The Redfin listing for this Laguna Niguel preforeclosure home does not designate it as a short sale, but how can it not be one? The owner put $0 down when he bought it during the bubble, and he is now trying to sell it for more than $150,000 less than he paid about two years ago.
As you will see, there is much more to this story than meets the eye.
28281 Via Alfonse, 92677
Asking price: $649,900
Asking price/ sq ft: $375
Income requirement: $162,475
Purchase price: $830,000
Purchase date: 5/19/06
Size: 3 beds, 3 baths, 1,731 sq ft (built in 1989)
MLS: S532406 (3 days on Redfin)
Zillow Zestimate: $645,500
2006 property tax: $7,207
HOA dues: $142
Type: Single Family Residence
Stories: 2 Levels
Lot size: 4,040 sq ft
From listing: Wonderful two story home in Laguna Niguel. This home features 3 bedrooms, 2.5 bathrooms, a family room with a fireplace, a formal dining room, mirrored closet doors, and a great view of the surrounding city. Home has access to association amenities, which include a pool, spa, tennis court, and work-out center. Come and enjoy all the wonderful things this home has to offer.
Considering how the photos look, it appears the property is already vacant, so it seems unlikely the owner will be trying too hard to keep the house. Does the bottle of alcohol in this picture come with the house, or does that have to be negotiated separately?
As we mentioned, the owner obtained 100% financing (78/22) from JPMorgan Chase. The notice of default was filed on New Year's Eve.
Assuming it is possible to successfully sell the property for the full asking price, the loss would be $219,094, including 6% sales costs. Not a good day for the lender. And it's not the only one who will be out a lot of money.
Think this is an isolated incident in this neighborhood? On this street? Wouldn't you believe it: 28272 Via Alfonse is also headed towards foreclosure. And, 28371 Via Alfonse is an REO that is not yet listed for sale.
All $0 down deals using virtually identical means of financing. All purchased in mid-May through early June of 2006. All by the same investor.
That's right: In a span of less than a month, our real estate investor "bought" three properties on the same street - for a total of $2,390,000 - using none of his own money. Carleton Sheets would be proud!
But the fantasy of real estate riches soon ended, and each of the three homes began the foreclosure process by early January. Fortunately for the investor, he didn't have to sacrifice his home. In fact, his primary residence is in another, very wealthy South OC city.
All told, the loss on these properties will be significant, and the lenders will be left holding the collective bags. Who do you get angry at here? The investor for walking away and potentially not disclosing on their loan applications that they were buying so many properties and leveraging themselves to the hilt? Or do you cry foul on the lenders who enabled this behavior by funding the loans?
No matter what your personal opinion, there is no denying it is the lenders that will be taking the brunt of it in the shorts. And the neighbors can't be too happy to have three homes possibly sitting vacant on the street, either.
Friday, May 16, 2008
3-time failure in Laguna Niguel
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7 comments:
Incredible. Nice post!
Whomever structured the financing should be prosecuted. Whomever represented the buyer and or the seller should be in jail. Any way of finding out who listed these homes?
What these Sellers just don't seem to comprehend is -- who would wan to live in those pieces of s*$t??? Total WTF pricing! The only place that seems more in denial is Aliso Viejo -- low end homes, with a handful still trying to pass off $1.2 - $1.5M homes in dumpsville. Amazing. The only one more of a fool would be anyone who would buy this kind of trash. OC is now loaded with nice - very nice homes for rent in Newport, Irvine, etc.
What ultimate confidence in that neighborhood. Astounding.
The neighborhood is Rancho Niguel and it has great schools and great association amenities. However, if more homes start foreclosing then everyone in that association may be paying higher dues. Already, the schools are cutting teachers for next year so who knows what the quality of life is going to be like even in Laguna Niguel. I would buy in this area if homes like this were in the mid 400K's.
They are cutting teachers throughout the State of California in all neighborhoods, in all schools. What varies from location to location is the number of kids who are spending lots of time and teacher resources learning English since it is not their family's first language. Also different in Laguna Niguel is the level of education and income of the parents which directly affects the contributions they make to the learning environment in money, time, involvement with their child in succeeding in school.
Very interesting story. I'm looking forward to more in the future!
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