Foreclosure stats, June 2008

The latest South OC stats from ForeclosureRadar show new notices of default and the number of foreclosure properties that went back to the bank during the month of June decreased from May's totals - but they were still significantly higher than the totals from a year ago. The South Orange County numbers mirrored those of Orange County as a whole.

Here are the notice of default numbers for June 2008:



These are the REO stats - properties that went back to the bank at auction:


Image credit: Steve Rhodes

May foreclosure numbers

Here are the May foreclosure numbers from ForeclosureRadar.com (if you're looking for foreclosure data, they've got the most up-to-date info out there).

REOs on our chart are foreclosures that were sold back to the bank at auction - this does not include properties sold to third parties at auction. These are homes that will be back on the market for sale (theoretically) soon and will be adding to the local inventory.

NOD stands for notice of default - the first stage of the formal foreclosure process. These numbers are helpful because they serve as forward-looking indicators for foreclosure numbers of the future.






As you can see, NODs and REOs are up significantly in South County when compared to 2007. If you compare to April, REOs were up, but notice of defaults were down slightly.

By this measure, Lake Forest (92630) is the most distressed market, since it had the most new NODs and the most REOs. It is surprising that Laguna Niguel was only two NODs behind.

Countywide, all foreclosures (NODs, notice of trustee sales and foreclosure sales) were up 18% compared to April, and up 302% year-over-year. Orange County ranked 32 out of 54 counties in California in terms of population per foreclosure sale (1 sale for every 2,307 people). Riverside was at the top, with a foreclosure for every 548 people.

Nothing down; big loss in Mission

Properties like the one we're profiling today have all-too-familiar sales histories: Modest appreciation from 1990-2000. A nice jump from 2000-2002. Then, the sky was virtually the limit during the bubble as this property almost doubled in value in the span of nearly three years.

Now, the value is retreating fast...

28052 Festivo, 92692
Asking price: $575,000
Asking price/ sq ft: $271
Income requirement: $143,750
Purchase price: $720,000
Purchase date: 8/2/2005
Size: 3 beds, 3 baths, 2,111 sq ft (built in 1979)
MLS: S508362 (226 days on Redfin)
ZipRealty price tracker: Price Reduced: 11/16/07 -- $699,000 to $669,000
Price Reduced: 1/10/08 -- $669,000 to $639,000
Price Reduced: 2/19/08 -- $639,000 to $599,000
Zillow Zestimate: $605,500
2007 property tax: $7,351
Type: Single Family Residence
From listing: Amazing Forever Views across Capistrano Valley! Gorgeous Trilevel, huge family room with cozy fireplace, updated kitchen and baths, scraped ceilings, freshly painted, very clean, and ready to go! Possible RV access! Giant backyard with plenty of room for a pool!


View Larger Map

The property is listed as a short sale for $575,000, and we wish potential buyers good luck with that considering there was a total of $720,000 in loans taken out on this property in mid 2005: Yes, $0-down (80/20) financing on a $720,000 house. The notice of trustee sale on the first loan was for about $34,000 more than the original loan, so we can only assume not much (if any) of the principal has been paid off. There is a lot of debt on this property.

Assuming a short sale can be completed for the current asking price, the loss would be $179,500, including 6% sales costs. Not including transaction costs, this property would undergo a depreciation of 20%.

3-time failure in Laguna Niguel

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.

No jolly holiday in San Juan

The decorations in the photo of this San Juan home scream "holidays" - and their presence is strangely appropriate. The borrowers who are holding today's subject property have been the beneficiaries of some very generous giving from their lenders. That's lenders with an "s."

26435 N Woodcrest Lane, 92675
Asking price: $370,000-$395,000
Asking price/ sq ft: $235-$251
Income requirement: $98,750
Purchase price: $510,000
Purchase date: 7/20/04
Size: 4 beds, 2 baths, 1,572 sq ft (built in 1972)
MLS: S525924 (49 days on Redfin)
ZipRealty price tracker: Price Reduced: 4/04/08 -- $450,000 to $400,000
Price Reduced: 4/15/08 -- $400,000 to $395,000
Zillow Zestimate: $478,000
2007 property tax: $5,393
HOA dues: $100
Type: Single Family Residence
Stories: 2 Levels
Lot size: 3,050 sq ft
From listing: Cozy Single Family Attached Home in San Juan Village with lots of upgrades. Well maintained. One of the best homes for sale in the neighborhood. This is a short sale. Foreclosure. Short sale subject to lender's approval.


View Larger Map

There are no interior photos with the listing, so we're settling for the Google street view. Here is the timeline for this property:

7/20/04: Purchased for $510,000 using 100% financing (a $408,000 first loan and a $102,000 second).
8/24/05: Re-fi for a total of $544,500 using two loans.
12/6/06: Another re-fi, this time also using two loans totaling $630,000.
1/16/08: Notice of default filed in the amount of $13,211.
3/19/08: Property listed for sale with an asking price of $450,000.

It seems unlikely the lender would quickly agree to a short sale, considering the first loan on this property that was made in 2006 was in the amount of $504,000 - about the entire 2004 purchase price. The second loan of $126,000 stands to be completely wiped out.

As you can see, it appears the years of free gifts for our owners appear to be numbered. Is there any reason to feel sorry for them? They "bought" the house using none of their own money, pulled cash out more than once and will walk away losing nothing except a few points on their credit score. This is clearly the case of the lender left holding the bag.

Assuming a short sale can somehow be arranged and the lender accepts for the top current asking price, the loss would be $138,700, including 6% sales costs, off the previous sales price. It would also be a depreciation of about 23%, not including transaction costs.

But, as we showed you, the loss for the lender would in reality be closer to $259,000, considering how much debt is actually on the property.

$0 down backfires in Talega

Today's property is another example of how a bubble-era buyer could get into a pretty darn nice million-dollar property like this one in Talega - without using any of their own money. What ever could go wrong?

Now, since the market has cooled, the house is predictably headed for foreclosure. Will a last-minute buyer step in, or will this one go all the way to auction?

219 Via Marfino, 92673
Asking price: $1,030,000
Asking price/ sq ft: $287
Income requirement: $257,500
Purchase price: $1,425,000
Purchase date: 8/26/05
Size: 5 beds, 5 baths, 3,586 sq ft (built in 2000)
MLS: S503912 (242 days on Redfin)
ZipRealty price tracker: Price Reduced: 11/30/07 -- $973,143 to $945,342
Price Increased: 11/30/07 -- $945,342 to $985,032
(Price increased 3/20/08 -- $985,032 to $1,030,000)
Zillow Zestimate: $991,500
2007 property tax: $18,242
HOA dues: $149
Type: Single Family Residence
Style: Spanish
Stories: 2 Levels
Lot size: 10,600 sq ft
From listing: Best value in talega and maybe orange county!!!! This pool home is ready to move in. Backs to the golf course, custom kitchen, lots of tile. Show and sell today!!! See you in escrow. Short sale is approved, no waiting, no waiting, no waiting for this great property!!!!Sold as is!!!!!!Short sale is approved by the lender!!!!!

The buyer paid $1.425 million in mid 2005. She was able to obtain 100% financing through First Franklin in the form of a $1.14 million first loan and a $285,000 second (80/20). A notice of default on the first loan in the amount of $31,494 was posted in December, and a notice of trustee sale in the amount of $1,198,356 came in mid March.

We would be curious to know if this property saw much action when it was priced at $945,342. Was the only thing holding up a sale the lender's approval? Or, was there not sufficient interest back then and this is really a last-ditch wishing effort with no substance?

One thing is certain, though: The property hasn't appreciated any since last fall, so if buyers weren't all over the place then it seems hard to believe they would be interested now with an increased price tag - unless, of course, the allure of an approved short sale is worth the higher price.

The property is scheduled to be auctioned May 5 at 10 a.m. - that is, unless a buyer can be found before then. As you can see from the listing, the lender has approved a price of $1.03 million. Is it worth that much to a buyer, or would they prefer to wait, let the property go back to the bank and later reappear as an REO before deciding whether to go through with the purchase?

By setting an approved short sale amount, the bank has agreed to a price that would equal a loss of $456,800, including 6% sales costs. Bye bye second loan, and ouch to the first one, too - in fact, the notice of trustee sale amount is actually higher than the original loan itself, thanks to unpaid interest and fees adding up.

A sale at that price would also mean a depreciation of about 28% in less than three years, not including transaction costs.

$12.8 million preforeclosure in Laguna Beach

This property is simply amazing - it's a luxury beachfront home in Laguna Beach that is right off Coast Highway. But, as we know, it works the same no matter where the address is: Stop paying the mortgage, and the lender gets unhappy and begins the foreclosure process.

This property became a preforeclosure in March and also is up for sale on the MLS. Got all your pennies saved for the downpayment on this one?

31091 S Coast Hwy, 92651
Asking price: $12,800,000
Asking price/ sq ft: $2,977
Income requirement: You can't afford it
Purchase price: $4,800,000
Purchase date: 6/24/04
Size: 3 beds, 5 baths, 4,300 sq ft (built in 1992)
MLS: L25935 (31 days on Redfin)
Zillow Zestimate: $2,487,040
2007 property tax: $54,497.34
Type: Single Family Residence
Style: Contemporary
Stories: 2 levels
Lot size: 6,251 sq ft
From listing: Breath taking beach front contemporary home. Recently completed a $2 million remodel in 2007. Rare luxury property with every amenity imaginable. Enjoy short walks on the sand to the montage resort & spa with private beach access. Bang & olufsen tv and sound system, security cameras, automatic window coverings, custom temperture controlled wine room, partner's office, gym and entertainment room complete with pool table and professional bar. Hotel inpired master retreat with ocean views from every angle. Kitchen boasts his and hers sub-zeros, beverage center, convection range & gaggenau hood. Custom sie-matic cabinetry and zodiac stone counter tops designed by euro-kitchens. Home is elegantly completed with honed marble and limestone floors. Enjoy the magical sunsets nightly from the comfort of your living room or from one of your beautiful decks.


View Larger Map

(Google street view maps are a wonderful thing. We will now be including these with our featured properties whenever available. Don't forget to use your mouse and poke around the street if you feel so inclined)

Here's the recent financial history on this property:
10/23/03: Sold for $4.5 million.
6/24/04: Sold again for $4.8 million. Buyer put $960,000 down and financed $3.84 million through Loan Link in Aliso Viejo. Funding came in the way of a $3.36 million first loan and a $480,000 second (70/10 financing).
3/14/08: Notice of default filed - $12,714.
3/31/08: Appeared for sale on Redfin.

If you were compelled to read the long listing description (which sure as heck is warranted with a house of this price), you would have seen that this property underwent a $2 million remodel just a couple years ago. But does this alone warrant an appreciation of $8 million - a 167% total increase, or roughly a 28% gain per year - from the previous sales price in 2004? What is it really worth today?

Only a very small group of people can answer those questions - they make up the very tiny pool of potential buyers who would be interested in a property like this and have the financial wherewithal to pull the trigger (for all cash, we would presume). Consequently, they would be bailing out the current owner at the same time.

Will the "location, location, location" rule win out here and provide the current owner with enough appreciation to spring them from the foreclosure trap? We will certainly be watching to find out.

And, guess what: This isn't the only distressed property in Laguna Beach...

Beat the bank in San Juan

We have profiled in the past how some lower-end San Juan condo complexes are getting reamed right now, but today's property is in fact a single family home that is a short sale. If you hurry, you might be able to beat the bank on this one - the auction is scheduled for May 19 at 10 a.m. Better get a move on...

25765 Avenida Pedrigal, 92675
Asking price: $399,000-$425,000
Asking price/ sq ft: $374-$399
Income requirement: $106,250
Purchase price: $553,000
Purchase date: 7/29/05
Size: 2 beds, 2 baths, 1,066 sq ft (built in 1972)
MLS: S521688 (76 days on Redfin)
ZipRealty price tracker: Price Increased: 03/26/08 -- $385,000 to $395,000
Zillow Zestimate: $438,500
2007 property tax: $5,722
HOA dues: $75
Type: Single Family Residence
Style: Townhouse
Stories: 2 levels
Lot size: 1,553 sq ft
From listing: Beach Close Home. New ceramic tile with mosaic inlay in the downstairs area. Fireplace in living room. Master Suite with walk in closets and balcony. Upgraded powder room. Private yard with cobblestone patio. Approximately 1 mile to Dana Point Harbor and local beaches. Bank has approved short sale at $425,000. Owner paid $553,000 in July of 2005. Must be able to close quickly to beat the bank!

Owner paid $553,000 in 2005, huh. Want to guess how much of their own money they actually used? You got it: Nothing. Zero. This owner was able to get 100% financing through a $442,400 first mortgage and a $110,600 second - it's yet another 80/20 loan situation.

The notice of default was filed in early November in the amount of $10,553. The notice of trustee sale was posted in February. The amount was $462,982. That means unpaid interest and additional fees have driven the amount well above the original loan amount. This property is going to be a big loser for the lender.

It's kind of a mystery as to why the bank has approved a short sale for $425,000, and yet the property is listed at a price range of $399,000-$425,000. Do you really think the bank will go as low as $399,000? And even if they would, do you think they would get back to you in time to save this from auction?

Assuming a sale for the approved price of $425,000, the loss would be $153,500, including 6% sales costs. It would also be a depreciation of 23% in less than three years, not including transaction costs.


View Larger Map

Other owners on the street are not faring too well, either. You may also be interested to know that 25719 Avenida Pedrigal is an REO that is not for sale yet. Those owners bought the property for $600,000 in 2006 using a $480,000 (80%) loan. The home went back to the bank in January for $449,000 and is owned by Avelo Mortgage.

And, 25711 Avenida Pedrigal is for sale - at $146,500 less than its 2004 price.

High-end loss in Aliso (update)

This property in Aliso Viejo, which we first posted on back in September, is of the million-dollar variety. As you will see, the amount of debt coupled with a declining market is making it very hard for the current owners to get out cleanly. It's still on the market and is now a preforeclosure.

36 Endless Vis, 92656
Asking price: $1,099,000
Asking price/ sq ft: $306
Income requirement: $274,750
Purchase price: $1,350,000
Purchase date: 1/31/06
Size: 5 beds, 5 baths, 3,600 sq ft (built in 2000)
MLS: S501452 (257 days on Redfin)
ZipRealty price tracker: Price Reduced: 9/29/07 -- $1,349,900 to $1,274,900
Price Reduced: 10/11/07 -- $1,274,900 to $1,100,000
Price Reduced: 1/10/08 -- $1,279,000 to $1,199,000
Price Reduced: 2/16/08 -- $1,199,000 to $1,099,900
Zillow Zestimate: $1,109,000
2007 property tax: $11,779
HOA dues: $96 + $41
Type: Single Family Residence
Stories: Two Levels
Lot size: 6,600 sq ft
From listing: Huge Price Reduction!! Best Value in Aliso! Fabulous Estate Home in the Exclusive Gated Oak View Enclave. Luxurious Interiors * Elegant Long Driveway * Large Living Room with Soaring Ceilings + Fireplace * Elegant Dining Room with French Doors * Gourmet Kitchen with Island + Stainless Steel Appliances * Family Room with Fireplace * Pool Sized Yard with Built-In BBQ with Tons of Privacy * 5 Bedrooms + Large Loft(could be converted to 6th Bedroom) * Mainfloor Bedroom with Private Bath * Master Suite with Dual Walk-In Closets with Custom Built-Ins. Truly a Must See!

The current owners bought at the peak in early 2006 for $1.35 million, using 90% financing (80/10) from Washington Mutual. The couple who sold them the property truly struck real estate gold, as they made $520,000 in profit, before sales costs and other expenditures, simply by holding the home for less than three years.

A little less than a year later, our new owners re-fied into a $1 million first loan and a $235,000 2nd. A month after that, a $276,500 line of credit was added from National City Bank.

Six months later, the owners decided to place their home on the market. They listed for $1,349,900 - essentially the same price they had paid. But the market had already begun to turn, and there were no takers.

The $1 million loan from WaMu went delinquent, and a notice of default was filed in early March in the amount of $24,916. The property is still on the market, though the price has been lowered four times to $1,099,000. - that's a total reduction of $250,000.

Assuming the property is (somehow) sold for the current asking price, the loss would now be $316,940, including 6% sales costs. It also would mean a depreciation of about 19%, not including any transaction costs.

(Another) Ladera Ranch foreclosure

Ladera Ranch came up in the LA Times' new foreclosure widget as being the area in Orange County with the worst rate of households per foreclosure (15.58 - but, the number is likely off since the number of homes in the area seems to be understated). So, today we're featuring a foreclosure property in Ladera's Covenant Hills that is selling for a huge markdown off the 2006 price.

14 Drackert Lane, 92694

Asking price: $879,900

Asking price/ sq ft: $251
Income requirement: $219,975
Buyer purchase price: $1,500,000
Buyer purchase date: 8/28/06
Size: 4 beds, 4 baths, 3,500 sq ft (built in 2005)

MLS: S529187 (8 days on Redfin)

Zillow Zestimate: $1,235,000
2007 property tax: $23,920.54 (2006 taxes of $22,129.58 unpaid)
HOA dues: $404
Type: Single Family Residence

Style: Mediterranean

Stories: Two Levels
Lot size: 6,500 sq ft
From listing: Beautiful home in desired gated community of Covenant Hills. Cul-de-Sac location with landscaped front. Backyard landscaped needs completed. Main floor Master bedroom and bath/spa including jacuzzi tub. His and her closets with double sinks. Custom paint, crown moulding, through out home. Travertine floors downstairs. Kitchen with island and granite counter tops.

The original owner walked away with a cool $455k in sales proceeds after holding the property for about a year and selling it to our greater fool in 2006 for $1.5 million. The progression from there is not hard to predict:

8/28/06: GF puts $75,950 down and finances $1,424,050 via a $1,199,200 1st mortgage and a $224,850 2nd from First Franklin.
9/24/07: Notice of default filed in the amount of $32,236.
2/1/08: Notice of trustee sale filed, amount is $1,271,924.
3/18/08: Home scheduled to be auctioned. Opening bid of $1,202,574.95.

Now, the vacant property is on the market. Assuming a sale at the full asking price, the loss would be $672,894 off the previous sales price, including 6% sales costs. Not including transaction costs, that would also be a depreciation of 41% off the previous sales price.

Think about that: 41% off in less than two years. In a luxury neighborhood. Of course, there is always the possibility that the price is artificially low to attract multiple bids. We will know for sure when this property sells.

The latest home stats came out Friday, and there's still not really much of an improvement on the South OC numbers - if anything, the retreat continues. Here are the DataQuick stats for the 22 business days ending April 8, as reported by the OC Register:

Update: Beat the bank in Laguna Beach

A reader has updated us that this Laguna Beach property we posted on in January has, in fact sold. The house's journey is complicated and fuzzy, but with some help from our source and a bit of digging here is what appears to be the timeline:

8/29/06: Listed for sale for $1.125 million
2/15/07: Sold for $1.095 million, 1st loan for 80% of purchase price, or $876,000, from Indymac Bank (171 days on market)
9/12/07: Notice of default recorded, delinquent amount $38,141
12/10/07: First installment of 2007 property tax bill ($6,070.83) unpaid and becomes delinquent
12/14/07: Notice of trustee sale recorded, minimum bid established at $880,982
1/3/08: Listed for sale with asking price of $1,100,876. Listing would later carry the following description: *******Approved Short Sale At Between $830,000 Bom Back On Market Subject To Cancelation Of Current Escrow*************** Beat The Bank Pre-Foreclosure, Panoramic Ocean Views, Spectacular North Coastline Views, Catalina Sunsets. Spacious Living Areas Include Two Remodeled Viewing Decks, Open Living Room With Fireplace, Dining Area, Open Kitchen. Good Sized Bedrooms, Master With Two Closets. Freshly Painted Interior. Flowering Landscaping, Large Private Rear Yard With Decking. Situated Toward End Of A Cul-De-Sac Street, A Wonderful Residence With Outstanding Ocean Views!
4/2/08: Reader update - property sold for $830,000
4/3/08: Was on the list to be sold at auction at Santa Ana courthouse; had been postponed from 3/6

It appears, then, that the property may well have been successfully sold at the last minute before it was to be sold at auction (where it may have been kicked back to the lender). Assuming a purchase price of $830,000, that would mean a decline of 24%, or $265,000 from the previous sales price in early 2007, not including any sales costs.

2002 short-sale pricing in RSM

We're starting off the week with a short sale/preforeclosure in RSM that could easily be headed for full-blown foreclosure. The asking price is virtually the same as the one the property sold for in May 2002 - that's almost six years ago.

95 Via Vicini, 92688

Asking price: $310,000

Asking price/ sq ft: $200
Income requirement: $77,500
Purchase price: $305,000
Purchase date: 5/22/02
Size: 3 beds, 3 baths, 1,550 sq ft (built in 1999)

MLS: C08032456 (27 days on Redfin)

ZipRealty price tracker: Price Reduced: 3/22/08 -- $440,000 to $310,000
Zillow Zestimate: $453,000
2007 property tax: $4,856
HOA dues: $142
Type: Attached, Condominium

Style: Traditional

Stories: 2 Level
From listing: Turn key home ready for move-in. This was a model home that was used to sell the other units. This a 3 bed, 3 bath, wood floors, high ceiling, upgraded kitchen, community pool, low assoc dues, attached 2 car garage with built in closets. Accross from major shopping centers. Also very close to the 241 toll road. Properity needs to be sold, lowest priced home in the area, subject to short sale approval.

This "properity" (see the listing for the spelling) was first listed for sale at $440,000, but was quickly slashed to the current asking price of $310,000.

There are a handful of other properties for sale in this neighborhood, and the competition can't be happy about this price - or more, likely, some will write this one off as an impossible-to-complete short sale that won't have any affect on anybody else.

Those other properties range in price from $372,500 for a smaller two-bedroom to an absurd $525,000 also for a two-bedroom. The closest comp in terms of size is asking $475,000.

If it were possible to complete a sale at the current asking price, the loss would be $13,600 off the 2002 price, including 6% sales costs. That equates to almost six years of ownership with nothing to show for it...