Surrender — Cheap Trick

Sometimes you just have to surrender to the absurdities in life. Despite my efforts to figure it out, the housing bubble, and the behavior of the people who participated in it, is simply unfathomable. Mommy’s alright, Daddy’s alright, they just seem a little weird.

Today’s featured property is another in our endless series on HELOC abuse. Another day, another homeowner who spent themselves out of house and home…

6 Tahoe Kitchen

Asking Price: $699,900IrvineRenter

Income Requirement: $158,750

Downpayment Needed: $174,975

Monthly Equity Burn: $5,832

Purchase Price: $279,500

Purchase Date: 11/9/1999

Address: 6 Tahoe, Irvine, CA 92612


Beds: 4
Baths: 3
Sq. Ft.: 2,684
$/Sq. Ft.: $261
Lot Size: 2,820

Sq. Ft.

Property Type: Single Family Residence
Style: Other
Year Built: 1975
Stories: 2 Levels
View: Park or Green Belt
Area: University Park
County: Orange
MLS#: S539280
Source: SoCalMLS
Status: Active
On Redfin: 2 days

Oustanding location behind The University Park, this desirable 4
bedroom Parkcrest home has a separate living room, dining room and
family room. All bedrooms are large and upstairs. Both the master
bedroom and master bath are huge with tall vaulted ceilings. Property
is slightly dated and needs some work.

Oustanding? The realtor couldn’t be bothered to spell the first word correctly. Hmmm…

is slightly dated and needs some work? Apparently, they did not spend all the HELOC money on upgrades.

The previous owners of this property took out a bit of money:

  • The property was purchased on 11/9/1999 for $279,000. They borrowed $276,500 and put a whopping $3,000 down.
  • On 5/29/2002 they had their first sip of kool aid with a $330,000 refinance.
  • On 8/14/2003 they refinanced again for $408,000.
  • On 5/5/2004 they refinanced again for $500,000.
  • On 7/25/2005 they refinanced again for $588,000 with a stand alone second for $73,500.
  • Total property debt is $661,500 which explains the asking price.
  • Total mortgage equity withdrawal was $385,000

Look at the pattern. First they took out about $50,000 when they got their first taste of kool aid. They must have liked it because they withdrew $100,000 a year for the next 2 years followed by a $150,000 withdrawal. They must have had a good time. How do you blow $385,000 in 4 or 5 years and have nothing to show for it? I wonder how they are doing now that they have bad credit, and they have to get used to living on their wages. Oh, the horror of it…

This property is REO, and it appears the Bank of New York Asset Backed
Pass Through Certificate is trying to get their money back. They have
priced this thing to recover all their capital. Good luck with that.
There is a reason they picked it up at auction for $524,800 — That is
all it is worth it today’s market. I guess they have their loss
mitigation procedures to follow. This one will see some serious price
reductions to find the market.

Are you starting to see just how prevalent this behavior was? Can you see now why we had such a booming economy during the bubble? For those who think our local economy will be OK, explain to me how the loss of all that consumer spending will not have a major impact.

Thus concludes another 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.



Mother told me, yes, she told me I’d meet girls like you.
She also told me, “Stay away, you’ll never know what you’ll catch.”
Just the other day I heard a soldier falling off some Indonesian junk that’s going round.

Mommy’s alright, Daddy’s alright, they just seem a little weird.
Surrender, surrender, but don’t give yourself away, ay, ay, ay.

Father says, “Your mother’s right, she’s really up on things.”
“Before we married, Mommy served in the WACS in the Philippines.”
Now, I had heard the WACS recruited old maids for the war.
But mommy isn’t one of those, I’ve known her all these years.

Mommy’s alright, Daddy’s alright, they just seem a little weird.
Surrender, surrender, but don’t give yourself away, ay, ay, ay.

Whatever happened to all this season’s losers of the year?
Ev’ry time I got to thinking, where’d they disappear?
When I woke up, Mom and Dad are rolling on the couch.
Rolling numbers, rock and rolling, got my Kiss records out.

Mommy’s alright, Daddy’s alright, they just seem a little weird.
Surrender, surrender, but don’t give yourself away, ay, ay, ay.


Surrender — Cheap Trick

81 thoughts on “Surrender

  1. newby to site

    And don’t forget these people not only can’t use the house as an ATM machine but they also are now paying $4+ for gas – one report I saw said each 1 cent increase in gas prices is appx. $1 billion in annualized impact for the US consumer as a whole. so to put another way the $100bn of stimulus payments have been more than offset by say $200bn of incremental spending on gasoline given the $2 (rounded) increase in gas prices this year.

    1. lowrydr310

      What the Fcuk is that siht? NO GOURMET KITCHEN!?!?!?!? NO GRANITE?!?!?!?

      I can’t wait for things to come back to the 1995-199 9 prices in absolute dollars.

      What, you don’t think that’ll ever happen? I do.

      1. picflight

        It will happen and faster than most think. Anyone watching what is happening to Freddie and Fannie?

        1. Laura Louzader

          Attempts to bail Freddie and Fannie will fail. They are just too big and they bought too much toxic paper.

          This means that potential buyers can forget about getting financed for less than 30% down. In many markets, financing will be impossible to obtain, especially for condos and for properties in “marginal” or “up-and-coming” neighborhoods.

          The unravelling of these two agencies virtually guarantees that prices will roll back to 1998 levels, which until now I never thought would actually happen.

          Look out below, for every prop to this bloated market has been jerked away, with siesmic results.

          1. Dave

            Yep. Late-’90’s it’s going to be. Looks like it’s even going to start heading down in Berkeley too.

            All around San Francisco proper, the noose is tightening… will it ever reach the Ci-tay? Nah… “We’re different. We’re San Francisco.”

      2. George8

        This one does need a total make over. Question to those who are experienced in Irvine: how much (or range) does it take to completely update this one?

  2. AZDavidPhx

    700K and I don’t even get a stainless steel refrigerator with that?

    I like how these gypsies stripped everything that wasn’t bolted down.

    Better check the copper wiring before you sign the dotted line.

        1. NoWowway

          Where at? IHB? As in here?

          Yup! look at the very top of this ihb blog. You’ll see a little menu of items:

          Home Forums Analysis About

          ~Whispering…. hit the forums tab…. it’s a whole other world my friend ~Whisper off

          1. AZDavidPhx


            I haven’t looked over there. Thanks.

            The only thing I saw was IrvineRealtor asking if I could be added to the troll list. I love it!

          2. graphrix

            It’s not even my birthday. If anything becomes of this, then you will regret messing with a moderator. What? What did I ever do to you to deserve this? Come on… at least put the blame on Skek. He loves Dave, and plans on moving to AZ so they can be together. I was starting to like you too. Ah… the fun I will have now.

  3. cara


    Slightly dated????
    Mirrored panelling on the back side of the kitchen cabinets facing the dining room. I have never before seen this in my life!

    Did they miss anywhere they could put up a mirror? All the sliding doors, giant ones in the dining room, obviously the bath, completed with glass cubes… I think they needed to go for the gusto and mirror panel up the staircase for sheer impressive difficulty level.

    Granted, “they” may be the previous owner. But the narcisicsm level of someone is out of control here.

    1. Roberticus

      Did anyone check… are they counting what you can see in the mirrors as additional square footage?

    2. Dave

      Mirrors are cheaper than fixing holes. Old contractor trick from Houston, pre-Austin Chalk collapse.

    3. Genius

      I’m not narcisistic, I just like being able to give myself a high-5 when I have sex with my wife. Leave my mirrors alone.

  4. NoWowway

    Frenchs’ Bakery has gone up over 80% in a little over 3 weeks. The exact same thing that I bought on June 28 (21 dollars) was 38 dollars yesterday.

    I guess I won’t be indulging in that as often, going forward.

    I am wondering when CostCo pizza will stop being ten bucks apiece. IMO, we have not even seen what real costs are/related to fuel. There’s going to be a whole LOT of price adjusting going on soon.

    1. jhill

      My favorite coffee place, raising the price of their heavenly scones from 2.50 to 3 bucks, told me that price of flour has doubled in last 6 months. Maybe we’ll all lose a little weight or something.
      Paulson says he won’t bail out Freddie and Fannie, and I think he’s lying. Too many rich investors involved.

    2. camsavem

      The ONLY saving grace about this meltdown and high fuel prices is that it will drastically increase the cost to SHIP goods from other countries to the U.S.

      We need to mine raw materials, and build things to be competitive in our own market.

      We have whored out our industry to become brokers and service employees for far to long and now the bill has come due.

      IOW……you have to BUILD something to sustain and economy. An ecomomy cant be sustained by moving money from one account to another.

      Welcome to the biggest Ponzi scheme, the U.S. economy.

      1. Dave

        Actually, it’s a great time to start a business, if you have cash. Domestic manufacturing will likely begin to boom within a few years, and all that offshoring is coming back on shore. Just like the auto industry in the late 80s.

        1. NoWowway

          We have a little invention – a christmas light hanging gizmo that we had manufactured in China earlier this year. The prices to make them had risen quite a bit and it was actually going to be cheaper and more time/cost effective to find someone in the US to do the next batch.

          We got kind of stalled out on the marketing and distribution, so no need to make more of those gizmos at this time… but just saying… manufacturing might be evening out soon.

    1. MalibuRenter

      Hey, my dog has a nice house. He probably prefers it to this one. He has a tendency to bark at the dogs he sees in mirrors, and today’s house would drive him nuts.

      1. IrvineRenter

        They probably will not get approval to sell from the lender, but it does destroy all the neighborhood comps because banks are now looking at the lowest comparable sales and lowest for-sale offerings when determining the value of the property. Everyone in this neighborhood is going to face a difficult time selling because any potential buyers are going to have to come up with a lot more cash to close the deal.

    1. msv

      Looking forward to seeing the pictures. Didn’t think we’d be seeing sub $250/sq-ft just yet on decent properties. That is very encouraging! Today’s featured is a dump and I think will be well below $200/sq-ft before it sells.

      1. NoWowway

        That neighborhood has always looked crappy/outdated, imo. However many of the interiors are very livable. This home has decent square footage for Uni Park.

        AND the big bonus is the schools in that particular part of Irvine. A few years ago I heard of high schoolers who attended Uni High b/c their parents bought property in Uni Park/Turtlerock or rented an apartment in those locales so that the kids qualified for that to be their “home” school.

        Don’t know if that stuff still goes on… but I knew about several instances of that going on, personally.

    1. Blueberry Pie

      This is the part I don’t understand.

      A few years ago when I first saw the housing prices getting crazy, I didn’t understand much about the process, but I knew it couldn’t be sustained. At the least, I figured all of the entry to mid-level employees (people making less than $75k) in So Cal would end up leaving the state because they just can’t afford to live here.

      But then a year ago I found this blog and came to understand the economics of the housing market much better.

      But I am sure the banking industry has some very smart people working in them who understand economics and finance. Didn’t they see that this model was not sustainable? Did they choose to ignore it? What the hell happened?

      I realize the mortgage sellers are just out there to sell loans. It’s not their job to determine if the model works. They just need to get the next commission.

      1. stepping_up

        “But I am sure the banking industry has some very smart people working in them who understand economics and finance. Didn’t they see that this model was not sustainable? Did they choose to ignore it? What the hell happened?”

        And weren’t all the VC people during the dotcom bubble supposed to smart about business and finance? These busts and bubbles have got to stop… I can’t believe our government didn’t do a darn thing to slow down the housing bubble. Laissez faire has its place, but people KNEW that this was going to cost all of us dearly, yet they let the ideology that the market always fixes things once again take down our economy. And when the market goes so crazy that we have to step in with a gazillion tax dollars, we say we had no choice.

        This sounds crazy, but we should put a permanent extra tax on anyone from Wall Street or the mortgage industry, or appraisal or ratings agencies, etc.. who profited from this until their debts to the taxpayers are clear.

  5. abdul rahim

    We are in the final crisis of american capitalism, i fear. look at the panic on fannie and freddie today — they hold $5 TRILLION in crap mortgages.

    as james kunstler the doomsayer pundit has said, the banks have swindled themselves out of existence.

    every few weeks, the fed assures the markets that it has fixed things, and the markets believe it for a few days. but the cycle is reaching its end, and the wolf has come to the door.

    are YOU ready to ride out the crash? i think those who kept their heads during the bubble will have to arm themselves and their kids to ward off the hungry, homeless, jealous masses who will storm solvent people’s houses.

    1. picflight

      This is where we are headed, it will be worse than third world because of gun ownership in this country.

  6. camsavem

    What is absolutely appauling is the level of fraud that was encouraged by all parties. Did anyone bother to “look” at this property before loaning almost 3/4 of a MILLION dollars on it?

    I mean someone had to do an apprasal right?

    This is the fugliest home I have ever seen on this site. Just looking at the pictures I feel like I am walking through a carnival fun house.

    The only thing missing are glass walls so it could be the Irvine equivilant of Biosphere.

    1. Ken

      Did anyone bother to “look” at this property before loaning almost 3/4 of a MILLION dollars on it?

      Why should they? Make the loan to these suckers, sell the paper to some other sucker as an “Investment (TM)”, and book that European Cruise with your commission.

      “Four-one-nine just a game;
      You be da Mugus,
      I be da Mastah!”
      — Nigerian music video “I Go Chop You Dollah”

      1. Anthony

        Wait! It’s not done yet.
        There will be another sucker coming to the rescue, maybe at the asking price. There are still a lot of such suckers in Irvine.
        And the biggest sucker of them all,……, the US taxpayers, you and me and our children, and the next generation, and the next next generation.
        We are all going to pay for the bailout.
        No other choice.
        Because we keep on electing and reelecting a bunch of crooks to represent us.
        We don’t have the courage to throw them out of their office.
        We are easily fooled, manipulated, scared!
        We deserve to be in this fiasco!

  7. alan

    I’ll post this here instead of the economy forum.

    I don’t get the extreme hype over the Feds taking control over Fannie & Freddie. According to the doomsayers, these companies control $5 trillion in debt which the Feds would be responsible for, destroying our currency.

    Yet, total losses for the Housing Bubble are now estimated at only $1.6 trillion. So if Fannie & Freddie end up eating half of these losses, that’s still well under a trillion in US gov bailout, not the $5 + trillion I’m reading in the doomsday posts.

    Any thoughts.

    1. camsavem

      The 1.6T writedowns have come from banks and wall street investment houses that currenlty hold debt tied to residential mortgages. Fannie and Freddie are a seperate issue entirely.

      Limits had been raised for these banks to dump their crap loans on these GSE’s in recent months so Citi and the likes could free up cash to function as a normal finacial institution.

      Believe me, Fannie and Freddie are not solvent now. Even if they have to write down just 10% of the sht sandwich they have been forced to take, that means there is still an aditional TRILLION of write downs tied to residential mortgages.

      Of course commercial properties are next……

      1. Arcadia Lost

        Hi, Just visiting from the Arcadia Housing Blog — another city with inflated prices due to McMansions. money from overseas and a great school district.

        From what I’ve read and seen, it doesn’t appear that commercial properties saw the level of price inflation seen by residential properties. We’ve been looking for a storefront for a potential fast food restaurant in the San Gabriel Valley and seems the rents in strip malls are pretty reasonable — $2.00/sq. ft. for older, less maintained malls and $4 new or remodeled, including COM fees.

        Other than the effect of reduced discretionary spending, on rents, as well ongoing additional developments, perhaps prices were kept in check on the commerical side?

    2. Rocker

      What I’ve been able to understand due to the limited disclosure about it, is that the $5T are the total portfolio combined and 1% of that is delinquent, which is equal to $50 billion, the total US mortgage market is $12T.

      1. lawyerliz

        Yeah, no way the whole thing is going to blow up.

        The shareholders may lose everything, if fact they practically already have.

        They have the reputation of being involved in slightly better loans, and they really didn’t make very many loans over the former jumbo amounts. So how much Citi crap were they forced to take?

        Anybody know?

        That said, the demise of Fannie and Freddie would be a disaster of the first water. NO new
        loans would be made at all if they go under. For quite a while, anyway.

        1. Chris

          And hence you’re better off with Ginnie Mae instead of the Freddie and Fannie.

          At least THAT’S guaranteed by Uncle Sam.

          However, both my GNMA funds were down today…not much but still….oh well 🙁

  8. Ambiepants

    Irvine Renter:

    Thanks as always for another enlightening post. Coming to this site is the highlight of my morning (although I really shouldn’t try to eat breakfast while reading this stuff because the behavior of these homeowners is simply nauseating.) I wish you would come on over to the Lansner blog more often and give some of the bulls a dose of reality. They seem to think the hurt is only in the worse neighborhoods. Well thankfully we can bank on the ignorance of the bulls and the self-entitlement of the Heloc-abusers. Cheers to another great post. – Ambiepants

    1. Matt

      I’m not sure there’s any measure of evidence or rational argument that can convince the perma-bulls who frequent Lansner’s blog.

      1. IrvineRenter

        Yes, that is why I don’t post there much. I find their drivel rather amusing, but it is pointless to debate them. Talking to a wall is more productive.

        1. Gremlin2000

          Hey IR,
          While I agree with your assesment of the Lansner blog which I find is a good source of cheerleaders for the RE industry, it is from that blog that someone mentioned the IHB in one of their posts. So you have them to thank for one more loyal reader.

          Also, I would take any post on Lasner’s blog with more than a few grains of salt. I remember watching him week after week on KOCE stating that it was impossible for OC’s real estate to ever drop. I wouldn’t be too surprised if he actually employs a couple of trolls to post on his blog. I don’t know how any intelligent person can ever take him seriously again. I might visit that blog maybe once a month for the comic relief %-P

  9. Ken

    They must have had a good time. How do you blow $385,000 in 4 or 5 years and have nothing to show for it?

    “Booze and Ladies
    Keep me right —
    As long as we can make it
    To the show tonight!”
    — “We’re an American Band”

    I wonder how they are doing now that they have bad credit, and they have to get used to living on their wages.

    Screaming to the Gummint for The Bailout, what else?

  10. trrenter

    That place is horrible they have over 100k worth of work to do so people don’t laugh at you when you walk in th door.

    Mirrors everywhere even under the kitchen counter that reflect that white tile.

  11. stepping_up

    I’d have to look at it a little closer, but I might be willing to take the fountain off their hands for $6.99.

  12. ryno

    I swear I saw this in place in that movie with roller girl. I can picture her in front of those mirrored panels bent over as Brock Landers is…oh sorry. They must have bought this place from Dirk Diggler and kept it as is, in his memory.

    What is worse…the asking price or interior taste?

  13. Genius

    Looking over the comments it appears that some of the people from HousingPanic have found this blog. It’s not time to arm yourselves just yet, simmer down.

    Nice choice of song IR.

  14. norcal_jeff

    Indymac just closed after the market today. 2nd largest financial institution to ever fail. Ought to put more pressure on OC housing with all those newly jobless home owners.

    1. Kirk

      All banks eventually close after the market on Friday. It’s people like you with your innuendo about the state of our economy that have pushed this nation into a mental recession. Maybe if everyone would stop their whining and focus on keeping their wives in line this nation could finally do something about all the terrorists in Congress.

      1. stepping_up

        Uhh, I think you missed some news Kirk, or are you joking about McCain’s economic advisor?

        1. Kirk

          If it hasn’t been covered on Fox News or Free Republic then it’s not news.

          Why would I make a joke about the man who eliminated Glass-Steagal when he was a Senator? It can be argued that Phil Gramm is a bigger hero than John McCain. While John McCain may have dodged bullets in Vietnam, Gramm has been fighting on the front lines for the deregulation that brought such great prosperity to this nation. It is because of Phil Gramm that we enjoy our economic freedoms today.

          1. r€nato

            I suspect Kirk is being facetious… aren’t you?

            By the way, this brings up something I have wanted to ask… is Fox News Channel pushing the meme that there is no recession and it’s all the fault of the media for talking down the economy, and if everyone would just shut up about it there would not be any problems?

            I ask this because I have heard this exact same argument from two different people, both watch Fox News Channel programming frequently… or, should I say, both are programmed by Fox News Channel frequently… and I don’t think it’s any coincidence they are repeating the same garbage.

            I’m sure if that damned liberal media would just stop talking about banks failing, IndyMac would still have their doors open.

          2. Kirk

            1) Chuck Schumer killed IndyMac with his vicious lies.
            2) The economy is fine. Don’t denigrate America by saying it’s not.
            3) We are winning in Iraq. Don’t denigrate the troops by saying we’re not.
            4) Phil Gramm should be running for president instead of flipity flop McCain.

  15. lawyerliz

    I’ve noticed that IHB-ers are not talking about when and what they will buy, when the prices fall enough, anymore.

    Are you guys still interested? Suppose the price on a nice house (not this one!!) falls 30% from where it is now? That good enough?

    I’d like to see IR’s famous chart superimposed on what has actually happened.

    1. Lazy Dog

      That’s true, but this is a pretty darn bearish crowd. Based on us, even as a contrarian, I’d probably set a kitchen timer for about 18 months right now and buy when it goes off.

  16. Craig

    The local economy not only loses all the HELOC money homedebtors were spending, it loses all the money that realtors and flippers and building supply folks and mortgage brokers, and anyone else who was loving the bubble isn’t making anymore.

    It isn’t just unemployment that hurts the economy in a recession — a lot of people still have their jobs, but are making 50 to 80 percent less than they’ve grown accustomed to.

    1. Kirk

      There is no such thing as an economic recession. When people lose their jobs, others are hired to sweep the vagrants off the street. We always maintain equilibrium. This is the foundation of a free market system and is why this system is the best greatest system in the whole world.

  17. Austin Real Estate Broker

    Damn. I almost feel bad that I never got to abuse the system like these folks. I can’t imagine what I’d do with $400k in cash and no assets to show for spending it. 🙂


  18. atxcats

    Poor kitchen design — the oven is right next to where the refrigerator is (or rather should be), and what do you want to bet it’s not insulated very well.

    Of course, with that HELOC, they probably never used the oven — just ate out all the time.

  19. lahabrastuccobox

    You know how they hose down the outside to give the property that “look”,on this dump perhaps not taking a few extra minutes to hose the inside down is the deal killer.

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