The surprise news story of the housing bubble has been the resurgence of squatting. Banks allow it, so people begin to take advantage.

Irvine Home Address … 46 WHEELER Irvine, CA 92620

Resale Home Price …… $499,000

The way you hold your knife (do-do-do-do do-do).

The way we danced until three.

The way you've changed my life.

No, no – they can't take that away from me.

No, they can't take that away from me.

Frank Sinatra & Natalie Cole — They Can't Take That Away From Me

I recently wrote that squatting is becoming a way of life for many delinquent borrowers.

Of course, this doesn't meet the technical definition of squatting which is possession of real estate without the owner's permission. In this instance, the squatters are technically still the owners of property, so there is nothing illegal going on, but these owners are generally hopelessly underwater and failing to make their mortgage payments. They are in possession of real estate that can be called to auction at the discretion of their lender at any time. Ultimately, they will lose their homes.

Today, we are going to look at other forms of squatting from the traditional adverse possession to the return of former owners who couldn't leave their entitlements behind.

Squatters moving into upscale neighborhoods

With thousands of mansions vacant, some see easy pickings

By Bill Briggs

msnbc.com contributor

updated 9/23/2010

On the big screen, actor Randy Quaid may be best known for his mooching, move-in-and-never-leave character “Cousin Eddie” from National Lampoon's "Vacation” films. Last weekend, he allegedly followed his own Hollywood script.

Quaid and his wife, Evi, were arrested Saturday after they were found living in a guest house on a million-dollar, Montecito, Calif., property Quaid once owned. While Quaid claims his name remains on the deed, the actor and his wife were jailed until they were able to post $10,000 bail.

For those of you who don't read the gossip on TMZ, here is a recap of this bizarre story:

Randy Quaid and Wife Arrested for Burglary

The Quaids — Fifty Percent Punished

Randy & Evi Quaid — Pretty in Pink Handcuffs

Quaids Show Up to Court, Plead Not Guilty

Quaid is hardly alone in his distinctly post-bubble legal trouble. Such high-end "mansion squatting" has becoming an increasingly visible irritant in or near Seattle, St. Louis, Chicago and Los Angeles and probably elsewhere, industry experts say.

And the trend appears to be growing, as the housing bust means thousands of mansions around the country are languishing on the market, often under the control of banks that have foreclosed on them.

“It’s immoral but I do understand, logically, how people get this idea in their heads,” said Tara-Nicholle Nelson, a former Bay Area broker agent and now a consumer educator for the real estate website Trulia.com. “I also think this happens a lot more than we know.”

Yes, it is very easy to understand how this idea gets into everyone's mind: it's because they all see their neighbors doing it. Ask yourself, in your circle of friends and acquaintances, how many people do you know that are not paying a mortgage and living in a property that has no equity? How is that different from squatting? It is because their name is on title? What is title without equity? A lease… except that even a lease requires payment.

Luxury homes that are for sale or foreclosed are often unoccupied and under the care of asset managers who typically may be responsible for a lengthy list of idle properties. Many mansions are isolated, walled, cloaked by trees or otherwise hard for passersby to see.

“Squatters realize these places may not get showing for months at a time,” said Nelson. “That’s what makes these properties more of a target.”

Better the squatter you know than the one you don't? That seems to be the reasoning of banks these days.

Before the recession, squatters were known to slip into average- or bargain-priced homes for short, secret stays. In Oakland, Nelson recalls escorting clients to available, empty properties during which “you walk in and there’s like a shaving kit and mattress on the floor, and you go in the next room and find somebody there.

“Traditionally, this has been something you see more in low-end neighborhoods where there are more people around, where more people need a place, and perhaps where police have higher priorities than checking on a pushed-in door or broken window," said Nelson, who has written about the trend for WalletPop.com, a personal finance news site.

The sad truth is that squatters like that often live in squalor and are frequently the victims of crime.

But squatters have moved into nicer neighborhoods now. Realtor Adam Kruse discovered last February that his company-hired house cleaner was living it up – and sleeping over – at a $2 million, 10,000-square-foot home he had listed in St. Louis. The mansion, owned by an out-of-town seller, was nestled near a golf course and boasted large swaths of open space, a media room and “a gorgeous kitchen (with) really just bedrooms, bathrooms galore,” said Kruse, who works with the Hermann London Group.

I guess local realtors aren't the only ones stuck on the word "gorgeous."

You have to admire a squatter who has the nerve to squat in a multi-million dollar mansion.

After tidying up the place, the house cleaner “started having friends over, too, and drinking and partying and staying there … for days at a time,” Kruse said. The squatting went on for about three months until the cleaner – or one of her “guests” – accidently got locked out.

“We found a broken window by the front door and are to believe that at some point the squatters … needed to break in to get back in,” Kruse said. “We just saw party scenes – remnants that looked very similar to beer pong games.”

The cleaner was fired and no criminal charges were brought against her. The house is no longer on the market.

Upscale squatters have been nabbed in at least three other cities:

• In Sugar Grove, Ill., a suburb west of Chicago, cops arrested 42-year-old Steven Hawthorne in April 2009 after he moved his furniture and big-screen TV into a vacant, $700,000 foreclosed home. He introduced himself to neighbors as the new owner and stayed for about eight months. Hawthorne, who also managed to have the power, gas and water turned on at the dwelling, was eventually charged by authorities with two felonies, including theft of government property (the utilities).
• In Malibu, Calif., Wells Fargo executive Cheronda Guyton occasionally occupied a $14.9 million beach house to host swanky social gatherings, according to newspaper reports. One catch: the property’s former owners had lost the home to foreclosure after they were victimized by Bernie Madoff – and the estate was claimed by their bank – that’s right, Wells Fargo. When residents within the gated community glimpsed the parties, they got Guyton’s name from security guards and turned her in. Wells Fargo fired Guyton in September 2009.
• In the Seattle suburbs, a small group – nicknamed the “Mansion Squatters” – has taken a more creative approach. In June, one of its members, Jill E. Lane, 30, moved into a foreclosed and vacant 8,000-square-foot-home in Kirkland, Wash. valued at $3.3 million. She posted a note on the front door that read: “Privately owned property. Not for sale."

The home takeover attempt also involved James McClung, a former real-estate agent and owner of a business called NW Note Elimination. He reportedly runs that business with Lane. Police soon arrested Lane on a criminal trespass charge.

Lane told the Seattle Times that her squatting was part of a protest movement: “Banks do whatever they want and nobody holds them accountable. It makes me ill to see what the banks are doing. They aren't using their bailout money to help anyone. So I'm standing up for the people who are being brutalized by banks every day."

Ordinarily, I would cheer her on for having such a great attitude. Unfortunately, everything she said is complete and utter bullshit.

In August, McLung apparently tried to stake claims to three more Seattle-area mansions, including a $2.2 million home in Bellevue. He posted similar notes on the doors of all three homes, according to the Seattle Times. Mark von der Burg, real estate agent for both the $3.3 million Kirkland property and for the Bellevue luxury home, did not return several phone messages seeking an interview.

I'll bet he didn't return the phone call. What would he say? He was either complicit in the scheme, or so totally disengaged from his job that he should hide his face in shame.

According to media reports, Lane’s short stay in Kirkland cost von der Burg’s client, a bank, $35,000 in legal fees and locksmith bills as well as increased security and cleaning.

Nelson said the targeted homes in the Seattle area were all owned by failed banks.

The squatters apparently believe "they’re going to come into this gap between ownerships and somehow trick someone into believing they now own this place for real — which is absurd," Nelson said. "Even if the (original) bank fails, somebody owns those assets.”

In St. Louis, Kruse can see why desperate people in some cities are making a bid for a taste of the good life – albeit a temporary one.

“People are seeing all the negative news (about the housing market) and just deciding to be more gutsy and stay in riskier places,” Kruse said. “With all the vacant homes, (they figure) their chances aren’t that bad.”

Isn't squatting just another manifestation of entitlement? The people living in houses they are not paying for are doing so because they believe life owes them something. It doesn't matter to these people that others who actually pay their bills live with less as long as they get what they deserve. The housing bubble has changed both the rich and famous and the ordinary and anonymous and made them into something less.

Squatting among the not so rich and famous

Thanks to the IHB, Irvine has become known as a HELOC abuser's and squatter's paradise. The residents here are generally not as well known, but their ongoing occupation of property they do not own and do not pay for is just as infamous. The owner of today's featured property got a great free ride.

• This property was purchased on 8/21/1998 for $341,000. The owners used a $272,800 first mortgage, a $34,100 second mortgage, and a $34,100 down payment.
• On 3/4/2003 they refinanced the first mortgage for $280,500.
• On 11/10/2003 they opened a $200,000 HELOC.
• On 9/15/2006 they went Ponzi and refinanced the first mortgage for $637,500.
• Total mortgage equity withdrawal is $330,600
• Total squatting time is about 16 months so far.

Foreclosure Record

Recording Date: 06/10/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 03/05/2010

Document Type: Notice of Default

Foreclosure Record

Recording Date: 07/29/2009

Document Type: Notice of Default

When you see the asking price history, you sense a bit of panic at the bank. Perhaps they were not getting the short sale offers they wanted.

The extremes realtors go to attract attention is getting ridiculous. This house will not transact at $499,000. The realtor is playing a game to try to get some bidders into the process with hopes of duping them into bidding higher.

Irvine Home Address … 46 WHEELER Irvine, CA 92620

Resale Home Price … $499,000

Home Purchase Price … $341,000

Home Purchase Date …. 8/21/1998

Net Gain (Loss) ………. $128,060

Percent Change ………. 37.6%

Annual Appreciation … 3.0%

Cost of Ownership

————————————————-

$499,000 ………. Asking Price

$17,465 ………. 3.5% Down FHA Financing

4.31% …………… Mortgage Interest Rate

$481,535 ………. 30-Year Mortgage

$95,362 ………. Income Requirement

$2,386 ………. Monthly Mortgage Payment

$432 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$42 ………. Homeowners Insurance

$0 ………. Homeowners Association Fees

============================================

$2,860 ………. Monthly Cash Outlays

-$378 ………. Tax Savings (% of Interest and Property Tax)

-$656 ………. Equity Hidden in Payment

$27 ………. Lost Income to Down Payment (net of taxes)

$62 ………. Maintenance and Replacement Reserves

============================================

$1,915 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,990 ………. Furnishing and Move In @1%

$4,990 ………. Closing Costs @1%

$4,815 ………… Interest Points @1% of Loan

$17,465 ………. Down Payment

============================================

$32,260 ………. Total Cash Costs

$29,300 ………… Emergency Cash Reserves

============================================

$61,560 ………. Total Savings Needed

Property Details for 46 WHEELER Irvine, CA 92620

——————————————————————————

Beds: 3

Baths: 2 full 1 part baths

Home size: 2,211 sq ft

($226 / sq ft)

Lot Size: 5,000 sq ft

Year Built: 1985

Days on Market: 136

Listing Updated: 40441

MLS Number: S617205

Property Type: Single Family, Residential

Community: Northwood

Tract: Gr

——————————————————————————

According to the listing agent, this listing may be a pre-foreclosure or short sale.

Beautiful Lite and Bright 3 Bedroom Home. Breakfast nook in kitchen, formal dining room, large master suite with walk in closet, inside laundry, new flooring. Close To Award Winning Irvine Schools. No Mello-roos, No Association Dues. Offers will be accepted at OPEN HOUSE ONLY Sat. Sept. 25 from 12-3 Home will be sold to the highest & best offer on Saturday.

Do any of you believe this home will be sold to the highest and best offer on Saturday? I hope none of you are that gullible.

I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.

Have a great weekend,

Irvine Renter

A local attorney is suing her lender for failing to give her a loan modification. Are loan modifications now an entitlement?

Irvine Home Address … 51 CEZANNE Irvine, CA 92603

Resale Home Price …… $1,849,000

Yeah owe me back like you owe your rent

Owe me back like its money I spent

Pay me back when you shake it again

Nas — You Owe Me

Are borrowers owed a loan modification? Is it a right or an entitlement? Once upon a time, loan modifications were a gift generously offered by a lender — a gift of a lower payment, a reduced interest rate or some other term modified in favor of borrowers as an enticement to keep paying their mortgage. Somewhere along the way, this unilateral change in terms in favor of buyers became something they are supposed to get, something they are entitled to. I am not sure why foolish borrowing should be rewarded this way, but fixing this problem after the fact is so important to the government that many programs exist to make these loan modifications happen, and now borrowers who have tried to use these programs are suing if the loan modification does occur to their satisfaction.

Irvine woman sues over loan mod ‘hoax’

September 17th, 2010 — Marilyn Kalfus

An Irvine homeowner is suing a large national mortgage servicing company, saying they perpetrated a “loan modification hoax” and committed fraud by promising but never granting her a permanent home loan modification.

So this woman is claiming the entire loan modification program was a hoax to induce her to apply for something she probably isn't qualified for. That seems like a stretch to me, but if she can squeeze a few bucks out of the bank, why not?

Jean C. Wilcox, who also is a real estate lawyer, is seeking class-action status on behalf of other homeowners whose mortgages have been serviced by EMC Corporation.

EMC is based in Texas with offices in Irvine. The company used to be owned by Bear Stearns and is now a subsidiary of JP Morgan Chase, which is not named as a party in the suit. The lawsuit was filed by attorneys Anthony Lanza and Brodie H. Smith of Lanza & Goolsby in Irvine and Thomas Mauriello of Mauriello Law Firm in San Clemente.

Wilcox claims in the suit:

“Through its orchestrated loan modification hoax, EMC has induced consumers, including plaintiff, to continue making excess or other unjustified payments in pursuit of illusory permanent loan modifications. EMC has thereby avoided the need to initiate, prosecute and conclude multiple foreclosures … and has avoided the need to liquidate excessive and under-valued real estate inventory … and has artificially bolstered its financial statements, including balance sheets and related SEC filings … by minimizing mandatory reporting of toxic loans, defaulted loans or distressed loans.”

We’re requesting a response from EMC.

Wilcox bought her home in 2004. Three years later, she says in the suit, she refinanced her WAMU purchase money loan with a subprime loan from Freemont Investment and loan, which has since been dissolved. A few months after the refi, she was notified that EMC was her new servicer, but she wasn’t told who holds the loan. She said to this day, she doesn’t know who it is.

I found her mortgage records in my database. She purchased her home for $992,000 using a $695,000 first mortgage and a $297,000 down payment. She opened a $40,000 HELOC shortly thereafter, and she refinanced with an $800,000 loan on 12/29/2006. Perhaps she needed that extra $100,000 to pay for upgrades? It is the $800,000 loan with $100,000 cash out that she is seeking to modify. I'm thinking that if she wouldn't have pulled out that $100,000, she might not need a loan modification. Do we want to reward her behavior?

Wilcox says in the suit that she underwent 4 temporary or trial modifications with EMC but never received the permanent modification that she was promised. The goal posts kept changing, she said, as she was shuttled from person to person at the company.

In the suit she relays the various steps she took to fulfill the requirements she was told she needed to meet to obtain temporary loan mods. She says at one point an EMC employee advised her to stop making payments on her debts because it would prevent her loan from being modified. As she missed her payments, she said, her FICO score plunged. She said she postponed selling her house, while its value decreased significantly, because she was relying on receiving the permanent loan mod.

“I poured every penny I had into this house,” Wilcox, a single mother of two, said in a brief interview. ”We just lavished everything we could on this house. This is our ultimate dream home.”

And all of us are supposed to pay for that stupidity by subsidizing her mortgage. Great!

The lawsuit, filed in Orange County Superior Court, alleges violations of the California Consumers Legal Remedies Act, unlawful, unfair and deceptive business practices, breach of contract, unjust enrichment and fraud.

A judge would have to approve the suit’s class-action status. The law firm of Lanza & Goolsby states on its Website, ”It is estimated that the class may include hundreds or thousands of California homeowners who were victims of EMC’s fraud — while struggling to keep their homes through this recession.”

Investigative Website Pro Publica has delved into the denial of loan modifications in an extensive series of reports. Reporter Paul Kiel wrote in February:

“The largest servicers have lagged in approving homeowners for modifications. Together, those servicers account for more than 60 percent of the 3.4 million mortgages eligible for the program, but very few homeowners have been approved for lasting modifications. About 425,000 Chase customers are eligible for loan mods, according to the Treasury Department. Only a little more than 7,000 have received permanent modifications.”

“There are a number of adverse consequences of a trial period’s dragging on, said the [National] consumer law center’s [Diane] Thompson. Because a homeowner is not making a full payment, the balance of the mortgage grows during the trial period. The servicer reports the shortfall to credit reporting agencies, so the homeowner’s credit score can drop. And most important, says Thompson, the homeowner isn’t saving money in case the modification fails and the home is foreclosed. ‘Keeping someone in a trial modification really does not do them a favor,’ she said.”

Earlier this year, borrowers in Washington state and Arizona filed lawsuits against Bank of America over loans that were not modified. Those homeowners also were seeking class-action status.

I don't know about you, but I don't feel good about this lawsuit. The behavior it rewards is troubling to me. All loan modifications are fraught with moral hazard, and if we allow lawsuits to compel them, we are inching ever closer to full principal forgiveness on the backs of the US taxpayer.

BTW, I want to commend Marilyn Kalfus on her great reporting. Lately I have noticed a series of excellent stories from her with hard-hitting truths about the activity in our housing market. Kudos, Marilyn, your good work is noticed and appreciated.

The illusion of wealth

People who live in Orange County are fantastic pretenders. The previous owner of today's featured property lived the good life courtesy of their house.

• This property was purchased on 4/21/2004 for $1,460,500. The owners used a $1,00,000 first mortgage and a $465,500 down payment. So far so good.
• On 6/30/2005 they refinanced with a $1,471,458 Option ARM and withdrew their entire down payment plus some extra spending money.
• On 2/20/2007 they refinanced again with a $1,650,000 first mortgage and a $220,000 HELOC.
• Total property debt was $1,870,000.
• Total mortgage equity withdrawal was $870,000 including their sizable down payment.
• Total squatting time was about 10 months.

Foreclosure Record

Recording Date: 04/13/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 11/20/2009

Document Type: Notice of Default

The property was purchased at auction for $1,485,500 on 7/16/2005. It looks as if the hard money lender put a $1,633,500 loan on the property staking claim to the first $148,000 plus interest. Whoever talked this hard money lender into the deal stands to make the rest — if there is any.

Irvine Home Address … 51 CEZANNE Irvine, CA 92603

Resale Home Price … $1,849,000

Home Purchase Price … $1,485,500

Home Purchase Date …. 8/16/2010

Net Gain (Loss) ………. $252,560

Percent Change ………. 17.0%

Annual Appreciation … 138.8%

Cost of Ownership

————————————————-

$1,849,000 ………. Asking Price

$369,800 ………. 20% Down Conventional

4.52% …………… Mortgage Interest Rate

$1,479,200 ………. 30-Year Mortgage

$362,209 ………. Income Requirement

$7,512 ………. Monthly Mortgage Payment

$1602 ………. Property Tax

$400 ………. Special Taxes and Levies (Mello Roos)

$154 ………. Homeowners Insurance

$410 ………. Homeowners Association Fees

============================================

$10,079 ………. Monthly Cash Outlays

-$1503 ………. Tax Savings (% of Interest and Property Tax)

-$1941 ………. Equity Hidden in Payment

$620 ………. Lost Income to Down Payment (net of taxes)

$231 ………. Maintenance and Replacement Reserves

============================================

$7,486 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$18,490 ………. Furnishing and Move In @1%

$18,490 ………. Closing Costs @1%

$14,792 ………… Interest Points @1% of Loan

$369,800 ………. Down Payment

============================================

$421,572 ………. Total Cash Costs

$114,700 ………… Emergency Cash Reserves

============================================

$536,272 ………. Total Savings Needed

Property Details for 51 CEZANNE Irvine, CA 92603

——————————————————————————

Beds: 4

Baths: 3 full 1 part baths

Home size: 3,600 sq ft

($514 / sq ft)

Lot Size: 9,327 sq ft

Year Built: 2004

Days on Market: 6

Listing Updated: 40435

MLS Number: S632282

Property Type: Single Family, Residential

Community: Turtle Ridge

Tract: Chau

——————————————————————————

TUSCAN BEAUTY!! Gate guarded in Turtle ridge..Very impressive and emotional neighborhood. Exceptional elevations and endless views. Extenxive stone exterior finishes. The emotion starts at the curb…Enter thru a private gate into the courtyard with cozy fireplace and dramatic water feature. Newly updated with new carpet, paint and lush landscaping. Extensive marble floors downstairs. Gourmet kitchen with granite counters and stainless appliances. Seperate wine room as well with a wrought iron door. Three bedrooms in the main house and a detached casitas with private bedroom/bath and an optional family room which also can be used for a gym or private office. Oversized master suite with walk in closets. dual sinks and large sitting area. Large view windows to give you a light and bright ambiance.Entetainers backyard is complete with extended family room area, built in bbq, fireplace and endless views of the mountains and city lights. MODEL PERFECT!!

Entetainers?

Environmentally friendly housing features have been hawked as a value add for builders and sellers. Buyers simply do not agree. So far, the green movement in housing has been a bust.

Irvine Home Address … 20 JULIAN 1 Irvine, CA 92602

Resale Home Price …… $639,000

"Break the bough and strip all of it.

Fell this forest, make a profit!"

"Are there more so brave and honest;

Who would die to save my forest?"

Skyclad — The Disenchanted Forest

Builders hate green building

I am going to let you in on a little secret: homebuilders hate the new trend toward Green Building. A homebuilder's motivations are pretty basic. They will provide anything a buyer is willing to pay for. If buyers want granite countertops, and if buyers are willing to pay the builder more than what it costs, then the builder will provide plenty of granite countertops.

Builders do not like to be forced to provide those items that buyers are not willing to pay for. Have you noticed that builders don't provide back yard landscaping? That is no accident. Study after study has shown that landscaping adds about $0.50 for every dollar spent. When a builder puts in back yard landscaping, they lose money, so they don't do it. The same is true of solar panels, low-flow toilets, and a number of other environmentally friendly items. Buyers give lip service to wanting these items, but they won't put enough dollars to green products to make it worthwhile for the builder to provide them.

Builders are being forced to put in Green Building features by local municipalities, but they resist this strongly because buyers won't pay for it. These environmentally friendly features become a cost to the builder with no increase in revenue. Like any wise business people, builders resist throwing away money.

The Green Building movement has a long way to go.

Big Green Home Bust

By Ernest Beck Sep 16th 2010

A well-appointed green home outfitted with energy-saving appliances and other eco-friendly features might save money on utility bills and ease your conscience, but it won't always help close a sale in a tough real estate market, a California homeowner has learned.

The warning sign for the green residential market: A house for sale in Costa Mesa that was the first in Orange County to receive a coveted LEED Platinum certification (green building's Good Housekeeping Seal) had its price slashed by half a million.

The seven-bedroom, 4,900-square foot Craftsman-style house is the ultimate green showcase, boasting everything from low-flow faucets to solar panels (see "Home Energy Saving Projects for Every Budget"). But even those hallmarks of sustainable design were no match, it seems, for the crappy economy and skittish buyers. According to the Orange County Register, the green home's list price recently dropped from $299,000 to $2,499,999.

The hefty drop underscores the continuing debate about the resale value of green homes. Many have believed that green would command a premium among buyers who aspire to a sustainable lifestyle, but now it appears that green might not be as big a selling point in a market that has gone off the rails.

The only people who ever believed green homes would command a premium are those vendors pushing green products and a few tree huggers. If there was real demand for these products, homebuilders would provide them in limitless quantities. There is no demand, so builders stay away.

So how green do prospective buyers want to go?

There's not much hard evidence to go by. Anecdotes suggest that sustainable homes can sometimes sell faster than conventional ones, especially if energy-efficiency is the main marketing theme, according to the National Association of Home Builders. On the other hand, some green condo buildings in urban markets like New York, that were expected to fly off the market in the boom, have had a rough ride.

Green or not, buyers are still constrained by the market's current tight financial conditions, the NAHB says, and even the prospect of lower monthly energy bills "has not gained the attention of the lending community."

Lenders don't really care how much a homeowner spends on utilities. Perhaps they should, but the DTI parameters don't include utility costs, and until they do, green products that tout energy savings will not get any financing dollars put toward them.

One problem is that most people are in the dark about what green building really means, and more importantly, if it's worth paying for. Green can also be confusing: Quick, what's the difference between LED and LEED? (Answer: LED is energy-efficient light emitting diodes, used in lighting and LEED is Leadership in Energy and Environmental Design, the much touted green certification program that includes a checklist of environmental standards).

Although the price gap between green and standard housing is reportedly closing, buyers aren't always interested in the technical aspects of how and why green will improve their lives, especially if they are agonizing over a big financial commitment. The Costa Mesa home, for example, which sits on a golf course, features dual-flush toilets, an internal gray water system, and drought-tolerant native plants in the garden (see "Landscaping With Low-Maintenance Lawns Saves Money").

Sounds great, but most buyers are more likely to wonder whether they can afford the mortgage.

The cold truth is that buyers don't care about green features. They care about costs, and green features add costs that are never recovered through use or added value.

$500K price cut on ultimate ‘green’ home

August 23rd, 2010 — Marilyn Kalfus

A Costa Mesa residence that became the first single family home in Orange County to snag the nation’s highest rating under the LEED green building program has had a nearly $500,000 price chop.

The 7-bedroom, modern Craftsman-style house at 1811 Gisler Ave. is now listed at $2,499,999, down from $2,999,000 in January.

The home, priced at $510 a square foot, sits on 0.32 of an acre at the 11th green of the Mesa Verde Golf Course.

As Register reporter Pat Brennan wrote in February, the developer began planning to build the 4,900-square foot house from scratch 2 years before it hit the market.

Wrote Brennan:

“It’s loaded with features — solar panels, a gray-water system, natural lighting, low-flow water fixtures, landscaping with drought-tolerant native plants …”

All these elements helped Steve Blanchard earn the platinum rating from LEED — “Leadership in Energy and Environmental Design”:

• Solar power
• Internal gray water system, recycling sink and shower water for toilet flushes and outside irrigation
• Low-flow, dual-flush toilets and faucets
• An interior built with materials free from volatile organic compounds, a common pollutant
• LED lighting throughout
• Energy Star appliances
• Natural lighting throughout the house
• Tankless water-heating system
• High-efficiency heating and cooling units
• Gas-burning fireplaces
• Low-flow drip irrigation
• Landscaping with Orange County native plants, which won’t require any irrigation once established.

Other features include folding walls of glass that lead to a private courtyard, a formal dining room, 3 fireplaces, including in the master bedroom suite, a gourmet kitchen and an outdoor Dacor kitchen.

Another Ponzi implosion

• Today's featured property was purchased for $362,000 on 6/20/2002. The owner used a $289,500 first mortgage, a $72,150 second mortgage, and a $350 down payment.
• On 1/23/2003, he refinanced with a $365,000 first mortgage.
• On 4/3/2003 he obtained a $50,000 HELOC.
• On 8/6/2003 he refinanced with a $369,500 first mortgage.
• On 5/16/2006 he got a HELOC for $250,000.
• On 12/22/2006 he was approved for a $315,200 HELOC.
• Total property debt was $684,700.
• Total mortgage equity withdrawal was $322,350.

Foreclosure Record

Recording Date: 05/13/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 02/10/2009

Document Type: Notice of Default

Palladio Properties picked this up at auction for $536,500. They will net 8% to 12% for their investors.

Irvine Home Address … 20 JULIAN 1 Irvine, CA 92602

Resale Home Price … $639,000

Home Purchase Price … $536,500

Home Purchase Date …. 6/1/2010

Net Gain (Loss) ………. $64,160

Percent Change ………. 12.0%

Annual Appreciation … 53.6%

Cost of Ownership

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$639,000 ………. Asking Price

$127,800 ………. 20% Down Conventional

4.52% …………… Mortgage Interest Rate

$511,200 ………. 30-Year Mortgage

$125,177 ………. Income Requirement

$2,596 ………. Monthly Mortgage Payment

$554 ………. Property Tax

$217 ………. Special Taxes and Levies (Mello Roos)

$53 ………. Homeowners Insurance

$128 ………. Homeowners Association Fees

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$3,548 ………. Monthly Cash Outlays

-$434 ………. Tax Savings (% of Interest and Property Tax)

-$671 ………. Equity Hidden in Payment

$214 ………. Lost Income to Down Payment (net of taxes)

$80 ………. Maintenance and Replacement Reserves

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$2,738 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$6,390 ………. Furnishing and Move In @1%

$6,390 ………. Closing Costs @1%

$5,112 ………… Interest Points @1% of Loan

$127,800 ………. Down Payment

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$145,692 ………. Total Cash Costs

$41,900 ………… Emergency Cash Reserves

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$187,592 ………. Total Savings Needed

Property Details for 20 JULIAN 1 Irvine, CA 92602

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Beds: 3

Baths: 2 full 1 part baths

Home size: 1,650 sq ft

($387 / sq ft)

Lot Size: n/a

Year Built: 2002

Days on Market: 21

Listing Updated: 40418

MLS Number: S630611

Property Type: Condominium, Residential

Community: Northpark

Tract: Tibu

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Beautiful Detached Home in Northpark Square Community. New Paint & Carpet. Stainless Steel Appliances. Open Floor Plan. Living Room with Fireplace. 3 Bedrooms upstairs. Spacious Master Bathroom with walk-in Closet. Close to Community Park. Move-in Ready.