Walkaway x 7
All types of homeowners are thinking about walking away – in this case, the builders of the seven new homes on Newland Ct. in Carlsbad formed an LLC so they’ll probably dodge the ruining-of-credit problem.
Too bad they didn’t sharpen their pencil a little sooner on their prices. When they started selling these in the summer of 2006, they were looking for $1.4 to $1.5 million, and when the first set of listings expired at the end of 2007, they were down to $1.2 million. But buyer expectations were either dropping faster, or close to non-existent for 3,500 sf homes that back to Carlsbad Village Drive.
The current listings on the Newland Seven are on the range $895,000 to $995,000, but too little, too late.
The lender, United Commercial Bank, is foreclosing on their $6.4 million loan, and had their trustee sale scheduled for today – but it postponed to next month. The profit was too tight – so their business decision became obvious – they decided to walk too.
The walkaway option will occur to many, and there’s not much to stop people. I think the LLC will be obligated to pay tax on the loss endured by the lender – wasn’t the tax relief offered only to those who owner-occupied?
Should the government reverse the decision on not taxing the money lost by the banks by owner-occupiers? That decision really opened the floodgates, and it’s probably too late to turn back now.