Monthly Archives: February 2009

Open Thread 2-28-2009

I hope you are checking out the great posts over at The Housing Chronicles Blog.

Prepare for higher taxes! Obama unveils budget blueprint.

What’s really going on with the economy?

Obama’s mortgage plan: is it fair to taxpayers?

December — George Winston

This recession is wearing on people. We are in the depth of winter in our economic cycle. It is cold out there. I hope you have a stable job and an affordable housing payment to shelter you from the storm…

I am pleased to announce that we are scheduled to have another IHB Block Party on Monday, March 9, 2009, at J.T. Schmids at the District.

A Warning about HOAs

Today I want to share with you an email from a long-term HOA board member. It is a warning of the perils of buying into the wrong association.

Our featured property is another house spender. I suspect I will not run out of these properties to profile before we find a bottom.

74 Turnbury Ln kitchen

Asking Price: $670,000

Address: 74 Turnbury Lane, Irvine, CA 92620

{book5}

Mr Brightside — The Killers

I’m coming out of my cage
And I’ve been doing just fine
Gotta gotta be down
Because I want it all

I received the following email that I thought everyone might find interesting:

Having served on the board of my master HOA in Fountain Valley for
longer than I care to admit, and having worked in the HOA management
industry, one of the questions that comes up with almost every one of
these Irvine listings is the question of how much additional debt each
one of these properties may be carrying as a function of their local
and master HOA’s.

Many associations ( if not most ) have board members who
consistently vote against raising assessments on their members, and the
area that is easiest to cut is funding of capital reserves, State law
requires that every association report on their reserves and disclose
the information, but they don’t actually have to fund them.

Properly funded reserves will isolate each component and add a
yearly fraction of the replacement cost to the reserves so that there
is money to slurry seal the roads, replaster the pool, inspect the
sprinkler systems in attached units, paint fences and buildings,
replace roofs, and do major required maintenance.

If the maintenance is deferred, the long term costs soar
exponentially, since the money you saved by deferring painting and deck
coverings means that you have dry-rotted staircases and decks to
replace. The money saved on deferred roofing maintenance translates
into leaks and mold clean-up, et cetera. An unpainted wrought iron
fence rusts, and replacing sections is expensive. Crappy vendors with
poor inspection by management frequently do poor work, with ensuing
problems.

Poorly managed associations may have thousands, or tens of
thousands of dollars per unit worth of underlying deferred maintenance,
and capital reserves funded at 10% to 20% of ideal balance. Catching up
when you are behind is a vicious circle of special assessments, sharp
increases in monthly assessments, and recalls of elected board members.

For associations with high rates of defaults, past due assessments
are wiped out on foreclosure, with the bank responsible for payments
only after the foreclosure, so a poorly managed HOA stuck in a downward
spiral can take even more hits.

Nobody should ever, ever buy an Irvine home without looking at the
reserve study and annual budget of the local and master HOA’s, and
understanding the implications, but in the real estate sales process,
these items are typically not available until you are sitting at a
closing with a mountain of paper and people urging you to sign, sign,
sign.

Gus Ayer, former Fountain Valley Council Member, and one of the three folks behind Orange County Progressive

When I first got this email, I thought to paraphrase it and add to it, but it is great just as it is. I would note that trying to figure out your HOAs potential liabilities is no easy task. I don’t know that I could examine the balance sheet of an HOA and recognize if a $25,000 assessment was coming. These issues are a big deal. As a potential homeowner, you could be buying in to a significant liability without knowing about it. Buyer beware.

Today’s featured property is another frugal homeowner who spent all their equity and has to move into a rental. You know, if enough of these people become renters, it will give renters a bad name…

74 Turnbury Ln kitchen

Asking Price: $670,000

IrvineRenter

Income Requirement: $167,500

Downpayment Needed: $134,000

Monthly Equity Burn: $5,583

Purchase Price: $499,000

Purchase Date: 6/28/2002

Address: 74 Turnbury Lane, Irvine, CA 92620

Beds: 3
Baths: 4
Sq. Ft.: 2,400
$/Sq. Ft.: $279
Lot Size: 3,562

Sq. Ft.

Property Type: Single Family Residence
Style: Other
Year Built: 1999
Stories: 2
Area: Northwood
County: Orange
MLS#: S564755
Source: SoCalMLS
Status: Active
On Redfin: 2 days

bright and airy! this is a must see home in irvine. upstairs loft can
be converted into a bedroom. kitchen has large center island with
granite counter top. master bathroom has tub and european bidet.

I guess we solved the ALL CAPS problem by eliminating capitalization altogether.

I have to get one of those “european bidets.” According to the Poop Report, they are Not Just for Hairy European Women Anymore. It isn’t quite as cool as the washlet, but it does have its own charm, wouldn’t you say?

  • This property was purchased on 6/28/2002 for $499,000. The owners used a $399,000 first mortgage, and a $100,000 downpayment. So far so good.
  • On 5/20/2003 they opened a HELOC for $82,000.
  • On 10/4/2004 they opened a HELOC for $248,000.
  • On 4/18/2006 they refinanced with a $650,000 1 year ARM.
  • On 6/13/2006 they opened a HELOC for $160,000.
  • Total property debt is $810,000.
  • Total mortgage equity withdrawal is $411,000 including their $100,000 downpayment.

If this property sells for its asking price, and if a 6% commission is paid (not going to happen), the total loss to the lender will be $180,200 assuming this borrower fully tapped the HELOC.

There is an open house on this property on Saturday, February 28, 2009 12:00 PM – 4:00 PM. Everyone is encouraged to stop by and ask the owners what they spent $411,000 on. If you get an answer, post it to the weekend open thread. I know I would like to know where the money went.

Choking on your alibis
But it’s just the price I pay
Destiny is calling me
Open up my eager eyes
‘Cause I’m Mr Brightside

I hope you have enjoyed this week at the Irvine Housing Blog. Come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

🙂

{book6}

I’m coming out of my cage
And I’ve been doing just fine
Gotta gotta be down
Because I want it all
It started out with a kiss
How did it end up like this?
It was only a kiss, it was only a kiss
Now I’m falling asleep
And she’s calling a cab
While he’s having a smoke
And she’s taking a drag
Now they’re going to bed
And my stomach is sick
And it’s all in my head
But she’s touching his chest
Now, he takes off her dress
Now, letting me go

And I just can’t look – it’s killing me
And taking control
Jealousy, turning saints into the sea
Turning through sick lullabies
Choking on your alibis
But it’s just the price I pay
Destiny is calling me
Open up my eager eyes
‘Cause I’m Mr Brightside

I never…
I never…
I never…
I never…

Mr Brightside — The Killers

Not Painfully Obvious

With all the news about falling house prices and specials on the housing bubble, it is obvious to most people that prices are falling, and they will continue to do so. Unfortunately, most people do not do anything about it until the price drop is painful–and it is too late.

Today’s featured property is a high-end short sale. It will be a foreclosure soon enough.

46 Crimson Rose kitchen

Asking Price: $1,215,000

Address: 46 Crimson Rose, Irvine, CA 92603

If You Want Blood — AC/DC

Blood on the rocks
Blood on the streets
Blood in the sky
Blood on the sheets

If you want blood
you got it

I think we all know this is going to end badly, and there is nothing anyone in government or elsewhere can do about it. It should be obvious to anyone who watches the news and is capable of objectively seeing what is happening. Unfortunately, most people lose their ability to be objective about the course of prices in financial markets once they take a position. Since almost 70% of households are “long” real estate, most people are incapable of seeing the market objectively. Even now, surveys on housing prices show a majority of homeowners believe prices will appreciate in 2009. Crazy.

{book2}

When I wrote the post “speculation or investment?” I had this description of a speculator’s emotional cycle:

When prices begin to fall in a speculative market,
most speculators immediately lapse into denial. They were so
emotionally rewarded by purchasing and holding the asset, they see no
reason to believe the first signs of a declining market are anything
other than a temporary aberration. As prices continue to fall, the
emotions change: fear begins to creep in, and the battle between denial
and fear goes on well past the breakeven point where the speculator
could have closed the position without losing any money. As prices fall
further, the fear begins to take an emotional toll and the speculator
starts to feel pain. The further prices drop, the more pain is
inflicted on the speculator. What is the natural reaction to pain? Push
it away. As a speculative investment becomes painful, the natural
reaction is to want to get rid of it. This prompts the speculator to
sell the asset – only after they have lost money. A speculator’s
emotions always work against them. When the asset is rising in price
they want more of it, and when it is falling in price they want less.
This is a natural reaction, and it is the cause of all losses in
speculative markets. This is why most speculators fail.

Speculation

I recently had a conversation with a friend who told me
about a family that lives in the Bay area that is important to him. The story of
what this family did during the great housing bubble is very common, and their reaction
to what is happening now is also very common.

It all started in the late 90s when they purchased their
first home for about $250,000. By 2005 the value of this property reached $650,000.
Along the way they lived somewhat beyond their means and spent about $150,000 of
their equity, but at the time they still had plenty of equity left over. In 2005 they
decided it was time to move up. They borrowed an additional $150,000 out of
their primary residence and used it as a downpayment on a $1.1 million property.
Rather than selling their first property they decided to keep it as an “investment.”

They put $50,000 down on their first property, and over the
course of the next eight years they managed to leverage themselves into $1.8
million worth of property, they were able to live beyond their means, and they
managed to increase their net worth. No problem, right?

Well, in order to achieve this great wealth and prosperity
they had to increase their debt from around $200,000 to nearly $1.6 million.
The rental income from their first property helps, but without exotic financing
they are unable to service the debt load. Through mortgage equity withdrawal
they were able to sustain their lifestyle through continued Ponzi Scheme
borrowing, but with the credit crunch their credit lines are frozen, and their
life lines are cut off. They do not make enough to support the debt, and my friend is concerned they will lose both properties. Unless Ponzi financing returns, they probably will.

Since the peak, property values in the area have declined
about 25%, which is less than the rest of the state of California, but it
leaves them with properties worth around $1,350,000. This puts them about
$250,000 underwater. They will probably be close to $600,000 underwater before
prices stabilize.

Right now they are in denial. They still plan to keep both
properties as they expect prices to be back up to the peak valuations in a
couple of years. They were so rewarded for buying and holding their first
property that they are not feeling enough pain in their current situation to do
anything about it. For them the price decline is not painfully obvious.

Today’s featured property is a fairly egregious HELOC abuser. Are you ready to pay off his debts as US taxpayers?

46 Crimson Rose kitchen

Asking Price: $1,215,000

IrvineRenter

Income Requirement: $303,750

Downpayment Needed: $243,000

Monthly Equity Burn: $10,125

Purchase Price: $1,384,000

Purchase Date: 9/28/2005

Address: 46 Crimson Rose, Irvine, CA 92603

Beds: 3
Baths: 4
Sq. Ft.: 2,863
$/Sq. Ft.: $424
Lot Size: 6,198

Sq. Ft.

Property Type: Single Family Residence
Style: Contemporary, Spanish
Year Built: 2005
Stories: 2
View: Hills
Area: Turtle Ridge
County: Orange
MLS#: P668964
Source: SoCalMLS
Status: Active
On Redfin: 67 days

Gourmet Kitchen Award

LOCATION! LOCATION! LOCATION! PRIVATE & ELEGANT MAGNIFICENT
MASTERPIECE SITUATED ON OVERSIZED LOT IN AN EXCLUSIVE GATED COMMUNITY
WITH LOTS OF CURB APPEAL! SPACIOUS OPEN FLOORPLAN FEATURING 2 BEDROOMS,
2.5 BATHROOM IN MAIN HOUSE, BEAUTIFUL MASTER SUITE WITH RETREAT AND
LAVISH JACCUZI TUB, GRANITE COUNTERTOPS OFF BALCONY TO CATCH AN OCEAN
BREEZE, EUROPEAN GOURMET KITCHEN ISLAND WITH GRANITE COUNTERTOPS, PLUS
SEPERATE CASITA WITH 1 BEDROOM, CLOSET, PRIVATE BATH. GIGANTIC WELL
MAINTAIN BACK YARD TO ENJOY FAMILY BBQ AND PARTIES.CLOSE TO FASHIONED
ISLAND & IRVINE SPECTRUM MALLS, JOHN WAYNE AIRPORT, UCI &
FREEWAYS. THIS IS AN APPROVED SHORT-SALE AT $1,215,000.00 WITHOUT
CLOSING COST. COMMISSIONS split 50/50 SUBJECT TO THE LENDER’S APPROVAL.
Take Back Up Offers.

LOCATION! LOCATION! LOCATION! Blah! Blah! Blah!

Take Back Up Offers. LOL!

  • This property was purchased on 9/28/2005 for $1,384,000. The owner used a $1,000,000 first mortgage, a $245,159 HELOC and a $138,841 downpayment.
  • On 2/28/2007 he refinanced with a $1,425,000 first mortgage.
  • On 5/9/2007 he opened a HELOC for $284,990.
  • Total mortgage equity withdrawal is $464,831.
  • Total mortgage debt is $1,709,990.

The “approved” short sale amount of $1,215,000 would net Washington Mutual Chase (soon to be US taxpayer) $1,142,100 after a 6% commission. So if the lender gets this wishing price, the total loss will be $567,890.

So how do you feel about paying off this guy’s debt?

{book7}

It’s criminal
there ought to be a law
criminal
there ought to be a whole lot more
you get a nothin’ for nothin’
tell me who can you trust
we got what ya want
and you got the lust

Refrain:
If you want blood (YOU GOT IT)
If you want blood (YOU GOT IT)
BLOOD on the streets
BLOOD on the rocks
BLOOD in the gutter, EVERY LAST DROP, YOU WANT BLOOD
you got it
yes you have

It’s animal
livin’ in a human zoo
animal
the shit that they toss to you
feelin’ like a Christian
locked in a cage
thrown to the lions
on a seconds rage

Refrain

O Positive

Blood on the rocks
Blood on the streets
Blood in the sky
Blood on the sheets

If you want blood
you got it

Want you to bleed for me

If you want blood, you got it

If You Want Blood — AC/DC

Will HELOC Abuse Doom the Housing Market?

Before the IHB began publicizing HELOC abuse, few realized how widespread the phenomenon really was. Now that we all know, I ask you “Will all the short sales and foreclosures caused by HELOC abuse doom the housing market?”

Today’s property is, of course, a HELOC abuse case. They are easy to find, just pick a listing at random, and it is either a 100% financing deal or HELOC abuse…

65 Olivehurst Kitchen

Asking Price: $415,000

Address: 65 Olivehurst, Irvine, CA 92602

{book3}

Another Brick in the Wall — Pink Floyd

All in all you’re just another brick in the wall.
All in all you’re just another brick in the wall.

People making their regular mortgage payments is the critical element that keeps money flowing into residential mortgages. Once people stop making payments according to the terms of their agreements, lenders and investors stop loaning money, and you have a colossal credit crunch. Everyone who borrows money needs to behave like another brick in the wall, or the wall will crumble. So it is with our housing market.

Many people got in over their heads because they bought too late in the rally and paid too much. Most were motivated by greed to capture appreciation, but some were honest borrowers whose life’s circumstances lead them to buy at the worst possible time. There is another group that is also in trouble, those that bought early but borrowed too much later on. This is the group that fascinates me. Why did they spend their houses?

{book7}

Many people who extracted their home equity lost their homes for lack of ability to refinance or make their new payments after their loans recast. After so many people lost their homes due to their own reckless borrowing, it is natural to wonder why these people did it. Why did they risk their home for a little spending money?

First, it was not just a little money. Many markets saw home values increase at a rate equal to the local median income. It was as if their home was another breadwinner. The lure of this easy money was too much for many to resist. The rampant, in-your-face, marketing of these loans in every available media outlet touting the glossy “lifestyle” of over-the-top consumerism was a drug to many spending addicts.

Also, during the bubble rally people really believed their house values would go up forever, and they would always have the ability to refinance enormous debts at low interest rates and maintain very low debt service costs. Most people did not think it possible they would end up in circumstances where they would lose their homes; however, they were mistaken.

Given these beliefs, the equity accumulating in their house was “free money” they just needed to access in order to live and to spend like rich people. Even though they were consuming their net worth, and making themselves poor, they believed they were rich, and they wanted to spend accordingly.

Mortgage Equity Withdrawal 1991-2007

Mortgage Equity Withdrawal 1991-2006

Charts are always interesting, but what do they really mean? When you look at the chart of mortgage equity withdrawal, you can see that people took out a lot of money as house prices went up, and they spent it. It is an interesting macroeconomic phenomenon that is fascinating to economists, but it’s just another statistic of the great housing bubble. Or is it?

Here at the IHB, I document the far more interesting microeconomic consequences of mortgage equity withdrawal: people lose their homes. You can translate the big macroeconomic chart with the plethora of individual borrowers we profile here that made the bars on the chart grow so tall.

In many ways Irvine is the epicenter of the housing bubble. We were the home of subprime, and our market saw some of the greatest price changes of any local market. And as we see daily here at the IHB, Irvine residents were also major contributors to the mortgage equity withdrawal statistics.

{book1}

So my big-picture question you today is “will mortgage equity withdrawal be the straw that breaks the market’s back?”

Of course, the question assumes that the market might not have collapsed without mortgage equity withdrawal. A compelling argument can be made that the additional foreclosures caused by mortgage equity withdrawal are unnecessary to cause a market collapse. The diminishing bids caused by tighter credit are enough to lower prices. The foreclosures merely speed the process along. However, if you do not accept this argument, and if you believe the foreclosures are an essential element for the market to collapse, then mortgage equity withdrawal and the foreclosures it creates play an important part in the future of Irvine home prices.

So are the additional foreclosures caused by mortgage equity withdrawal sufficient in number to facilitate the collapse in local home prices?

65 Olivehurst Kitchen

Asking Price: $415,000

IrvineRenter

Income Requirement: $103,750

Downpayment Needed: $83,000

Monthly Equity Burn: $3,458

Purchase Price: $539,000

Purchase Date: 3/29/2004

Address: 65 Olivehurst, Irvine, CA 92602

Beds: 2
Baths: 2
Sq. Ft.: 1,550
$/Sq. Ft.: $268
Lot Size:
Property Type: Attached, Townhouse
Style: Mediterranean
Year Built: 2001
Stories: 3+
View: Courtyard, Mountain
Area: North Park
County: Orange
MLS#: I09021936
Source: MRMLS
Status: Active
On Redfin: 2 days

THIS IS A SHORT SALE!!! TRI-LEVEL HOME: FIRST LEVEL W/ (2) CAR GARAGE
& STORAGE AREA. SECOND LEVEL: LIVING RM W/ CARPET, KITCHEN/DINING
W/ WHITE TILES, BAMBOO HARD WOOD FLOOR, TILED BATHROOM FLOOR,
WASHER/DRYER HOOKUP, BEDROOM W/ CARPET/MIRRORED CLOSET. COVERED
BALCONY. OPEN FLOOR PLAN W/ MULTIPLE WINDOWS, HIGH VAULTED CEILINGS,
RECESS LIGHTING THROUGH THE HOUSE. THIRD FLOOR: MASTER BR W/ WALK-IN
MASTER BATH, SEPERATED EXTRA-LARGE TUB, STAND-UP SHOWER, HIS/HERS
VANITY, MIRRORED CLOSET, STAIR CASE OVER LOOKING SECOND FLOOR AND
MOUNTAIN VIEW.

THIS IS A SHORT SALE!!! Congratulations!!! And thank you for the three exclamation points.

Why does this realtor use “W/” in this description? Is is critical to save the two additional characters it would require to write the word “with?”

ALL CAPS.

I find this description painful to my eyes. I had to force myself to read it. The sacrifices I make for the IHB…

SEPERATED?

  • This house was purchased on 3/29/2004 for $539,000. The owner used a $431,200 first mortgage, and a $107,800 downpayment.
  • On 12/10/2004 they opened a HELOC for $147,000.
  • On 11/2/2006 they refinanced with a $520,000 Option ARM, and opened a new HELOC for $65,000.
  • Total debt is $585,000.
  • Total Mortgage Equity Withdrawal is $153,800 including their downpayment. Mostly they got their downpayment back.

If this house sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $194,900.

Another day, another future foreclosure caused my mortgage equity withdrawal.

{book4}

We don’t need no education
We don’t need no thought control
No dark sarcasm in the classroom
Teachers leave those kids alone
Hey! teachers! leave those kids alone!
All in all you’re just another brick in the wall.
All in all you’re just another brick in the wall.

We don’t need no education
We don’t need no thought control
No dark sarcasm in the classroom
Teachers leave those kids alone
Hey! teacher! leave us kids alone!
All in all you’re just another brick in the wall.
All in all you’re just another brick in the wall.

“wrong, do it again!”
“wrong, do it again!”
“if you don’t eat yer meat, you can’t have any pudding. how can you
Have any pudding if you don’t eat yer meat?”
“you! yes, you behind the bikesheds, stand still laddy!”

Another Brick in the Wall — Pink Floyd

41% off in Irvine

I know short sales usually end up in foreclosure, but the discounts offered can be breathtaking.

Today’s property is being offered for 41% off its peak purchase price. It may be at rental parity–if someone wants to live there.

227 Tarocco kitchen

Asking Price: $280,100

Address: 227 Tarocco, Irvine, CA 92618

You Know You’re Right — Nirvana

I will move away from here
You won’t be afraid of fear
No thought was put into this
I always knew it’d come to this
Things have never been so swell
I have never failed to fail

Pain!!!
Pain!!!
Pain!!!
Pain!!!
Pain!!!

The deflation of The Great Housing Bubble is painful. Yesterday, we looked at the collapse of one man’s huge financial empire. Today, we have a lender losing 50% of his loan balance in just a few years. We have some property owners who managed to extract $40,000, but they are about to lose their home and face credit problems. None of this feels very good.

The economic problems caused by asset price bubbles often lead to personal problems in the wake of the deflating bubble. Statistics about unemployment, foreclosure and bankruptcy are impersonal. The events that result in any one of these outcomes was anything but impersonal: these things happened to real people who had very real emotional responses. Many people during the fallout of the Great Housing Bubble experienced all three. Any one of these outcomes can lead to depression, suicide, divorce and a whole host of traumatic personal problems. All of it was preventable if the bubble was not allowed to inflate in the first place.

The volatility of price action during a bubble had a profound and capricious impact on people’s financial lives. Many people became enriched by fortuitous timing. Some of these people were market savvy individuals who knew when to buy and sell in a volatile market; however, since the mindset of a successful trader was rare, and since most housing market participants were amateurs with emotional responses almost guaranteed to produce a loss, the majority of bubble participants lost a great deal of money. Some were lucky. Some people bought and sold at the right time due to life circumstances beyond their control. Those who transferred out of bubble markets for their careers and sold their houses at the peak reaped huge windfalls. Of course, for every seller who reaped a windfall, there was a buyer who faced major financial difficulties. The unequal distribution of gains and losses from bubble market volatility is not a positive feature.

Another group of people deeply impacted by bubble market volatility are those who chose not to participate. Some of these people recognized the bubble for what it was, and some could not set aside common sense to accept the fallacious beliefs of bubble mentality. This group was forced to rent during the bubble and subsequent decline. Many of these people would have preferred ownership, preferred to have the freedom to customize a property to their liking, and preferred to obtain the intangible benefits of ownership such as a feeling of community and belonging. These people had to endure the patient “waiting game” and feelings of groundlessness renting can entail.

Are the personal problems caused by the deflation of a housing bubble worth the euphoria of the rally? I don’t think so.

227 Tarocco kitchen

Asking Price: $280,100

IrvineRenter

Income Requirement: $70,025

Downpayment Needed: $56,020

Monthly Equity Burn: $2,334

Purchase Price: $475,000

Purchase Date: 9/29/2005

Address: 227 Tarocco, Irvine, CA 92618

Beds: 3
Baths: 3
Sq. Ft.: 1,192
$/Sq. Ft.: $235
Lot Size: 3,999

Sq. Ft.

Property Type: Condominium
Style: Contemporary
Year Built: 1983
Stories: Split-Level
Floor: 1
Area: Portola Springs
County: Orange
MLS#: P676428
Source: SoCalMLS
Status: Active
On Redfin: 3 days

Great Condo, Great Area near Irvine Spectrum Shopping Center, Near UC
Irvine and access to 405 fwy and 5 fwy. Great Community with tennis
courts and pools. A must see this is a 3 bdrm and 3 bthrm jewel. Great
for the College son or Daughter or even for 1 st time home buyer. Great
Ameneities, Nice parks in the area for hiking and running. Wont last.
Its located near Valley Center College as well, and walking distance to
Golf course.

Great photos, aren’t they?

Are there any Rules guiding Capitalization in that Description? Is this The Random cap Approach?

Yes it is walking distance to a $125 a round golf course that the owner of this property could never afford.

The owners of this property paid $475,000 on 9/29/2005. They used a $380,000 first mortgage, a $95,000 HELOC and a $0 downpayment. On 4/21/2006 they refinanced the HELOC with a $100,000 second mortgage, and on 4/27/2006 they added a $35,000 third mortgage. So as ridiculous as this purchase price was, some appraiser said it was worth $40,000 more at the peak in 2006. These owners got $40,000 out of the property before values went south.

If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $251,706. That is a 50% loss to the lender.

This property is being offered for 41% below its 2005 purchase price.

{book4}

I will never bother you
I will never promise to
I will never follow you
I will never bother you

Never say a word again
I will crawl away for good

I will move away from here
You won’t be afraid of fear
No thought was put into this
I always knew it would come to this
Things have never been so swell
I have never failed to fail
Pain!!!
Pain!!!
Pain!!!

You know you’re right
You know you’re right
You know you’re right

I’m so warm and calm inside
I no longer have to hide
Lets talk about someone else
Steaming soun begins to melt
Nothing really bothers her
She just wants to love herself

I will move away from here
You won’t be afraid of fear
No thought was put into this
I always knew it’d come to this
Things have never been so swell
I have never failed to fail

Pain!!!
Pain!!!
Pain!!!
Pain!!!
Pain!!!

You Know You’re Right — Nirvana