Irvine Housing Blog

Posted: 01 Nov 2011 10:00 AM PDT

It’s that time of year when you just can’t help but give thanks for all that you have and to give to those who need a helping hand. We at IHB would like to say thank you to our loyal readers by matching your charitable contributions to Laura’s House (up to a total of $1000).

Since 1994, Laura’s House has offered unduplicated domestic violence-related services to the residents of Orange County and beyond. It continues to be the only state-approved comprehensive domestic violence agency in South Orange County. Annually, Laura's House provides residential shelter services, counseling and legal services to hundreds of women and children. Thousands of crisis calls come in each year on their Crisis Hotline. Laura’s House’s target population is families experiencing the effects of domestic violence in need of emergency shelter, support, education and counseling. Their goal is to provide supportive service programs that will prepare clients and their children to live independent and violence free lives.

To participate, all you have to do is:
1. Make a contribution by visiting http://www.laurashouse.org/donate.html by November 30, 2011.
2. Forward your emailed receipt to sales@idealhomebrokers.com

That’s it! We’ll track how much has been raised in the sidebar to the right and at the end of the month, we’ll match that total (up to $1000).

Thank you for your generosity and for making the IHB community what it is today.

Desperate BofA now paying short sellers $20,000 cash for keys

Posted: 02 Nov 2011 03:29 AM PDT

To avoid the morass of the Florida court system, BofA is now paying short sellers $20,000 to sell and return BofA its much needed cash.

Irvine Home Address ... 18921 ANTIOCH Dr Irvine, CA 92603
Resale Home Price ...... $764,900

I want a girl with smooth liquidation
I want a girl with good dividends
At Citi Bank we will meet accidently
We will start to talk when she borrows my pen
She wants a car with a cup holder armrest
She wants a car that will get her there
She is changing her name from Kitty to Karen
She is trading her MG for a white, Chrysler LeBaron
I want a girl with a short skirt and a
looooooooooooooooooooooooooooooooong jacket

Cake -- Short Skirt, Long Jacket

The foreclosure process in Florida takes a long, long, long time. Florida is a judicial foreclosure state, and with millions of delinquent mortgage squatters and the lingering impact of robo-signer, BofA has given up on forcing people to leave via foreclosure, and has started to pay people to get out. Second mortgage lien holders must be thrilled, after all, they are the ones who will end up with the money.

Bank of America Offering Up to $20,000 to Florida Short Sellers

By Stefanos Chen | Posted Oct 11th 2011 5:00PM

It's not mortgage principal reduction, but it's a start.

WTF? Do I really care about the bogus opinion of this reporter to start the story? He makes this statement as if mortgage principal reduction is the answer to the problems in housing. Principal forgiveness is the the worst policy option. I certainly hope it isn't the endgame.

Further, if BofA is desperate, this is not the start of anything good for loan owners. It's a sign BofA is going to start clearing out its foreclosure pipeline which will reduce prices.

Bank of America is quietly rolling out an incentive program in parts of Florida in which they'll pay distressed homeowners up to $20,000 if they successfully short-sell their home, according to The Palm Beach Post.
A short sale is an arrangement in which the lender agrees to accept less than what's owed on the mortgage to avoid a lengthy (and expensive) foreclosure process. Foreclosures in Florida take an average of 23 months to be processed -- nearly twice the national average, according to analytics firm RealtyTrac.

Therein lies the reason for this policy. The Florida court system is so bogged down with foreclosures, it is more cost effective for BofA to pay people to short sell rather than push them through the foreclosure process. If BofA doesn't get some of its capital back, they may not be around to complete the foreclosure process.

The pilot program, identified by BoA spokesman Rick Simon as the "short sale/relo incentive program," is only being tested in Florida at the moment, due to the state's high volume of foreclosures. If the program is successful, the program may be launched elsewhere, he said in an email to AOL Real Estate.
Sometimes referred to as "cash for keys," the money may be used to provide distressed homeowners "with the tools and resources necessary to transition out of their home with dignity," the press statement says. In other words, there will be less chance that the homeowner will be tempted to vandalize the property on the way out.

This is a cash-for-keys deal, pure and simple. The contentious part will be debating over who gets the money. In the real world, the second mortgage holder is going to demand payment, and the loan owner is not going to want to turn over the money. Most borrowers have the belief that paying a second mortgage is optional, and that the second mortgage holder should lose everything because they took on that business risk. Of course, this is completely wrong, but that's what most people think. Plus, people simply want the money for themselves whether it's justified or not.

Trouble Thrives in Vacant Homes
In the humid climes of Florida, short sales are far more desirable to lenders than letting the house sit vacant in a foreclosure. Mold can ravage even the best built homes, and empty houses are prone to squatters and vandals. The $20,000 payout could be a drop in the bucket in comparison to the cost of maintaining a rapidly deteriorating home.
But there may be a major downside to the program for severely underwater homeowners. In recourse-loan states like Florida, the lender can seek what's known as a deficiency judgment -- the unpaid balance left on the mortgage -- even after a short sale is completed.

In such cases, much of the money could end up back into the bank's pocket.

If the same bank holds both the first and the second mortgages, this is less of a problem, but if another lender holds the second, they will not give up this money easily.

BoA's Simon said that the bank's guidelines "allow for the deficiency judgment to be waived," but the bank reserves the right "to pursue collection" after the sale. That may not be a strong enough commitment, according to Broward County-based consumer defense attorney Margery Golant.
"The fact that they 'may consider' waiving the deficiency judgment means nothing to me," Golant told AOL Real Estate in a phone interview. "It just fosters false hope."

Hasn't everything the government and lenders done since the housing bubble burst been designed to foster false hope? I think so.

For Golant, who regularly sees homeowners with close to six figures of outstanding debt, even the full $20,000 would do little to get an owner out of the hole if they're still on the hook for the difference, she said.
"If they really were waiving the deficiency judgment, then I would think it could mean a meaningful approach," Golant says. "But to say we'll give you $20,000, yet reserve the right to sue for the difference is not only not meaningful but deceptive."

Yes, it is deceptive. Perhaps BofA doesn't want to write the debt off on their books, so they can retain at least some valuation for this bad loan if they can sell it to a zombie debt collector.

Could It Work?
There is already a national precedent for what BoA is attempting – the Home Affordable Foreclosures Alternative (HAFA) program, which offers a $3,000 short sale "relocation" incentive. But so far the results have been less than encouraging. Since April 2010, HAFA has only completed 15,531 short sales nationwide, The Palm Beach Post reports, and the program is scheduled to sunset at the end of 2012.

Results have been less than encouraging? LOL! Completing only 15,531 short sales in a year and a half is a complete and utter failure.

Still, if BoA can put up some impressive numbers in its trial run, there may yet be hope of more aggressive financing options for America's thousands of underwater homeowners – like the often-trumpeted, mostly dismissed notion of mortgage principal reduction.

Statements like that give more false hope than any government or bank program. the reason the notion of mortgage principal reduction is mostly dismissed is because it is a really, really bad idea.

For Florida homeowners interested in participating in the program, here are some key points:
The program offers $5,000 to $20,000 to qualifying homeowners who complete a bank-approved short sale. The amount is based on the unpaid balance on the loan as of Aug. 2011.

Short sale must be initiated between Sept. 26 and Nov. 30, 2011, and closed by Aug. 31, 2012.
To learn more about the program, call 1-877-459-2852.

This program will likely spread to other judicial foreclosure states where BofA is having a hard time getting its money out.

Doubled the mortgage plus got a big HELOC

Meny casual observers of the housing market believe Turtle Rock may not fall because the homeowners there are generally longer term owners so there is less mortgage stress. Perhaps that is true, but perhaps not. Turtle Rock still had Ponzis, and today, we are featuring one of them.

This house was purchased on 12/30/1999 for $400,000. The owners used a $320,000 first mortgage and an $80,000 down payment.
On 7/5/2000 the owner obtained a $60,000 HELOC.
On 6/10/2005 they cashed out with a $650,000 Option ARM with a 1% teaser rate. It was a fatal mistake.
On 11/16/2006 they refinanced again with a 1-year ARM at $680,000.
On 7/26/2007 they obtained a $139,000 HELOC.
The quit paying in April 2010 at the latest and squatted for at least 15 months.

Foreclosure Record
Recording Date: 01/19/2011
Document Type: Notice of Sale

Foreclosure Record
Recording Date: 09/03/2010
Document Type: Notice of Default

Foreclosure Record
Recording Date: 09/03/2010
Document Type: Notice of Rescission

Foreclosure Record
Recording Date: 07/27/2010
Document Type: Notice of Default

The 2005 Option ARM is what did them in. Once they doubled their mortgage, it looks as if they crossed the Ponzi limit. It was only a matter of time. They held out for five more years, but finally succumb to the weight of the accummulated debt.

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This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599
sales@idealhomebrokers.com

Irvine House Address ... 18921 ANTIOCH Dr Irvine, CA 92603
Resale House Price ...... $764,900

Beds: 4
Baths: 2
Sq. Ft.: 2011
$380/SF
Property Type: Residential, Single Family
Style: One Level, Ranch
View: City
Year Built: 1968
Community: Turtle Rock
County: Orange
MLS#: S676762
Source: SoCalMLS
On Redfin: 7 days
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Single level 4 bedroom home in highly desirable Turtle Rock. Large lot with views from backyard. Great location across from the park. Home has great potential. Great opportunity!
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Proprietary IHB commentary and analysis

Resale Home Price ...... $764,900
House Purchase Price … $400,000
House Purchase Date .... 12/30/1999

Net Gain (Loss) .......... $319,006
Percent Change .......... 79.8%
Annual Appreciation … 5.4%

Cost of Home Ownership
-------------------------------------------------
$764,900 .......... Asking Price
$152,980 .......... 20% Down Conventional
4.18% ............... Mortgage Interest Rate
$611,920 .......... 30-Year Mortgage
$150,523 .......... Income Requirement

$2,985 .......... Monthly Mortgage Payment
$663 .......... Property Tax (@1.04%)
$0 .......... Special Taxes and Levies (Mello Roos)
$159 .......... Homeowners Insurance (@ 0.25%)
$0 .......... Private Mortgage Insurance
$81 .......... Homeowners Association Fees
============================================
$3,889 .......... Monthly Cash Outlays

-$699 .......... Tax Savings (% of Interest and Property Tax)
-$854 .......... Equity Hidden in Payment (Amortization)
$228 .......... Lost Income to Down Payment (net of taxes)
$116 .......... Maintenance and Replacement Reserves
============================================
$2,680 .......... Monthly Cost of Ownership

Cash Acquisition Demands
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$7,649 .......... Furnishing and Move In @1%
$7,649 .......... Closing Costs @1%
$6,119 ............ Interest Points @1% of Loan
$152,980 .......... Down Payment
============================================
$174,397 .......... Total Cash Costs
$41,000 ............ Emergency Cash Reserves
============================================
$215,397 .......... Total Savings Needed
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