money and build their net worth.
“We’re living in an economy in decline,” Smeeding adds. “It’s crawling back a little bit, but it’s going time.”
Loan owners and deadbeats win again.
FHA Dropping $1,000 Debt Rule that Would Have Delayed Closing
On July 1, borrowers wanting to take out an FHA-insured loan would have potentially experienced a closing day delay of 3 months or more if they had debt totaling or exceeding $1,000. Now, the FHA “credit-dispute” rule has been withdrawn, according to an agency letter released Friday.
A HUD spokesperson said in an email that the decision to rescind the earlier proposal, which was first announced in February, was based on input received.
“We plan to issue a new [Mortgagee Letter] shortly which will be more clear in our effort to manage risk on this issue without the unintended consequence of denying mortgage financing to otherwise qualified borrowers,” the spokesperson said.
According to the old guidance, which is the current rule, “[i]f the credit report reveals that the borrower is disputing any credit accounts or public records, the mortgage application must be referred to a [direct endorsement] underwriter for review.” In other words, an FHA spokesperson explained it will “get a human eyeball” to more fully understand what is going on.
The proposed policy that has been rescinded as of Friday would have required a borrower to either cure the collections debt before closing or resolve the debt through a repayment plan, which would have to be maintained for a minimum of three months before closing.
The proposal was originally introduced to lower credit default.
In April 2012, FHA-insured loans accounted for 28 percent of the new market share, according to Ellie Mae’s Origination Insight Report. Overall, FHA currently has 4.8 million insured single family mortgages, the agency stated on its website.
This person is Exhibit A for those who cry out “But… but… she a victim, tricked by the banks into refinancing with bad loans, just like everyone else”.
Fools and their money are eventually parted.
My .02c
”eventually parted” indeed.
BTW, the law of exponents not only applies to math, but to the trust element monetarily as well. At this point, I can say for certain that ‘loss of trust’ between counterparties is rapidly accelerating = housing negative.
What it all boils down to…. a lot of smart people and their money are going to be eventually parted.
New Alert! Possible QE 3 or Infinity tomorrow. Or even the long twist.
As Part Of Its NEW QE Q&A, Goldman Warns Of Possibility For $50-$75 Billion “Flow” Program
Submitted by Tyler Durden on 06/18/2012 19:07 -0400
Not like it should come as any surprise that the bank that first among peers “discovered” that flow, not stock matters, implying the Fed may literally never be able to stop monetizing, is expecting the FOMC to “ease monetary policy on June 20″, but nonetheless here is the full just released Q&A from Goldman’s Jan Hatzius, who just happens to be a Pound and Pence drinking buddy of former Goldmanite Bill Dudley, who just happens to run the New York Fed. Connects the dots. Implicit is that a big dollop of Large Scale Asset Purchases is imminent. That said, if the Fed does disappoint on June 20, and merely extends the maturity of bonds that it will sell as part of a Twist extension from 3 to 4 years, as the bond market appears to be implying (as first warned by Zero Hedge), then all bets are truly off. On the other hand, note where Goldman says: “However, it is also possible that the program would be specified as a “flow” of purchases of perhaps $50bn-$75bn per month.” If that happens, gold is going to $2000, $3000, hell, $10,000 very soon, as it means the Fed will not stop printing ever again. Period.
Wouldn’t surprise me one bit about QE3. This info might have already leaked out in the last two weeks where the market has gone up about 800 pts for no real reason.
Q2 – H1 winding down…. time to offload/book profits….
even despite losses (some), no doubt Goldman and other market-makers will be happily selling into the current rally. Heavily.
what the what?? sheesh….
”Your comment is awaiting moderation”
if you thought all of the recent housing welfare/macro stimulus was/is dispensed for free, you thought wrong…
LA/OC residents…get ready to pony-up….
….the 10 hardest hit would be:
#2 CA-30 (Los Angeles suburbs)—$10,128 tax increase tax per filer
#9 CA-48 (Orange County)—$7,168 tax increase per filer
http://blogs.wsj.com/washwire/2012/06/14/study-10-places-facing-steepest-fiscal-cliff/?mod=WSJBlog
“The bank should bear the brunt of the fallout from the problems they create. …” IR,
Should have, would have, could have. It ain’t going to happen.
How do you know that she spent the money? She could be a well trained modern business women who has maximize profits. Just think if she saved the $1,000,000 bank loan lottery winnings and lived in a manison for three years for free (estimated cash value $150,000).
That’s a sweet deal for her and a lousy deal for the taxpayers, cause you know that the federal govt will make the bank whole and stick it to the taxpayers. That’s just the way it is verses banks should cover their loses. US socialism: Socialize the banks’ loss and privatize the gains.
Somebody is making these stories up.