We featured this bank-owned property earlier as an online auction (which didn’t work out).
They did find a cash buyer – I hope they got in the house to take a look around!
This is a typical example of an REO sale these days. The former owners paid $1,650,000 in 2007, and used a 31% down payment. The original $1,137,500 mortgage was funded by World Savings, and undoubtedly it was a neg-am loan.
It looks like the buyers stopped paying in 2010, but instead of foreclosing and losing a truckload, the bank (Wells Fargo, who bought World Savings) just waited until they knew market value was high enough that they wouldn’t lose money:
The price at the trustee’s sale in November was $1,365,016, and they sold it traditionally for $1,350,000. It means that after paying closing costs, the bank received 100% of the principal back, plus around $150,000 of the neg-am interest that accrued.
These days, banks are only foreclosing once they can make money on them!
This was an odd home to say the least it was listed many many times with many brokers. I tired to buy it cash and to no avail. They kept saying people were living in it for years without paying.
I wonder if they made any payments at all, after the 31% down payment?
That’s $511,500 they paid in 2007, which after 12 years is $3,552 per month. Assuming they made no additional payments.
Would it have been cheaper to just rent for 12 years? Either way, they still end up not owning the house. But, maybe rent would have been cheaper?
31% down AND and Neg-AM loan?
I thought the whole point of getting those crazy loans was to putting any money down…??
I meant to say “to avoid……”
too much covfefe this morning