Life In The Fast Lane — The Eagles
During The Great Housing Bubble California’s homeowners were living life in the fast lane. Free money was readily available, and people were taking it and spending it with abandon. Some people got lucky and found the greater fool to bail them out, and some people did not. Today’s featured property was purchased with 100% financing at the top of the bubble from a HELOC abuser. Of course, the lender is left holding the bag.
Income Requirement: $118,725
Downpayment Needed: $94,980
Monthly Equity Burn: $3,957
Purchase Price: $625,000
Purchase Date: 11/1/2006
Address: 819 Yorkshire, Irvine, CA 92620
|Status:||Backup Offers Accepted|
|On Redfin:||6 days|
upgraded: hardwood floors in formal living and dining rooms; beautiful
kitchen with white cabinets and black countertops; new stainless steel
appliances; tile flooring in kitchen and bathrooms; recessed lighting,
plantation shutters, closet mirror doors and organizers. Corporate
owned; easy to purchase; can close in 30 days.
Colons and semicolons: fancy.
owned? Not according to the records. Perhaps she has a corporate deal where they will make up all the losses. I don’t know.
This property was purchased on 11/1/2006 with 100% financing. Now it is a short sale, and if it sells for its asking price (which it looks like it might,) the total loss on the property will be $178,594. Citibank will lose $125,000, the full amount of their second mortgage, and Wells Fargo will lose the remainder. Perhaps there is a corporate entity willing to pay off these lenders, or perhaps the realtor is making up the part about being corporate owned. Either way, it is a big loss for less than 2 years of ownership.
The subplot here is with the previous owners, the ones who were saved by the current owner. They lived like this:
- The house was purchased on 8/24/2000 for $295,000. There was a $235,920 first mortgage and a $29,200 second, and the owners put 10% down.
- On 9/9/2002 they refinanced for $265,000. No MEW.
- On 10/7/2004 they refinanced for $333,700 pulling out their downpayment plus about $40,000 spending money.
- On 11/21/2005 they opened a HELOC for $100,000.
These people were not as hardcore as some we have profiled, but they probably represent a typical family going about its business during the housing bubble. When they sold their property, they paid off their debts and had around $175,000 to spare. As you can see, the habit of mortgage equity withdrawal was reinforced by the market. I would not be surprised if they continued their somewhat subdued behavior in their next property. Why wouldn’t they? They got to live beyond their means for a time, and there were no repercussions.
There is a price to be paid for living in the fast lane. Californians are having their bills come due, and it appears as if they cannot pay them…
For anyone who believes we are anywhere near a bottom, look at the chart above (courtesy of Bubble Markets Inventory Tracking.) We are nowhere close to a bottom. It looks like we are having quite a rally in foreclosures.
He was a hard-headed man
He was brutally handsome, and she was terminally pretty
She held him up, and he held her for ransom in the heart
of the cold, cold city
He had a nasty reputation as a cruel dude
They said he was ruthless, they said he was crude
They had one thing in common, they were
good in bed
She’d say, ‘Faster, faster. The lights are turnin’ red.”
Life in the fast lane
Surely make you lose your mind, mm
Are you with me so far?
Eager for action and hot for the game
The coming attraction, the drop of a name
They knew all the right people, they took
all the right pills
They threw outrageous parties, they paid heavenly bills
There were lines on the mirror, lines on her face
She pretended not to notice, she was caught up
in the race
Out every evening, until it was light
He was too tired to make it, she was too tired
to fight about it
Life in the fast lane
Surely make you lose your mind
Life in the fast lane, everything all the time
Life in the fast lane, uh huh
Blowin’ and burnin’, blinded by thirst
They didn’t see the stop sign,
took a turn for the worse
She said, “Listen, baby. You can hear the engine
ring. We’ve been up and down this highway;
haven’t seen a goddam thing.”
He said, “Call the doctor. I think I’m gonna crash.”
“The doctor say he’s comin’, but you gotta pay him cash.”
They went rushin’ down that freeway,
messed around and got lost
They didn’t care they were just dyin’ to get off
And it was life in the fast lane
Life in the fast lane
Life In The Fast Lane — The Eagle