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CA renter and I saw this new listing hit the market at about the same time yesterday, and had the same reaction - you gotta be kidding!

http://www.sdlookup.com/MLS-090037885-3302_Azahar_Carlsbad_CA_92009

It’s a 34-year old house with no upgrades on an 11,000sf lot in Old La Costa.  In January, 2004 the homeowners paid $580,000 using a 3% down payment, and then did a cash-out refi in 2005, bumping the loans to $657,000. 

They’ve made about $70,000 profit on the deal.

Now they are in foreclosure.

Yesterday the new listing pops up, and is marked ‘contingent’ immediately, awaiting lender approval of short sale.  It appears that the listing agent must have had their own buyer, and put the short-sale deal together prior to MLS input.

CA renter posted it on Piggington as fraud, because of the ultra-low price of $450,000.

A number of issues arise:

1.  Do the sellers and/or realtor have any legal or fiduciary duty to the lender, Wells Fargo, who is facing a haircut of approximately $230,000?

2.  What’s the real value of the house if it’s not exposed to the open market?

3.  Do taxpayers take a hit on these?  Or just Wells Fargo shareholders - or MBS holders?

4.  As a realtor representing a buyer, am I compelled to search out these deals?

The first three questions have the same answer - it’s up to the bank to protect themselves and their shareholders or MBS owners.  Just getting an appraisal done probably isn’t enough protection.

The fact that the agent inputted the listing onto the MLS must mean he represents the sellers too, which gets touchy if you ask me, especially regarding the potential liability of short sales.  Will the banks chase around old borrowers of recourse loans some day in the future?  They might, nobody knows for sure.

If the agent formally represents the sellers, then he should do what’s best for them - obtain the highest-and-best offer.  That way they’ll have the best chance of getting bank approval, and minimize the loss that the bank could try to collect in the future.

I think we’ll agree that it’s not likely that any agent puts much thought into these, they are just looking at picking up a 5-6% commission in the next few months.  There hasn’t been any guidance issued by any government entity, and, of course, nothing from NAR, CAR, Sandicor, or local boards on what is acceptable, or how to properly handle these cases.

Let’s drop down to point #4 - aren’t buyer’s agents compelled to search out these deals?  The house in question is offered at 2000-2001 pricing, doesn’t every buyer want that?  CA renter said she’d pay $450,000 for it, and that’ll tell you something right there!

The buyer-agents have a fiduciary duty to their buyer to get them the best deal possible. These are some of the best deals, if you can get them closed. 

There are hundreds of these happening now - I know of one agent alone who has 32 of these in process currently.  He inputted all of them as pending listings, not contingent, and he also marked that he is representing the buyer too.  Since November he has only closed four and had at least three get foreclosed, so getting them done must be a challenge when you have 32 on your desk.

This type of guerrilla salesmanship is where the realtor profession appears to be heading - to find these deals for their buyers, secure them at favorable pricing, and get them closed.  The REO sales are just as challenging - wait until the frenzy breaks out over seeing bank-owned SFRs in Carmel Valley listing for $300/sf!

from sddt.com:

Foreclosures in San Diego County reached their highest monthly totals since September 2008, while notices of default spiked after two months of decline. 

June’s 3,715 notices of default were the second highest total for a single month on record. The figure is a 12.9 percent increase from May.

Year over year, June 2009 had 8 percent more notices of default than June 2008. Year to date, notices of default are outpacing their 2008 totals by 7 percent.

The 1,799 trustee deeds filed in June were 78.6% higher than May’s filings.

The increase in trustee’s deeds filed is not surprising after March’s record-breaking number of 4,260 notices of default filed.

“It’s a great puzzle,” said Alan Nevin, director of economic research for MarketPointe Realty Advisors. “Between the combination of lenders not being able to handle the current workload in addition to the Obama plan coercing lenders to be more kind, we don’t know what the hell’s happening out there.”

An update on mortgage rates - they are staying in a tolerable range, so far.

The 30-year fixed-rate mortgage averaged 5.32% for the week ended Thursday, down from last week’s 5.42% average and 6.35% a year ago.

Bank of America’s 30-year jumbo fixed rate today was 5.625% with a point.  They have been pretty aggressive on rates, and ended up ranking as the #1 jumbo lender for the first quarter:

Lenders are still looking for full documentation on the 30-year jumbos.  There are a few brokers that mention easy-qual loans being available, but rates would be higher, and offered only on short-term interest-only terms too.

On our regular blog watch is the Mortgage Fraud Blog:

http://www.mortgagefraudblog.com/index.php/

She added this whopper on Beazer Homes settling for $10 million now, and up to $50 million eventually to compensate for these illegal activities:

Beazer, and its subsidiary, Beazer Mortgage Corporation, admit to engaging in several fraudulent mortgage origination practices, including (1) fraudulently retaining so-called “discount points” that should have been used to provide some home-buyers with a decreased interest rate; (2) fraudulently informing some home-buyers that they were receiving a “gift” from a charity to cover their down-payment when, in truth, the price of the home was increased to offset the supposed “gift;” (3) fraudulently circumventing the “Neighborhood Watch” and “Credit Watch” programs of the Department of Housing and Urban Development to avoid action from HUD in response to the high foreclosure rate of some Beazer Mortgage offices; and (4) instituting a strategy of willful blindness with regard to some stated income loans.

But more eye-popping is that the blogger has added 70 stories on mortgage fraud since May 1st!

On July 23rd we’re going to determine the winner of the latest contest to guess the number of 2Q09 detached sales, but here’s a preview.

As of this morning, the MLS is reporting 5,683 detached closings for 2Q09, at $223.19/sf. There is typically about 10% more added by late-reporting agents, which would be around 6,250. But with more-stringent MLS police enforcement recently, and a slightly earlier date, the final number may be lower.

Duplicate numbers happen every time, but in this contest there was only one double, 6,021, and the two guesses were logged in within four minutes of each other. They are my pick to win!

Here are the guesses:

The “Day at the Track” winner will receive six tickets for box seats right above the finish line at Del Mar, with waitress service!

Here are the previous counts:

Just based on price alone, this new REO listing on Newcastle in Cardiff will get a lot of interest - I had to wait for two others groups to clear out before shooting this youtube tour:

Some of 92007 extends east of the I-5, but to me that was always suburban Baja Encinitas.  This house is in the real Cardiff, west of the freeway, where most sellers still think they are worth $1,000,000+.

Sellers (and their listing agents) will be quick to dismiss a dumpy REO with no view as an outlier, but buyers won’t.  They’ll expect bigger discounts of the nicer ones - but when will sellers oblige?

There are currently 2,055 houses listed over $1,000,000 in SD County, and 449 have closed this year, or about 75 per month on average.

2,055/75 = 27.4 months worth of inventory of million-dollar homes!

Kelly is on the beat:

http://www.voiceofsandiego.org/articles/2009/07/01/survival/199obama070109.txt

An excerpt:

The plan announced in February was initially offered to homeowners whose mortgages were worth 105 percent of their homes’ current value.

Now the option to refinance will be extended to homeowners who are even further underwater.

Today, HUD Secretary Shaun Donovan announced in Las Vegas that the plan will expand to include those 125 percent underwater on their mortgage but still current on their payments.

More than 30 percent of all homeowners in San Diego County who have mortgages are underwater. Note: We’re not talking about the loan modification, payment-reducing part of the federal Making Home Affordable program here, but the option to refinance the loans if you’re underwater.

There is a catch: The borrowers’ loans must be owned or guaranteed by Fannie Mae and Freddie Mac. Both agencies have loan lookup programs (Fannie Mae and Freddie Mac) to determine whether you qualify. I’m checking to find out what other restrictions might apply to the refinancing program and I’ll let you know what I hear.

I could see this in Palmdale, or maybe Victorville…….but could it happen here?

An update on Flint, MI:

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/20/AR2009062000956.html

An excerpt:

Then he looks at what’s left of the neighborhood - blocks lined with bruised homes and broken windows. Two streets over, someone has nailed a plywood sign to a tree: “No Prostitution Zone.” On three blocks of Jane, the city is targeting 14 homes for demolition, four of which have already been scarred by fires.

“My dad, he can’t come down this street anymore. … It’s too hard to see,” Kildee says. “Because his whole life was here.”

What was once Buick City is largely a cement prairie now, and General Motors, which once employed more than 80,000 in the city of its founding, has cut its Flint work force to about 6,000. Flint’s population, which peaked at 197,000, dwindled to 115,000 in 2007, and falling.

To stabilize the city, Kildee started the Genesee County Land Bank, which has taken title to 9,000 properties since 2002, tearing down 1,000 and selling or rehabbing others.

The foreclosure crisis has made the job even tougher, leaving the Land Bank with at least 1,000 more abandoned homes to demolish.

The Wall Street Journal ran the story yesterday about the San Diego MLS sending in the wrong sales data to C.A.R. for the last year.

I don’t know what’s funnier; that Sandicor never checks their own work, or that apparently no one in the western world cares enough about what C.A.R. has to say to notice a major discrepency for a year.

Nothing about this escapade is surprising though, if you know Ray Ewing, CEO of Sandicor.  The realtors are the actual owners of Sandicor, who runs our Multiple Listing Service, and we need somebody to run it.  Enter Ray Ewing.

Back in 1992 when Sandicor was formed by the eleven SD association of realtors, it was the first, and the largest in the country to do so.  If Sandicor would have boldly set out to provide the a first-rate MLS website and assist realtors with helping their clients, they could served a greater good. It has never happened.

Instead, in May, 2008 the Sandicor folks changed the entire MLS system, allegedly ‘upgrading’ from Tempo 3 to Tempo 5.  It was an unmitigated disaster, and still to this day a vastly inferior product.

When a certain blogger complained about the new system, it caused a local news reporter, Zach Fox, called Ray Ewing for comment.

Ray was happy to look up the records and tell Zach that I had taken one of the last Tempo 5 training classes (gave Zach the date and time) and suggested that if I would have gone to additional training I might know what I am talking about.

It is that type of arrogance that is undermining our realtor community every day.  

Sandicor has not developed their own public website, like many other MLS providers have done around the country.  Instead, people like Redfin, Zip, and even one of our own realtors who developed sdlookup.com have kicked Sandicor’s butt with a better distribution of MLS information. 

Ray is good about issuing fines though, and bad-mouthing agents to the press.  Apparently his control over the MLS and the data he provides is still a challenge.

I AM GRATEFUL for Ray’s work.  He is expediting the demise of realtors as we know them.

Consumers are sick of the lack of transparency, the lack of data analysis, and lack of real-time facts to make decisions with.  Ray’s failure to provide any of the above will hasten the creation of an upstart public MLS, and make Sandicor, and most realtors, useless to the community.

I look forward to that day. 

I’ll still have a job helping people analyze properties and their value, and putting deals together.  How about you Ray?

And Ray, what are you going to say to the thousands of realtors who you have failed so miserably who will be out of work? 

The market has been hot lately because the inventory is low.  There are only 5,880 detached, and 3,043 attached active listings in the MLS - about 38% of what it was in September 2007.

Waiting buyers are frustrated and should be jumping at new product - how are the June listings faring?

This is the chart of all the detached listings that came on the MLS in June, and the number that have gone pending.  If the market is hot, and realtors price them within 5-10% of being right, we should see a third or half of new listings selling:

Those towns are hot - there are plenty of buyers waiting, and close to half of every house listed sells right away. What about the ‘tonier’ parts of town?

Houses stand the best chance of selling when new on the market, yet SIXTY new listings have come on the MLS in Del Mar and Rancho Santa Fe, and NOT ONE of them have found a buyer?