Jingle bell, jingle bell, jingle bell rock
Jingle bells chime in jingle bell time
Dancing and prancing in Jingle Bell Square
In the frosty air.
What a bright time, it’s the right time
To rock the night away
Jingle bell time is a swell time
To go gliding in a one-horse sleigh
Giddy-up jingle horse, pick up your feet
Jingle around the clock
Mix and a-mingle in the jingling feet
That’s the jingle bell,
That’s the jingle bell,
That’s the jingle bell rock.
Jingle Bell Rock — Bobby Helms
When I first started blogging about the housing debacle, some of the more bullish commenters would bristle when I suggested that a great many people refinanced all their equity out of their homes and would end up in foreclosure when prices went south. I have already profiled some pretty egregious HELOC and refi abuse on this blog, but today’s listing sets a new standard.
Income Requirement: $404,700
Downpayment Needed: $323,760
Purchase Price: $870,500
Purchase Date: 12/11/2002
Address: 34 Westlake, Irvine, CA 92602
First Mortgage $696,000
Second Mortgage $699,900
Total Debt $1,832,600
Total Cash out $962,100
Sq. Ft.: 4,000
$/Sq. Ft.: $405
Lot Size: –
Type: Single Family Residence
Year Built: 2002
Stories: Two Levels
View(s): Park or Green Belt
On Redfin: 10 days
From Redfin, “Executive luxury home backed to tree-lined greenbelt, elegant wrought iron staircase-distressed hardwood flr entry, main flr bedroom/bath, huge kitchen w/ center island, granite, maple cabinets, butler’s pantry, wine compartment, built-in media center, surround system, decorator paint, shutters, crown moulding, French doors, large upgraded master suite w/ extensive wardrobe organizers, backyard w/ built-in BBQ, fireplace, ref/sink, garage w/ epoxy finish, cabinetry, resort ass. amenities”
Resort ass? Is this the person you fool around with when you are on vacation?
This house was purchased 5 years ago, and these people have already taken out at least $525,400. If they have also maxed their HELOC, then they have taken out an unbelievable $962,100! That comes to $192,420 per year of additional spending money. If their house were a W2 employee, it would have been making over $300,000 a year to generate that kind of take-home income.
So how bad is the bank going to lose on this one? Assuming they maxed their HELOC, they get their asking price, and they pay a 6% commission, the lender will lose $310,928. For the lender’s sake, I hope the owners have not tapped their HELOC.
Do you imagine these sellers think they are rich? After all, they probably make around $200K, and they have been spending as if they make $500K. Only rich people do that, right? As the housing bubble continues to deflate, we will all see who was pretending. As Warren Buffet said, “Only when the tide goes out do you discover who’s been swimming naked.“
I wonder how well they will adjust to the 50% drop in spending money and being cut off from credit after the short sale?