Celebritization of Foreclosure Relief

Soon-to-be-retiring NBA star Shaq follows in Magic Johnson's footsteps to provide good will to the community. He plans to purchase the mortgages of homeowners facing foreclosure in the Orlando area, refinance them and keep them in their homes. The strategy is likely predicated on standard real estate foreclosure investment practice: 1) filter mortgages in foreclosure and identify those that offer positive equity cushion, 2) pay down mortgage, perhaps at a discount, and refinance home at current market value, 3) allow homeowner to lease home based on new, lower monthly payment, with future option to repurchase based on a formula that would recompensate Shaq's finance company. 4) Finance company benefits on eventual upturn of housing market.
“I want to come in not to kick them out, but to work with them and save them so they can stay in their homes,” O’Neal told the Orlando Sentinel.
Behind the proven success of Magic Johnson Enterprises, Shaq would be counting on the largesse of foundations and companies interested in this kind of association for funding the project. Execution of the strategy would also signal a housing market bottom in areas like Orlando beset with foreclosures because the strategy has downside risks that could tarnish noble objectives should housing stock continue to fall.

Celebrities using their names for good causes is admirable, as long as professional managers and not celebrity hanger-ons are involved.


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  • 6/20/2008 7:50 AM jp moses | REI Tips wrote:
    I can see it now. Shaq's smiling face on a "We Buy Ugly Houses" billboard. Awesome!
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    1. 6/20/2008 7:57 AM Pat Kitano wrote:
      Funny you should mention how unexpectedly comical this Shaq venture is. My initial impression was similar - Shaq sure doesn't inspire the masses as a financial titan, but neither did Magic. Upon reflection, I think it's a worthy cause.

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  • 6/20/2008 2:51 PM [email protected] wrote:
    Although it may seem comical, all in all, it is still very admirable for the 2 to extend their celebrity status and help desperate owners keep their homes.. I wonder if they are helping Ed McMann and Holyfield as well.
    Reply to this

  • 6/23/2008 5:58 AM John O wrote:
    I surely hope Shaq has had his people due proper due-diligence as to the recent Florida legislation restricting (and penalizing) "foreclosure rescue" programs. No up-front fee is a given, but offering a stay-in-the-house-and-buy-it-back-with-an-option is flirting with future trouble (at least that's what most experienced investors think).
    Reply to this

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