The State of California needs to do what regular people do – when you’re in trouble, sell assets to generate cash.
from sddt.com
The city of Del Mar is considering a bid to buy the Del Mar Fairgrounds so that coastal property can remain in the public domain.
The Del Mar City Council voted unanimously on Monday to send a “letter of interest” to Gov. Arnold Schwarzenegger about the 400-acre fairgrounds, racetrack and nearby horse park.
Schwarzenegger has placed the property on a list of surplus sites that could be sold to raise cash for the financially strapped state. City officials are worried that a developer could buy the property, making it off-limits to the public.
The cost of the fairgrounds is estimated between $400 million and $700 million.
Speaking of the track, the 2Q09 contest is almost a wrap, and as of today there are 5,844 closings for the second quarter of 2009 – here’s a link:
A couple more REO listings came my way from Bank of America.
They sent me a new 4,000sf one-story house on 4 acres in a gated community in Pala, whose zip code was marked incorrectly, it was listed as Oceanside’s 92054, when it was really 92059.
The builder had it listed for $1,200,000 towards the end of construction in 2006, but he refinanced with a $880,000 loan in March 2007, and proceeded to go down with the ship – he never listed it for sale again.
The projected value is between $500,000 and $550,000.
The zip code snafu looked like a mistake, until the second REO came over – in the Fallbrook zip of 92028, but east of the I-15 not far from Pala!
This is a single-level 1,610sf house built in 1990 on a 4,356 sf lot. The former owners paid $415,000 for it in 2005 and financed 100%, and they refinanced their second mortgage twice and took out another $70,000 cash.
The original balance of the first mortgage was $332,000 but by the time it got foreclosed the amount owed was $383,355 – $50,000 in neg-am and back payments!
They had tried to short sell it last year, listed for $274,000, but no luck. The listing agent did include this exciting fact:
Home is a modular design on raised foundation.
Is this just a test? Does B of A figure that if he can sells these, he can sell anything, and we’ll load him up with the Carlsbad-to-Carmel Valley gems?
Another note – both of these were assigned to me within a day or two after the trustee sale, just like the last bunch back in February. Hopefully it’s a sign that they are pursuing these vigorously!
Still looking for signs of the foreclosure tsunami beginning – now that the MLS requires that REOs be marked clearly, it’ll be easier to track. Here are the number of new detached REO listings, per week in San Diego County:
Recent Week
New REOs
# Already Marked PEND/CONT
June 10-16
115
85
June 17-23
150
122
June 24-30
135
106
July 1-7
113
52
July 7-14
95
16
Totals
608
381
The new REO listings are flying off the shelf, relatively.
Of those listed since June 10th, 63% have already been marked contingent or pending. There have been 2,567 non-REOs listed in the same time period, and only 30% of those have found a buyer.
Add a price parameter of $800,000+ to detached listings since June 10th:
REO/Non-REO
# of New Listings over $800K
# Marked PEND/CONT
REOs
11
3
Non-REOs
690
43
But with 3,715 NODs filed in June, it’s likely that we’ll be seeing more REO listings!
Did they cash out at the top, and have been patiently bubble-sitting? Out-of-towners? Generational money shift (inheritance, before or after death)? or move-up or down?
In the previous post, some of the examples were marked as cash buyers by the listing agent, but their tax rolls haven’t been updated yet (Rancho Costero, Via Conquistador, Valerio Trail, and Lynwood).
But we can check out the others, and add a few that weren’t previously sold at the peak.
OUT-OF-TOWNERS (2) The buyers of Camino del Orchidia and Meadows Del Mar showed no previous history owning or selling in San Diego County, so let’s assume that they are out-of-towners (not first-timers).
MOVE-DOWNERS (1) The buyers who paid $1,130,000 for Skyline moved from Solana Beach. They had paid $1,300,000 for a house on the east-side of Pacific in 2000, and sold it last month for $2,100,000, using the same agent from Skyline – nice package deal. Their loan was around $800,000, so they transferred their equity to Carlsbad and were able to lose the payment.
Here are other homes purchased recently by all-cash buyers:
782 Sparta, Encinitas, 92024
5 br/4.5 ba 3,454 sf
YB: 2002
Monthly fees = $261
SP: $910,000 9/02 new
SP: $1,435,000 6/09
MT: 178 days
One-story former model home on 3/4-acre lot in Leucadia. These all-cash buyers are long-time owners of a smaller house in Mission Hills that isn’t on the market, and wasn’t refinanced. They used the Mission Hills address on the tax roll, so they must be planning on keeping it. Flippers? No way, we’ll call this one:
GENERATIONAL (1) ………(buying a house for parents or kids?)
These sellers had listed for $1.595 million and came down pretty quick, so their $1.2 loan might have been a motivator. The cash buyer has a Scottsdale address, and it looks to be in the Troon area, so he has/had some dough. Buyers don’t always put their future address on their tax questionaire, so we’re not sure if this is an out-of-towner coming to join us permanently, or a
This cash buyer had just purchased another slightly smaller house (200sf) in Carmel Valley in January, 2007 for $1,280,000…..all-cash, and hasn’t refinanced. We’ll call this a
The seller’s $2.4 million loan may have played a part in this one too, because the 60 ft.- wide lots don’t seem to bother folks in Meadows Del Mar. The buyer had purchased his previous residence in 2003, and a rental in 2004, both in Carmel Valley, and didn’t refinance either to buy, so we’ll call this a
There are a variety of cash buyers, and reasons for buying. Where does the money come from? We can only make a case for one of the seven above that it came from their previous residence, but there were probably some real estate-related investments that led to some of the equity used – just not other houses sold right around here.
Here are some same-house sales in Carlsbad, Encinitas, and Carmel Valley:
4120 Skyline, Carlsbad 92008
3 br/2 ba, 1,725sf
YB: 1958
SP: $1,410,000 11/06
SP: $1,130,000 6/09
MT: 439 days
This is the house on the splittable 0.72-acre lot on the corner of Tamarack and Skyline, the top of the hill in Old Carlsbad with sweeping ocean views. The 2006 buyer had financed $1,128,000, so losing the entire down payment of $280,000 (and then some) turned out to be a better option than to continue making those payments. In the MLS remarks: Lot split almost completed
According to the MLS remarks, the seller had put in $300,000+ into this double-gate guarded home. He should feel pretty good though, two others have closed since June 1st, for $2,400,000 and $2,558,375, and there are 11 active listing and one pending currently.
Remember this one, on the outskirts of North Vista?
2115 Vista Grande, Vista 92084
3 br/2.5 ba 1,996 sf
0.67-acre
SP: $725,000 6/05 (90% financed)
TS: $233,750 3/09 (back to bene WFB)
LP: $99,900 5/09
SP: $240,000 7/09 cash
They disclosed a bunch of non-permitted issues that the listing agent thought would take $60,000 to $100,000 to fix, but it didn’t stop somebody from paying almost 2.5 x list price!.
NEW YORK (Dow Jones)–For the third straight month, option adjustable-rate mortgages are generating proportionally more delinquencies and foreclosures than subprime mortgages, the scourge of the housing crisis.
A further acceleration of troubles among the loans could mean higher-than-expected losses for Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), as well as the Federal Deposit Insurance Corp.’s own insurance fund.
“The realization of the issues related to option ARMs is just beginning,” says Chris Marinac, director of research at Atlanta-based FIG Partners.
Known as Pick-A-Pays – a brand name popularized by Wachovia Corp. – the mostly adjustable-rate loans were typically issued to creditworthy homeowners, and allowed borrowers to make a range of monthly payments. The payment options include a partial-interest payment that adds the unpaid interest to the loan’s balance. On many of the loans, balances have risen while values of the underlying properties have plummeted amid the nationwide housing crisis.
As of April, 36.9% of the loans were at least 60 days past due, while 19% were in foreclosure, according to data from First American CoreLogic, a unit of Santa Ana, Calif.-based First American Corp. (FAF).
By contrast, 33.9% of subprime loans were delinquent as of April, while 14.5% were in foreclosure.
The loans are heavily concentrated in the worst-hit regions in the housing market, including California and Florida, making option-ARM borrowers inordinately vulnerable to declining property values.
Option ARMs account for a much smaller portion of outstanding mortgages than subprime loans, but they occupy substantial tracts of certain banks’ balance sheets.
San Francisco-based Wells Fargo holds a mountain of Pick-A-Pays, having acquired $115 billion of the loans in its purchase of teetering Wachovia Corp., which it agreed to buy late last year.
Due to complicated accounting rules, Wells Fargo assigns the loans a value of $93.2 billion, giving it room to absorb future losses on the loans. The bank, however, won’t say whether losses from the loans have risen beyond the firm’s original expectations.
The firm nonetheless said in May that borrowers accounting for 51% of its outstanding Pick-A-Pay balances made only the minimum payment.
“Our Pick-a-Pay customers have been fairly constant in their utilization of the minimum payment option,” Wells Fargo said in a corporate filing.
Wells Fargo declined to comment further.
JPMorgan, for its part, holds $40.2 billion in option ARMs that the bank acquired when it purchased most of Seattle-based Washington Mutual Inc., which collapsed last year.
The New York company also said in a filing that it has some exposure to an additional $46.5 billion in option ARMs sitting in complex off-balance-sheet entities.
JPMorgan declined to comment.
The FDIC could also face future losses due to rising problems with the loans. The regulator agreed to soak up most future losses from about $5 billion in option ARMs once held by Coral Gables, Fla.-based BankUnited, which the FDIC seized and sold to private investors. The FDIC did not respond to a request for comment.
Troubles among option ARMs could well get worse, since the bulk are due to “recast” – industry lingo for reset – over the next three years or even earlier.
Most of the loans reset to a traditional mortgage after five or 10 years, depending on the contract. But borrowers can trigger an earlier recast if the loan’s balance exceeds the property’s value by a predetermined ratio – usually 110% or 125%.
Whereas subprime delinquencies have started to taper off, option ARMs’ worst troubles may yet lie ahead.
“We’re just beginning to enter the cycle of resets” on option-ARM loans, says Matt Stadler, chief risk officer of National Asset Direct Inc.
Senior lawmakers are also taking note of the looming storm.
In late June, 20 U.S. senators, including Banking Committee Chairman Christopher Dodd, D-Conn., sent a letter to Treasury Secretary Timothy Geithner to address the issue.
The senators asked Geithner whether he could assure the public that loan servicers are prepared for a “potential onslaught of requests for modifications” from option-ARM borrowers.
-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@dowjones.com
When that article about the blog was syndicated, it ran in the newspaper in Bend, Oregon, and we’ve picked up some friends since.
Bob sent this in from the latest edition of the same paper, evidence that looks like Citi is going after those who owe a balance on their mortgage:
Published: July 06. 2009
Civil Suits
Deschutes County Circuit Court Civil Log
Cases involving less than $50,000 are subject to mandatory arbitration
Filed June 22
09CV0640ST: Citibank South Dakota NA v. Todd R. Meredith, complaint, $12,567.15
09CV0641AB: Citibank NA v. Jeffrey D. Evans, complaint, $99,960.50
09CV0642ST: CitiMortgage Inc. v. Lisa M. Solomon, complaint, $42,259.79
09CV0643AB: CitiMortgage Inc. v. Ramon Salcedo Jr., complaint, $71,126.88
09CV0644MA: CitiMortgage Inc. v. Lara Wettig, complaint, $60,054.39
09CV0645MA: CitiMortgage Inc. v. Michele Ann Sprando, complaint, $60,705.39
We don’t know for sure what these are, but the CitiMortgage suits look mortgage-related, and they aren’t the normal foreclosure postings. No surprise that they are trying to collect money owed them – I think we can expect future recourse-loan deficiencies to be pursued.
If it isn’t bad enough just trying to find a decent house for a decent price these days, once you find one, you need to grapple with additional issues.
This note was left in the comment section of a youtube video on Carlsbad McMansions:
I’ve done lots of work for class action lawsuits in Carlsbad where many of these Mc Mansions were built on fill or in areas with substantial groundwater issues. I’d be wary of buying anything in Carlsbad without getting a reputable geologist to sign off on the property as sound and stable. Being told they need to cough up $100k+ for repairs tends to make some people very angry. Make sure and research class action lawsuits in the development you are interested in BEFORE you put in an offer.
The State of California needs to do what regular people do – when you’re in trouble, sell assets to generate cash.
