The 4 br/3.5 ba, 3,265sf house at 3291 Avenida La Cima in Carlsbad has sat vacant all year, and was being offered as a short sale, listed for $925,000.
The owner bought it new in 2003 for $694,500, and had refinanced at least three times. The latest left her with a $900,000 first mortgage, and a $100,000 second mortgage.
An all-cash offer for $900,000 was tendered, but declined by the bank. The frustrated listing agent has this in the remarks:
Second lien holder Bank of America WILL NOT release their lien unless they receive 5% of the net proceeds that the first receives. The first lien holder generously will only allow $10,000 to the second. B of A will not accept this amount and therefore is forcing foreclosure. HOME FORECLOSED ON 11/12/09.
Today’s opening bid was $739,500, and no takers – so it goes “back to bene”, and the first mortgage holder gets another REO on the books.
Three things appear to be in the works here….
1. Banks are stupid.
2. Servicers are losing patience on short sales, and foreclosing is becoming a primary option.
3. JtR has three people (Jim, Lucy and Richard) who are filming houses that are heading for the court house steps, and building quite a library for their clients!
Here is Richard’s tour:
Reminds me of that house in Cardiff that went back to the bank and then got bid up by a cash buyer. You would think more of these cash buyers would try bidding at the auctions but I guess they either don’t want to take the risk, don’t have the time, or don’t have the necessary information or help.
JTR, you are doing a tremendous service to your clients and blog readers by posting this kind of information.
Woohoo! REO for everyone!
Looks like a nice house. I look forward to seeing more of these pre-REOs. 🙂
BOA is not stupid and doesnt care what the first mortgage gets. The second is a recourse loan BOA must beleive that they can recover more than $10,000 from the prior owner. Rather than letting someone walk who once paid a large mortgage they are exercising their option to pursue the deficiency. The seller was probably offered the chance to settle for some amount and declined to do so. Now the seller will have to dodge collection agencies for the rest of their life, declare BK or actually pay back some of what they borrowed.
Thanks for the insight CA Law, I was wondering if the move by BofA was motivated by spite. The listing agent’s remarks cracked me up.
Any guess as to the LP? $900k for that seems really steep, whoever held the first must not be too thrilled with BofA.
Speaking of short sales, I almost forgot:
“Short sale subject to lender approval. No lender knowledge at this time. Just starting the process. Lock box now on front door.”
Really? I wonder what the story behind that one is. The house is vacant, so someone is real serious about leaving.
That house seems to be broken up into a lot of little tiny rooms that were so far from the hub of the house they could best be used as office rentals. Who plans these homes?
Chuck
Not a bad house. $739K is not outrageous for this place considering the location. Why would a $900K cash offer be refused? IMO, BofA deserves to fail.
It’ strange to hear Rich’s voice on this vid instead of Jim’s. It needs more wisecracks and sarcasm :o)
JAP, with time and age my videos will become more sarcastic and wise. Or should I say full of wisecracks.
If the second was used as purchase money toward the purchase of the house I believe that the 2nd would have no recourse.In this case it does not appear the 2nd was purchase money and the 2nd (BOFA) can go after their money and get a judjement from the owner.If it was an 80/20 situation where all the money was used for the purchase of the house BOFA would probably be more lenient.Knowing they can recover some of their money is a different story.
Jim,
What you and your video assistants are doing is awesome. You’re turning the traditional RE process on it’s head.
Thank you for all the hard work.
richard,
nice video, but i want more commentary! more comments like “all lagoon”! “nothing fancy”, “detroit river”, “no extra charge” optional, but appreciated.
not many comments on the video – clearly, jim has not schooled you in the fine art of snarkiness 🙂
I have told Richard and Lucy that because their videos are intended to be viewed by our private clients only, don’t worry about the snark.
If they get off some funny lines, I’ll be sure to include them here!
CA Law
Your comment is insightful but honestly think it sounds like a lawyer. Technically correct, but for all practical purposes a bad decision. The likelihood of BofA recovering net of collection and legal fees anything close to $10k is nil and thus from a pure business decision is not wise (unless you are a lawyer involved with collection of the debt).
Of course if the govt had allowed a few more banks to fail, I suspect we would have seen a much different decision by bofa. Instead we have banks with net recoveries below what they would be in a short sale, a home owner with ruined credit (morally good but for economy probably bad), the govt with huge debts to bail out the banks, banks who won’t lend and the benefit of the loss going to someone with the cash to pay a low ball price…but at least we know Jim will benefit (good thing) and so with us readers who do have the means to buy these bargains (also good thing)…
It just strikes me as more bad decisions influenced by bad policy
JtR,
Maybe you can loan Rich your Chevy to use when he goes out to make videos. Would get him in the proper state of mind. Maybe stage an ice cream truck drive-by.
Calhousebear:
How do you know BofA will never collect $10K on a $100K loan? Maybe the prior owner actually has the $$ (or the income and does not want to declare BR?) It is speculation, either way.
Maybe BofA is playing hardball in general, in an effort (however flawed) to maximize returns on its 2nd mortgages, and was willing to forgo $10K on this particular sale as part of its strategy? Or, maybe they are just stupid. Would be nice of BofA would share its “thinking” with the blog readers, but we wont hold our breath waiting.
JtR, do you list any (many?) shorties? If so, do you turn ones down if there is a 2nd lein holder because of this sort of plot complication?
Whether or not BofA accepts the $10,000 at the short sale or it forecloses, they still have recourse. They will sell this loan to some attorney group for 10 cents on the dollar anyway. They are not coming out with any more either way. … Yes, they are just plain stupid. The people who make these decisions have not a brain in their heads.They are just part of the food chain and they are idiots. They cost the bank money in the long run. Most short sale language comes back at closing with the right to recourse, assuming it is a recourse loan and not purchase money.
I can think of a couple of reasons why BofA would want to nerf a short sale and force the holder of the 1st to take a bigger hit. Do we know who the 1st lien holder is? That would potentially explain a lot….
How can anyone look at the “lagoon” and not think of a certain failed flipper from Sacramento?
Nothing particularly wrong with the layout and the yard will clean up nice but I just didn’t see 3200 sf in that tour.
JtR,
Apparently the cash buyer and his/her agent are stupid too, since they could have attended the auction with that cash and picked up the house free and clear of the junior liens (suck it BofA!) AND bought the house they wanted for 15% below what they apparently thought it was worth. Weak sauce by the agent.
“I just didn’t see 3200 sf in that tour.”
My wife and I walked into an open house in that neighborhood a few months back. It was a 4,000 sqft house, that just didn’t seem like it. Lots of tiny rooms like this one. Nice house, but we didn’t like the layout (or, of course, the $1.1 million price tag.)
It will be quite interesting to see what this lists and sells for.
That place looks like a thousand others I’ve seen. Builders have no imagination and buyers are no better. So many cookie cutter wanna be high end hopefulls looking to live in the same marble/stone/granite box with stainless steel. 1950’s south Oceanside near the beach is looking better and better.
“Banks are stupid.”
I would add ruthless, greedy and now the folks who actually run this country.
File this under the label, “We Are Screwed”.
The suggestion that BofA has some method to what they do seems speculative at best. More probably than not, BofA’s motivations will depend on whether they are the servicer as opposed to the owner of the second, the terms and conditions of their servicing agreement, whether mortgage insurance is in play, the number of files the asset manager has in question, what the asset manager has been eating for breakfast lately, the particular relationship between this particular asset manager and his lower level boss, and perhaps, but not likely, what this particular asset manager located in some unknown state understands about California deficiency law.
My experience to date is that I have been unable to confirm that BofA is not dumb, and JTR knows what I mean. Even assuming that BofA has some high level policy from up high on recourse issues, the translation of this policy into intelligent action on the lower levels is, to put it charitably, inconsistent.
We are living in the wild west on these short sale transactions.
Gotta say I agree with those who note the tiny rooms. It’s such a joke – builders try and play into people’s flawed fantasy of grandeur. Marble floors and “grand entry way” that look like some fractionally scaled model.
Anyway – those of you/us that have jobs take a look at your paystub. CA just took 10% off the top without asking you. Now how do you feel about committing to a mortage?
I say house prices are still headed lower. Between unemployment, higher taxes and flawed government policies this current attempt to reinflate the bubble will not end well. I continue to invest in gold/silver miners and have been enjoying solid returns and peace of mind. There will be a time to “get into real estate”, but not now.
“I’m the realist”
I had a conversation with a guy I know who is a top loan officer for BOA here in Atlanta (15 years with them).
He said the merger with Countrywide is a fiasco. His words. He said Countrywide, which I thought was out of business, is trying to tell Bank of America how to do mortgages. He went on to say that right now, he can’t access Countrywide loan data from his office. He said that tech people tell him that in early 2010, he might be able to get that data.
I told him I thought Ken Lewis ought to share a jail cell with Mozillo for doing that deal. He didn’t disagree, but then, being the good company man that he is, went on to defend parts of the deal.
Did I mention we’re screwed?
I bet I could get BofA full access to all the Countrywide data in less than a week.
And there’s lots of companies that can do the exact same thing.
It’s probably housed in some kind of database and just needs to be converted to whatever kind of database BofA is running so agents/employees can run queries against it.
* If everything is on paper and nothing is in a database. BofA needs to get data entry people into Countrywide HQ and start the manual database population effort.
Sean: “Weak sauce by the agent.”
It has been my observation that agents come in two flavors: those who know that the client is #1 and do whatever it takes to meet the clients needs. Then there are those who are meeting the needs of their wallet and the client is just a means to an end. Jim is type 1, but there is an ocean of type 2’s out there.
Consultant – Didn’t Ken Lewis complain that he was forced into the deal by Paulson and Bernanke? Until we see the orange one in a cell I think the rest of the cartel is pretty safe. We’ve been screwed since 1913.
Shadash – You just gave me an idea for a business venture, if I get rich I’ll give you full credit.
Genius,
If you get anything off the ground let me know. I do side work sometimes.
I know how computers work inside and out. When business say that can’t access data for some reason or another it’s usually not true.
That house has $25k in delinquent taxes, so the cost at the trustee sale was really about $765k. Perhaps still a good deal, but only for an owner-occupant.
Genious said:
30.Consultant – Didn’t Ken Lewis complain that he was forced into the deal by Paulson and Bernanke? Until we see the orange one in a cell I think the rest of the cartel is pretty safe. We’ve been screwed since 1913.
BofA was forced into the Merryl Lynch deal. They weren’t forced into the countrywide deal. Ken Lewis gets the blame on that one.
“Did I mention we are screwed?” (Consultant)
Well, re: Bank of America (I call them boa “snakes” for they heaped fees on my son’s CLOSED bank account (long story). Then when the dust settled, he went it to discuss the whole thief on their part (no email, phone call, or letter AFTER he CLOSED the account in Bend, OR, for their lousy customer non-service).
His closed account then showed a +$19 balance after the bogus fees. He asked for that. They declined. Isn’t that illegal?
Since they “screwed” my then 19-year old son and took $373, they also have no chance of even a dime of his mama’s money.(Me!)
But what kind of son did my late hubby and I raise? He paid me back the $373 (Details on request for the near one-year nightmare).
Many You Tubes are popping up with angry BOA customers. Listen closely to this guy’s unemotional assessment and what he wants BoA consumers to do. He’s an Ad “Logo” Exec so he put his talents to good work.
The video is about 2:41, but watch ’till the end so you see the new BoA logo the guy designed. Yep, BoA–the bank I love to hate!(And I’ve never even been a customer!)
Here’s the link:
http://www.youtube.com/watch?v=u6hy4PBo4tE
A few comments I would have added to the video.
“Kitchen appliances available on Craigslist.”
“A shared bathroom for the kids, just like in The Brady Bunch. Except this one has a john.”
At the pool: “More Craigslist!”
As long as the comments don’t unnecessarily denigrate the house, it should work out.