23 Wake Forest J. Bus. & Intell. Prop. L. 61.
During 2006, in the calm before the storm most Americans know now as the “Great Recession,” Mr. and Mrs. Duffy decided to purchase a second property in Gearheart, Oregon, hereinafter referred to as the “Gearheart” property. In retrospect, it is clear that 2006 was the worst time in recent history to purchase a second home in the United States. From the mid-1990s to the mid-2000s, the average price of housing rose rapidly, peaking in 2007 when the average price of a house in the United States reached $314,000. Along with the rising home prices, increases in subprime mortgages also played a major role in the growth of the housing bubble, which “burst” in 2007, leaving many without jobs and spurring the housing market to quickly plummet in value.
Unlike the extremely savvy characters in the movie, The Big Short, who foresaw the impending housing crisis, Mr. and Mrs. Duffy were unaware of the coming housing market crash. When the Duffys purchased the Gearheart property, they paid the sellers $430,500. The remaining $1.4 million was borrowed through a mortgage from JPMorgan Chase Bank, N.A. (hereinafter “JPMC”).