Crumbling Down — John Mellencamp
Today we continue with our daily grind of speculators giving up. The featured property was purchased in 2005, then as much money as possible was taken out of the property, and the lender is left holding the bag.
Asking Price: $474,000
Income Requirement: $118,500
Downpayment Needed: $94,800
Monthly Equity Burn: $3,950
Purchase Price: $545,000
Purchase Date: 12/15/2005
Address: 73 Reunion, Irvine, CA 92603
| Beds: | 2 |
| Baths: | 2 |
| Sq. Ft.: | 1,099 |
| $/Sq. Ft.: | $432 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 2003 |
| Stories: | Split-Level |
| View: | Mountain |
| Area: | Quail Hill |
| County: | Orange |
| MLS#: | S534044 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
 New Listing (24 hours)
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kept. Granite kitchen countertops, stainless appliances, California
Closets, fireplace, dual master bathroom sinks, and so much more. End
unit with no one above or below. Largest two car garage of the tract.
Do you get to the point when you read a property is “highly upgraded” you think it is complete BS? Oh wait, I guess this guy put in pergraniteel.
This flopper bought the property in late 2005. He borrowed $408,750 with an Option ARM, a HELOC for $81,750 and put $54,500 down. Of course he quickly opened another HELOC 2 months later for $110,000 and 2 days after than, another was recorded for $61,250. Assuming he paid off the first HELOC, the total debt on the property was $580,000. Basically, this guy made $35,000 in his first two months of ownership. Perhaps he spent this on pergraniteel, who knows. In any case, he has none of his own money in the deal.
Even with the short sale, this asking price at $432 / SF is ridiculous. When this sells it will be under $400/SF, and probably well under it. If this sells for asking price, the HELOC lender (Wells Fargo) is going to lose $134,440. The borrower will only lose if the lender comes after him — maybe later…
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Some people ain’t no damn good
You can’t trust ’em, you can’t love em
No good deed goes unpunished
And I don’t mind being their whipping boy
I’ve had that pleasure for years and years
No, no I never was a sinner-tell me what else can I do
Second best is what you get-till you learn to bend this rules
Time respects no person-what you lift up must fall
They’re waiting outside-to claim my crumblin’ walls
Saw my picture in the paper
Read the news around my face
And now some peopkle
Don’t want to treat me the same
When the walls come tumblin’ down
When the walls come crumblin’ crumblin’
When the walls come tumblin’ tumblin’ down
Some people say I’m obnoxious and lazy
That I’m uneducated and my opinipn means nothin’
But I know I’m a real good dancer
Don’t need to look over my shoulder to see what I’m after
Everybody’s got their problems-ain’t no new news here
I’m the same old trouble you’ve been having for years
Don’t confuse the problem with the issue, girl,
‘Cause it’s perfectly clear
Just a human desire to have you come near
Want to put my arms around you
Feel your breath in my ear
You can bend me You can break me
But you better stand clear
When the walls come tumblin’ down
When the walls come crumblin’ crumblin’
When the walls come tumblin’ tumblin’ down
Crumbling Down — John Mellencamp
This is so much easier and safer than using a gun to rob the banks. And the criminal penalties seem to be much less risky.
This is such a valid point. I keep wondering how it is that my lender only offers me about 12 grand in HELOC, while I read about people taking out 100 percent of the value of their homes. Not that I want to undertake HELOC abuse, but I want to understand how this theft occurs.
Is it about finding the right appraiser, who will overvalue my home?
If I max out the current HELOC, will that cause my lender (or other lenders) to offer me even more credit (ala credit cards)?
I recall a recent post here about some people who took out a half million and walked away. That floors me. I just can’t get my head around what seems like plain, old fashioned theft. And I wonder how it’s done…
Any guidance would be appreciated.
Price
I have such a difficult time wrapping my mind around how so many people seem to have gotten away with so much fraudulent behavior that I simply can’t fathom it. The occasional instance is one thing but the seemingly widespread behavior suggests that this was not ALL due to irrational belief in 20% annual appreciation ad infinitum.
Call it conscience or what have you but I could not sleep at night thinking that someday a collector will come calling. What angers me most is it’s entirely likely these thieves will get away with it. Frankly I have more respect for the common purse snatcher because at least they’re risking something. (Not really but it illustrates my point … White collar crime really does pay.)
I’ve long said responsibility is the dying attribute of our country. The victim culture is taking over … and this distorted sense of entitlement that leads to this type of behavior. No one accepts responsibility for their actions any more. It’s all about excuses and finger-pointing. What, who me? I didn’t do it. The evil mortgage broker made me sign those papers AND he made me spend it all on cars and vacations. After all doesn’t everyone deserve to drive an MB/BMW/Range Rover and vacation twice a year in Italy?
Is it any wonder this is where are? For the last 8 years we’ve had an administration distort, obfuscate, lie and outright break laws and not a single person has been held to account. Not one. Before that we had Ken Lay, Bernie Ebbers and Dennis Kozlowski. Fine bunch of role models there. So why not follow their lead, if they can do it and get away with it so can I, right?
Flush the toilet, it’s getting rank in here.
If the guy made $35k in 2 months, he didn’t do too badly. When he gets out all the money he put in initially plus a nice pile more, giving the debt back to the bank may be like selling but without the hassles? Unless the recourse loan holders manage to get money out of him eventually, which apparently is no sure thing.
OK, he didn’t do as well as if he had the luck/timing to sell at the market peak and make an additional profit beyond what he had already pulled out, but looks like he did just fine so far. The music stopped and it is someone else who is looking for a chair …
I read somewhere in the last couple days (unfortunately no link) that banks were “ramping up” there loss mitigation depts in an effort to go after borrowers defaulting on recourse loans. You would think this would be worth the effort if there’s no recession and/or a shallow/short recession because many borrowers still have jobs.
Blood. Turnips.
Agreed Agreed.
Did they teach this kind of technique in all those “How to get rich buying real estate with no money down.” TV commercials?
I wish that I had learned this in 2001-2002 and then used it to get really rich just like all the showcased real estate gurus.
Two HELOCs after two months of ownership? Money sure was easy to come buy during the bubble.
This flipper gets a 1st place award for the fastest HELOC abuse!
Meanwhile at the bank…
[Wells Fargo] “Sir, you just bought this house and you want a loan?”
[Flipper] “Umm yeah. I’d like my down payment back plus a 100 grand.”
[Wells Fargo] “Sure no problem. Do you want that in one hundred dollar bills?”
[Flipper]”One hundred dollar bills? No, that’s too much trouble. Just wire to my Cayman Island Account will do.”
Car dealers are hurting because a lot of the money used to buy cars in California was HELOC money! Long article in the NY Times yesterday about this.
Lexus dealers are discounting $7000-$10000 off MSRP ($68k – $73k) on 2008 LS460.
So they’re selling at invoice price?
[b]My Offer[/b]
After giving this property a thorough look, my offer today is [b]$220,700.00[/b]. I believe this is what this property is worth.
I find it hilarious that Wells Fargo prides itself on conservatism. They refused to originate option arms (which can be applauded) but they did millions of HELOCS in 2nd position behind option arms.
Go figure
That makes no sense to me either. They won’t originate toxic loans, but they will actually take a subordinate positions to them.
Did you check out those hooka GOGO boots in the closet? This chick was one hot irvine b*tch.
And the award for the most useless photo on the MLS goes to….
At least when there is a picture of a garage door you assume they will leave that behind when they leave. Or are these boots being left as a buyers incentive, kind of like 3 months HOA fees.
Nice observation! By the by … listing says “mountain view”. Hmm.
Stretching it a bit methinks. Sure on the 10 clear days a month you will see Saddleback Mtn. but it’s not like QH is in the foothills or anything.
Again, with spin and the truth stretched to failure point is it any wonder this country is gurgling down the tubes?
In the next few years they’ll finish the development east of Irvine Blvd all the way to Bee Cyn (aka the dump). The developer will call it Landefille Meadows and crow about proximity to “sustainable recycling activity”. Gack.
Man that dude really hustled the sh!t out of Wells… Everyone wonders how the banks could be so stupid during the bubble. Easy ! It wasn’t their money either. C-level execs in this country are rewarded for taking huge amounts of risk. If it goes wrong, they pull the ripcord on a 40million dollar golden parachute and float safely to another company to repeat the process. The bank ? They just socialize the losses with bailout money from the fed and a bunch of faceless, nameless angry shareholders.
It’s capitalism gone wild !
I’m normally a lasse-faire kinda guy, but the amount of abject fraud in our financial system astounds me. The government ? Hell they’re in on it. The financial system ensures a steady stream of debt to foriegners while the fed debases the value of the dollar by printing money and the CPI folks continue to perfect their jungle camo.
Be glad that smart little folk can still manage to make a great living among all this theft and greed. We’re not Argentina, yet.
With prices averave 20-25% down, we are only half way of total collapse. If we hit a real bad recession with massive job loses, then I dont even want to speculate where we will end up. A stort surfaced on KNX1070 this morning where former homeowners are living in their cars and Santa Barbara was the first city to allow sleeping in cars in secured parking lots. Looks like American Dream turned into American Nightmere for a lot of people. Lets all thank Bush Admin for all this mess and thank him again for the stimulus check that I received yesterday. I will stimulate Canadian Economy when I visit there in June.
Yes, the Bush Administration is 100% responsible for inflated Irvine prices. It’s just too bad he was able to get the Dems to rollover in order to pass his Stimulus Package despite their strong opposition.
I read a book by Kim Stanley Robinson (a near future sci-fi) about global warming…Anyway, a scientist lost his house in a flood, and was left with only a job and a mini-van. He ended up putting a mattress in the mini-van, and joining a health club. Sounded like a pretty good idea — access to showers, a safe storage locker for any real valuables, and a place to stretch out and sleep. You can even get an adapter so you can plug in a hotplate or a mini-fridge. 24 hour fitness is only $25/month! Could get pretty hot in the summer, though, depending on where you live, but you can always hang out for the evening at the health club. (He also built a treehouse in a large, deserted public park, but that’s not as feasable). I’m totally doing that if I ever end up homeless — except with a VW bus.
I gotta say ochomehunter, Bush is just one man. But Greenspan, I think he’s actually a billion men. A monkey will prefer cocaine to food until it kills him. If you want to thank someone, thank Alan for the multi-decade liquidity party that we all binged on. If Bernanke decided to channel Volcker for a few years, he knows the avalanche of misery it would create (sobriety is a b!tch) would become his legacy, so he’s trying to take us down slowly. Unfortunately for him (read: US), now he’s got an inflation hurricane coming so he’ll have no choice but to start tightening up the hatches. With no more bubbles to blow (of any real significance) and countries hotly debating the much belated depeg from the dollar we could be in for a giant margin call that we’re not able to make.
Result: Audios, standard of living. Hola, hard work and savings.
Did we really think we could all get and stay rich selling each other cheeseburgers and foriegn made pergraniteel ?
Don’t just blame Bush for this. Yes he’s a monkey, but all politicians are. And oh by the way, so are we.
Good points amigo, although I don’t think I’m a monkey.
In the reality of your metaphor Ben Bernanke is the methodone clinic.
I don’t think things are so bad, at least not from my perspective. I have a job which I love that happens to pay well. I never got mixed up in the nonsense of debt or buying things I couldn’t afford so I really don’t care that it’s going away. I know there are a lot of people out here who can identify with what I’m saying.
If you don’t stay up all night drinking and doing blow, you don’t have to suffer a hangover the next day.
Good luck with stimulating the Canadian economy….given that our US dollars are approaching the old peso in value, your $10,000 might buy you a nice lunch at Tim Horton’s.
I am only interested if there’s Pergo with those granite countertops and stainless steel appliances.
“Don’t settle for graniteel, make sure it’s PER-graniteel!!!”
Have I turned cynical when they say “end unit” and I think “more likely to get robbed”. Guessing so.
Very astute. I keep thinking along the same lines … the crime rate is about to sky rocket. When everyone is fat, dumb and happy no one’s trying to put one over on the next guy. With belts tightening and desperation setting in, desperate acts follow.
IR, Can you take look at this one?
http://www.redfin.com/CA/Irvine/7-Andalucia-92614/home/4661724
Sales History Property Tax
Date Price Appreciation
Jul 08, 1988 $356,000 —
Feb 08, 2008 $358,865 0.0%/yr
Very interesting, it’s in foreclosure