Solana Flip

by | Jan 17, 2012 | Bubbleinfo TV, Flips, North County Coastal | 10 comments

Pro flippers increase the purchase price on their trustee deed when recording it.

According to foreclosureradar.com, the winning bid on this house was $1,014,000.  But when you look at the tax rolls, the recorded trustee deed says $1,114,000.  It’s done to narrow the gap between purchase price and flip price and, as a result, soften the buyer’s objection to the profit being made by the flipper:

OWS Takes Advantage

by | Jan 17, 2012 | Protest, Scams | 1 comment

From the nypost.com:

They’re occupying his home.

Occupy Wall Street protesters announced with great fanfare last month that they moved a homeless family into a “foreclosed” Brooklyn home — even though they knew the house belonged to a struggling single father desperately trying to renegotiate his mortgage, The Post has learned.

“They’re trying to take a house and say the bank is robbing the people because the mortgage is too high — so contact the owner!” fumed Wise Ahadzi, 28, who owns the home at 702 Vermont St. in East New York.

Occupiers “reclaimed” the row house on Dec. 6 and ceremoniously put out the welcome mat for a homeless family.

But Bank of America, which has been in and out of foreclosure proceedings against Ahadzi since 2009, confirmed to The Post that he is still the rightful owner.

Meanwhile, the family that OWS claimed to be putting into the vacant house has not yet permanently moved in. And it turns out the family is not a random victim of the foreclosure crisis, but cast for the part, thanks to their connection to the OWS movement.

OWS last week said it has spent $9,500 breaking into the house and setting it up for the homeless Carrasquillo family. A photo of the smiling family covers a window, under the slogan, “A place to call home.”

The head of the family, Alfredo Carrasquillo, 28, is an organizer for VOCAL- NY, a group that works with OWS. His Facebook page shows him in a “99 Percent” T-shirt at an OWS protest in November.

The Post visited the Vermont Street home last week — six weeks after OWS announced that the Carrasquillos were moving in — and the family was nowhere to be found.

In fact, the only people occupying the house were occupiers themselves.

“They only stay here sometimes,” a protester named Charlie said of the Carrasquillos. “There’s not enough room for the kids.”

(more…)

Short Sales Increasing, Part 2

by | Jan 17, 2012 | Market Conditions, North County Coastal, Shadow Inventory, Short Sales, Thinking of Buying?, Thinking of Selling? | 4 comments

How are short sales affecting the market?

This chart divides Actives by Pendings (A/P, our gauge of the relative ‘health’ of each market). We’ve seen in the past that a 2.00 reading seemed healthy, and 3.00 was tolerable. I included contingents in the Pending counts because now they are much more likely to stick, and if a buyer does cancel, it’ll be because they found a better one and replaced it.

The two columns on the right side of the chart show the number of short sales in each Pending count, and the total number of short sales closed last year in each town:

Town Actives Pendings A/P # of short sales in P # of short sales closed in 2011
Oceanside
339
324
 1.05
186
280
Vista
203
193
 1.05
98
163
SSM92078
107
95
 1.13
50
108
WRB92127
150
99
 1.52
46
82
Carlsbad
317
169
 1.88
68
132
Encinitas
138
60
 2.30
19
43
Carmel Vly
125
51
 2.45
12
45
DM/SB
131
39
 3.36
6
14
La Jolla
176
52
 3.38
18
14
RSF
204
36
 5.67
16
19

Oceanside and Vista are smoking red hot with 1.05 reading – they literally have almost as many pendings as actives. Why? Because sellers AND buyers AND agents have embraced short sales. Comparing the pending short-sale counts of current vs. last year, it looks like Oceanside and Vista will probably set new records this year – and received a lot of experience in 2011.

But in NSDCC (the last six categories), it appears that short sales are a relatively new concept – but coming on strong. The difference is capitulation – Oceanside and Vista sellers have conceded on price, and buyers are responding. As a result, the market is working.

We need some old fashioned market clearing in NSDCC, where it is stale and stagnant.

In the last six towns on the list, there are 1,086 detached homes for sale. Even with the dozens of “refreshed” re-lists in the new year, the average market time is 121 days – with 21% of them having been on the market for more than six months!

How many sellers are in the ‘pre-distressed’ stage, and are just testing the market today at higher pricing to see if they can get out with at least enough for a steak dinner?

There must be quite a few – what will be the effect when they finally cave?

Specifically, would it hurt the market if they lowered their price and entered short-sale status?

Based on areas that have already seen capitulation, it doesn’t look like it (capitulation = lenders and listing agents getting sellers off the fence, price-wise).

Oh but wait JtR, Oceanside and Vista is a whole different socioeconomic class; there aren’t that many rich people. OK, we’ll see, but when there are 18 offers submitted on a funky older house on a busy street in La Jolla, I’ll stick to my guns that there are plenty of buyers….waiting.

Short sales are the device being used to ensure a softer landing, and the lenders/servicers will control the pace as needed. But they would be smart to recognize that market clearing is working great where implemented!

Short Sales Increasing, Part 1

by | Jan 16, 2012 | Market Conditions, North County Coastal, Short Sales, Thinking of Buying?, Thinking of Selling? | 5 comments

In the not-so-distant past, both buyers and agents avoided short sales. They took too long, and the outcome was very uncertain.

But closings of detached-home short sales are increasing around the county:

We saw that the banks’ approval rate of recently closed NSDCC short sales was less than 60 days – helping to keep buyers interested in sticking around. With banks typically pricing REOs at retail, short sales might be the only place where you can find a deal.

Pushing Principal Reductions

by | Jan 16, 2012 | Can You Top This?, Market Conditions, Principal Reductions

An excerpt from cnnmoney.com, about respected Laurie Goodman, the current record holder for highest estimate of expected foreclosures across the country:

On top of the 2.5 million homes that have already fallen to foreclosure since the bubble burst, another 4.5 million mortgage holders have given up paying and are likely to lose their homes, she calculates.

Millions more are underwater — owing more than their home is worth — and may give up if things don’t improve soon. All told, Goodman warns that more than 10 million of the nation’s 55 million mortgage holders could default by 2018. If home prices fall much more than the 6% or so she’s projecting over the next 12 to 18 months, the picture worsens, as more foreclosures drive prices down further, in turn causing more sheriffs’ sales.

Goodman’s research into who defaults shows that many governmental and private efforts at saving borrowers — and reducing investors’ losses — by modifying mortgages weren’t helping because they only extended payments or reduced interest rates. They didn’t fix the fundamental problem of unsupportable debt loads.

Goodman found that investors lose as much as 70% when the homes underlying their subprime MBS are foreclosed upon. Lenders that tried to rehabilitate delinquent borrowers by reducing the principal (or total amount owed) by an average of 26% were far less likely to have to foreclose, and they actually provided MBS investors higher returns. “If you save a borrower, you save an investor,” Goodman says.

To avoid the “moral hazard” of rewarding foolish borrowers, Goodman recommends that lenders swap immediate principal reductions for shares of any gains on the mortgaged house when it is sold.

Many mortgage holders, including giants Fannie Mae and Freddie Mac, are refusing any kind of principal-reduction deals, however. Some don’t want to have to take the immediate write-downs that would be required, preferring to delay the financial pain and hope for a rebound.

‘One bailout = endless bailouts’

Many servicers refuse to consider them because their fees are tied to the amount of principal rather than to the ultimate payback to investors. And banks often hold second mortgages for the loans that they service. Principal reductions typically require them to take total losses on those notes.

In short, banks “are ridden with conflicts of interest” that pit them against the interests of borrowers and investors, Goodman says. “Many of the rules in place now are extremely large-bank-friendly, but borrower- and investor-unfriendly.”

Goodman’s firm, of course, is decidedly on the side of the MBS investor in this fight. Nevertheless, ideas she’s been advocating since 2008 are catching on.

The Treasury Department and several state attorneys general are encouraging lenders to offer principal-reduction options. And “shared appreciation mortgage” (SAM) modifications have won support from big thinkers such as Nouriel Roubini, the New York University economist who warned of a housing bubble in 2005. Roubini, who cites Goodman’s work in his own, recently co-wrote a report suggesting that SAMS could help “unclog the real estate and financial arteries and restore healthy circulation.”

At least one private servicer, Atlanta-based Ocwen Financial Corp., has started to try this “share the pain and gain” option. “Progress is slow,” Goodman says, “but I feel like I am getting some traction.”

http://money.cnn.com/2012/01/13/pf/ows_goodman_best_money_moves.moneymag/index.htm

La Jolla Lower End

by | Jan 15, 2012 | Bubbleinfo TV, La Jolla | 5 comments

If you are considering the under-$1,000,000 market around the Del Mar/Solana Beach/RSF/CV area, you’ve noticed how low the inventory has been.  If you are thinking of expanding your horizons, how about a La Jolla beach cottage?

BayCo Value Identifier

by | Jan 15, 2012 | Bubbleinfo TV, REOs for sale | 8 comments

When you check the tax rolls of this neighborhood sold at the peak, you can see that many were purchased with the exotic financing that was popular back in the day.

As you can imagine, it has left a trail of broken dreams for sellers – one at the top of the hill with eastern view is still looking for more than $1.1 million for this same floor plan. He probably thinks that the REOs are dumping on price (starting with this one that closed for $789,000).

But the banks and listing agents are conducting auction-like events by putting these up for bid on the open market for a week or so, giving every buyer a chance to purchase. It is the best way to find what a ready, willing, and able buyer will pay – which is the definition of value!

As a result, they are real comps – and buyers are reluctant to pay a couple of hundred thousand dollars more down the street or around the corner:

But buyers will pay more, if you have features that are worth it. The reason that premium properties aren’t selling is because their extras aren’t properly priced.

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