Wednesday, January 28th, 2009 at 3:26 PM
REO Eviction
I witnessed my first actual evicting of occupants today at this house at 4773 Sequoia in Oceanside.
It had been foreclosed in September, and a 60-day notice was served after the tenant turned down the cash-for-keys offer. He didn’t leave after two months, and because he didn’t contest it in court, the case went directly to the sheriff’s office.
The tenant is an active-duty Marine, a big fan of UFC fighting, and had a big nasty pitbull – and I’ve seen my share. I communicated this to the asset manager, hoping that the eviction would go quietly because the sheriff’s posse would be dispatched.
They emailed me the exact time, 10:40am, and I arrive a few minutes early thinking I’ll see 2-3 burly sheriffs looking for trouble. I look through the garage window and see all of the tenant’s stuff in full view. At about 10:45am, a squad car pulls up, and a little skinny guy with white hair about 60 years old gets out. I start thinking that a major confrontation is about to erupt, and now I’m relying on a guy who looks like Barney Fife to save the day. I hoped he still had his bullet in his front pocket!
Myself, the locksmith, and Barney go to the front door, knock, and no one answers.
We let the locksmith go to work, and Barney and I go around to the back door - and it’s unlocked. I step in, and Barney says “Hold on, let me go first”, and I leap out of the way, figuring he’s the one with the bullet.
Nobody was home, and the house was vacated, with the garage full of junk. Thinking that the sheriff is in charge of evictions, I ask, although somewhat nervously, ”who is going to come and clean the place out?”
Barney turns to me with a big smile and says, “That’s your job!”
He went on to say that he has been traveling to Carlsbad, Encinitas, and Carmel Valley more often lately, and mentioned Torrey Highlands by name.
The locksmith said his company of 12 people used to have 550 properties assigned to them, but today they are down to half of that, around 275. It’s gotten so bad that he has had to expand to Riverside County.
He thought it must be due to a competitor cutting in on his business, but someone in his network recently told him that the banks have been buried and not listing any new properties. He heard that we should see a major onslaught on REOs coming to market, starting in February.
I’ll be a little older then, but I’m ready!
Posted on Wednesday, January 28th, 2009 at 3:26 PM in Foreclosures/REOs | 21 Comments » | 
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Don’t forget Jim, if the “junk” in the garage is worth more than $300. you have to store it for the tenants to recover. Take lots of pix to cya.
Just a Broker | January 28th, 2009 at 3:37 pmWhat, NO Jim the Realtor VIDEO w/this post! I am truly disappointed.
OCVulture | January 28th, 2009 at 3:38 pmBad Boys Bad Boys whatcha going do when they come for you…
Maybe the Govt will give the marine dude some money and let him stay.
What the heck, we have already turned into: “America the mediocre”.
They should just share some of the TARP with this guy to cover 10 years worth of mortgage payments and explain that he was not responsible for making a fiscally irresponsible decision to buy a home he could not afford to pay for.
Turnack | January 28th, 2009 at 3:51 pmThere is a claim of massive shadow REO inventory but I’m unconvinced. S.B. 1137 and the holiday moratorium for many foreclosures cleared a lot of backlog. I think any new glut won’t be from houses that have already been taken off the market but news ones taken by the bank.
Sure there is stuff being processed but I think a massive overhang of inventory sitting out of sight has been overblown.
® | January 28th, 2009 at 4:22 pmHi Jim,
It’s time to show off your Chevy again after you clean out the garage. Love that classic truck!
Bringout the Chevy | January 28th, 2009 at 4:34 pmNext time you have to enter a property with potentially aggressive dogs. Do the mailman trick and bring some treats or steak. If you do it a couple times before entering the property all but the most aggressive dogs will associate you with a treat or food.
shadash | January 28th, 2009 at 4:51 pmThink about how NOW everyone can see that we were in a bubble in ’05, but at the time, people like those on this blog got huge flack for the mere suggestion that prices might drop, not increase or stay steady.
Today, reasonable people think it is a good idea to throw money in the breach. In ten years, everyone will know better, but of course we wrote the check for $815 billions today. In the mean time, our elected officials are taxing our descendants to put $$ in our pockets in the hopes we buy a house that can only be worth less when we will have to pay more taxes in the future to cover the bill for buying homes no one wants today.
When will Congress try to inflate the sanity bubble? I think never.
Rational expectations | January 28th, 2009 at 5:37 pmI blew a head gasket on the Chevy trying to set a new land speed record.
Jim the Realtor | January 28th, 2009 at 6:13 pmThanks for this interesting read Jim.
“He heard that we should see a major onslaught on REOs coming to market, starting in February”.
That’s why housing is going to drop another 20-40% over the next 2-3 years.
JAP | January 28th, 2009 at 7:57 pmJAP,
You seem to be purposely trying to poke and prod me with your commentary. Can you take it back to Ben’s blog please? Your constant battering of 20-40% price drops, while certainly possible, is old hat.
I’d prefer if you bring something more than your carpet bombing, which sounds like your only intent is to run off my potential clients.
And stop with the psuedo-compliments.
Jim the Realtor | January 28th, 2009 at 8:05 pmI blew a head gasket on the Chevy trying to set a new land speed record.
Better it than you. I should know.
Seriously, I think it wise you didn’t try to video in a situation that might get ugly.
Rob Dawg | January 28th, 2009 at 9:37 pmWhat? No U.S. Marshalls sent to help break down the door? I guess they send out Barney Fifes for the job, not Tommy Lee Jones.
allyson24 | January 29th, 2009 at 3:27 amBTW talking about foreclosure and evictions…
Last night I was playing cards with some friends at a downtown condo highrise. When one of the guys we used to play with about 2 years stopped by to say hi. Apparently money is a little tight for him so gambling wasn’t in the cards so to speak. But (and this will make you sick) apparently he hasn’t paid his mortgage or hoa for 2 years. He purchased in 2006 for 1.9mill and is now trying to do a short sale for 1.1mill. That’s an 800k loss! And to top everything else off the hoa has put a lien on his property for 22k in non payments. This is something the new owner will have to address before the property will transfer title.
2 YEARS OF NOT PAYING HIS MORTGAGE OR HOA!
shadash | January 29th, 2009 at 6:36 amIf he gets foreclosed, the HOA gets burned for the entire amount owed. Believe it or not, in a short sale, the bank will pay the expenses on behalf of the owner.
I think we’ll see more lenders demanding that te homeowners either cough up some dough to close, or execute an unsecured note.
I hve a short sale pending currently where the seller hasn’t missed a payment. He and the bank agreed not to harm his credit in exchange for him paying back the difference over time. That’s a fair deal, as long as it sticks.
Jim the Realtor | January 29th, 2009 at 6:46 amactually, HOAs can take the deadbeat owner to superior court to collect the debt if they so choose.
Depending on the makeup of the HOA board, they may or may not choose to do that. If they are owed $22K, that is quite a chunk of change so they just migh – once they weigh that old “blood from a turnip” adage.
the good life | January 29th, 2009 at 8:18 amIn my past life, I did a few evictions (tenants, not REOs), you always steel yourself for the worst, but I never had an actual problem. I had bigger problems when 1) the evicted tenant tried to retrieve their stuff (properly stored by law for 30 days but they came by 45 days later) or 2) serving the eviction notice proceedings. That was the only time I ever was threatened, and it was via dog.
Tips: let the cops go first. They are armed; you probably aren’t. No one shoots at cops unless its suicide by police. Arrange for movers and storage quickly. At least when I did it in CA, you couldn’t just throw their stuff on the curb like you can elsewhere. Arranging for movers can be a PITA, unless you rent a truck and hire 3 guys hanging out on a corner, in which case you risk them breaking something and you being on the hook for it for not maintaining the standard of care. Keep large sized dog treats in the car. Dogs are, despite how much we love them, generally stupid and run by their stomachs. If you throw a dog a treat he probably will 1) stop and eat it and/or 2) begin to like you. Either gives you enough time to get in the car.
Former RB Resident | January 29th, 2009 at 9:34 amNot to belabor the point, but I keep hearing/reading about an impending 29% drop in home prices (was it Roubini who said it?), and it makes me wonder: 1) if the drop is expected to happen this year over the next four quarters, 2) how prices could drop 29% more than where they are already, and 3) the effects that even a further ten percent drop in home prices will do for the sellers here on the east coast that still list as if it’s spring 2005. We’re at 2003/04 prices right now. There wasn’t so much bubble here so not so much deflation of said bubble, but ten percent will bring us back to ’02 prices, and anything more than that will take us back into the 90s. It just seems unlikely, but this has been a crazy ride so far, hasn’t it? I can see some further correction, but, I agree: anything over ten percent now seems like we’d need some really serious effects, like unemployment passing ten percent or 1970s inflation.
jprice vincenz | January 29th, 2009 at 12:43 pmIt looks like the banks are holding onto 70% of the current foreclosure inventory hoping for some miracle before having to write them down on their books. That locksmith should be humming along soon. http://www.cnbc.com/id/28898377
mybleachhouse | January 29th, 2009 at 1:38 pm“like unemployment passing ten percent”
California is already at 9.3% and climbing. And the mass job cuts this month have been brutal.
Unfortunately, it looks like 10% is in the bag.
sdnerd | January 29th, 2009 at 3:38 pm“There wasn’t so much bubble here so not so much deflation of said bubble, but ten percent will bring us back to ‘02 prices, and anything more than that will take us back into the 90s.”
Since just about all the price increases since 2001 have been based not on any real growth in the economy but on federally-subsidized cheap money loaned to people who shouldn’t have been able to qualify, I would expect prices overall to drop at least to ’01-’02 levels and then some more due to panic over the current job market (I call it “reverse bubble,” in which people’s fears that things will never stop getting worse mirror their previous overconfidence that they would never stop getting better). Eventually, when all the dust settles and we arrive at something that people consider at least a semblance of “normal,” I would expect to see prices come back to somewhere around their 2001 levels plus 1-3 percent for each year since for inflation. When you look at graphs of home prices adjusted for inflation over the past 50 years or so a line that averages the highs and lows is more or less flat, reflecting the fact that prior to the bubble peoples’ homes and mortgages were not “wealth builders,” but merely a form of enforced savings that had a reasonable chance of keeping pace with inflation.
GeneK | January 30th, 2009 at 8:49 amGreat response, GeneK and all. I track FCs on my local town blog, and there does seem to be a hidden inventory here. Two years ago–30 to 40 houses for sale at any one time. No FCs. There were still orders for unbuilt tract housing, which has stopped completely now. Just before Thanksgiving, we had almost 200 existing homes for sale and about 25 FCs. Today, it’s 120 and 10 FCs. That’s a loss of 80 homes (and they definitely didn’t sell that many in the cold season)–probably most taken off b/c the owners didn’t want the hassle of selling during the holidays, especially since nothing is moving anyways (even though that clause can be used against the same logic: why bother taking it off the market if nothing’s happening?). So I wonder where the rest of the inventory has gone to. I suppose there are LOTS of homes that will list when/if the market shows any signs of a recovery. We’d like to upgrade a little but are waiting until the market improves to some degree before looking for a replacement. This “hidden inventory” issue you touch upon, mybleachhouse, is one that is worth thinking about.
jprice vincenz | February 1st, 2009 at 4:14 pm