Here is more from our trustee-sale investigation. 

When the trustee sale has no bidders, and the property goes ‘back to bene’, how does the bank perform in the open market?  This is a review of the sixty Bank of America and forty of the Wells Fargo REO sales since September 1st:

When was the house purchased by the former owner?

2002 or before:  24 

2003:  8 

2004:  20 

2005:  17 

2006:  20 

2007:  11 

There are a number of long-time homeowners who are now renting or staying with family (more than half owned for at least 5 years!).


Was it a purchase or refinance mortgage that was foreclosed?

Purchase:  42 

Refinance:  58

Whether they knew it or not, 42% of the buyers were speculators.  When things didn’t work out, they weren’t willing, or able, to endure.


Of the 42 purchase loans that got foreclosed, when did they buy?

2004:  5

2005:  13

2006:  16


Those who purchased in 2004 and 2005 could have refinanced by fogging a mirror in 2006, but didn’t.  Were they already underwater?


Opening Bid vs. Eventual REO Sales Price

Sold REO for at least $100K more than OB: 5

Sold REO for $50,000 to $100,000 more than OB:  18

Sold REO within $50,000 of OB:  62

Sold REO for $50,000 to $100,000 less than OB:  5

Sold REO for at least $100,000 under OB:  10

Generally they are getting the opening bids pretty close to retail value.  But if you are really good at flipping, there is excess opportunity if 23% of the ‘back-to-bene’ properties are selling for at least $50,000 more than the price you could have paid on the court house steps.  Note that 15% sold for at least $50,000 under OB price too.


Only six of the 100 were in our stretch from Carlsbad to La Jolla, and only two of those were houses (both in Carlsbad).  There were a lot of condos and Chula Vista properties!


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