San Diego Housing Bubble News and Analysis

This has been a common observation by Piggs. Banks are not moving homes from the NOD stage to the REO stage. The "shadow inventory" isn't the banks owning and holding the houses - it's the houses they should have - by all rights - foreclosed on.

The argument is that they are trying to work loan mods, or that they're backlogged, or that there were moratoriums... There's also the fact that the banks that service the mortgage probably don't OWN the mortgage... so the process of taking a home back needs approval from the owners.

But I suspect it has a lot more to do with the fact that when a house goes back to the bank - it has to be marked to current value - not the inflated value it had previously been mortgaged at. Banks and mortgage owners don't want to mark down those losses.

My original post was quite long, but in a nutshell I was venting my frustration at the fact that there are over a handfull of homes on my street that are in some sort of foreclosure....5 of them have been scheduled for trustee sales over and over, and they are always delayed. They have not made a payment in a year, or almost a year,and it's frustrating. They don't pay their mortgage, property taxes, or HOA fees...but yet they STILL stay in their house. Some have even trashed the homes and they still stay - they just ignore the HOA fines and do whatever they please.

I know things happen, but jeebus! If you can't/won't/stop paying then make arrangements and move on. This staying until you're kicked out crap is really getting frustrating. People want to buy these homes, but the banks let people stay for free....for how long? Who knows.

I'm coaching a kid whose family is at 18 months and counting since their last mortgage payment (Fallbrook/Valley Center area).

They received NOD six months in and haven't made a payment for a year following and still no Notice of Trustee sale from the bank.

Talking to the dad, he indicated that he actually hasn't heard anything from the bank since the NOD and is treating no news as good news. I asked him if thought about calling the bank and asking what is up and his response was, "Hell, no!". He figures better to leave well enough alone.

Pretty amazing when you think about it. This isn't the only family I know of in this situation. I know no less than six people in Temecula/Murrieta area in roughly the same boat.

The number of NODs are dropping as well, even while other reports show that the number of those deliquent in payments are increasing.

My friend just walked through a short sale in our neighborhood. The listing pictures are from 6-8 months ago and looks kind of dumpy.
These days it is looking pretty good. When you walk through now....There is all new furniture, new big screen T.V., cars etc. They turned it into a model home now that they don't pay the mortgage.

Allan's version is becoming the norm.

Or rather, it is the norm.

Dan: I was talking to a coach on another team recently. Last season, this poor guy was a wreck. He had been in mortgage banking and, needless to say, business was tanking hard. He almost gave up coaching with all the work stress, but didn't (I think that's what kept him sane).

This season, he's a new man. Joking, laughing, light-hearted. I commented on this during a game a few weeks back and he grinned at me and said, "Stop paying the mortgage last November". I asked him what the status of his house was and he didn't know. Nothing from the bank and he and his family will stay there until the bank evicts them and then they'll find something else. He said he is banking approx. $5k per month in savings and has been doing so since late last year. I asked him about his credit and he told me that, given the economy and how many people are seeing their credit wrecked, he wasn't too worried.

Plus, he said he knows about dozens of potential rentals from his friends in banking that are available.

Welcome to the new economy. I think we haven't seen bottom yet and while the government is doing their best to gin the system, but, at some point, we're due for a second BIG leg down.

http://sdhpi.blogspot.com/2009/08/on-sha...

My estimate is that roughly half of all January and February NOD recepients have been foreclosed, sold their houses, or got some kind of workout. For earlier NODs, the resolution percentage seems to be closer to 75-80%.

P.S. can any of you realtor guys check Realist database for 636 Atherton, 92078? I'm wondering whether it really sold for 586k or it's a typo.

is the market value of that free rent taxable? i understand the IRS waived the forgiveness of indebtedness portion of taxable income provision (is that wiaver still in effect0 but why shouldn't people be taxed on free rent? How can the bottom be in if lots of people are living rent free? why am i shopping for a damned house? why/ becaus emy wife told me to.

If they stop paying property taxes also, how long before the county forecloses?

I am wondering the same thing about 636 Atherton.
It was the model home listed at $799,000.
How did $586,000 happen?
The $7,000 a year Mello Roos could have something to do with it but it still seems fishy.

5 years, if I remember correctly :)

That is making me SICK. It's SICK.

This is also what is making me sick and is a direct result of this situation.

Last fall some nice neighbors have a garage sale, sell the appliances, etc.....

2 weeks later the house becomes rented by a literal criminal and her felon kids...literally felons. The power of the internet is wonderful.

They trash the house, are STILL trashing the house. Drug dealer #1 was arrested months ago. Felon #2 has been arrested 3x that I know of, and has broken almost all the windows out.

Code enforcement and the county have been out. Riverside Co. has this new ordinance for crappy homes such as this, but they are not enforcing it. They have come out for the illegal building and other things, but they pay no mind. The HOA keeps fining them, but they don't care. The owners of the home are now MIA...The trustee's sale was scheduled for last June, but it's been rescheduled every month since, and now is set for November, which based on the track record won't happen.

So no one is responsible or this trash, and it never ends.

It makes me insane that I worked so hard to get our house....and many of our neighbors just don't pay. I'm ashamed that this is the norm in our country. So it's ok to just not pay now? My god we're turning into monsters.

That's correct, approximately 5 years till the County can get possession on delinquent property taxes. Sadly, there's a group of people that know this and are working the system. They make mortgage payments, and just expect to sell within 5 years. For a person of low morals, it's actually a good hedge against their investment. If the home increases in value, they just consider this an expense at selling.

My pleasure Eugene and I can offer one possible explanation. The house on Atherton shows being listed and sold by the builder. It hasnt recorded yet in the tax records and frequently builder sales do not.

Here is one possible scenario. In LC Oaks I heard that Davidson did not pay their sales people the bonuses they were due but rather gave them below market deals on the models. Perhaps those sales were along similar lines I.e. a low price was given to an employee or vendor in lieu of some payment due). Things like that happen.

This isn't directly related to the topic, but is still of interest.

I was reading that when a bank forecloses it is legally required that they be able to show the original mortgage note if asked. Apparently with all of the chaos within the banking industry, many banks just simply can't find the piece of paper.

In the article I read about this it was indicated that more homeowners and attorneys are on to this, and that huge delays are being created as a result.

sdtomenifee, I feel your pain. I am in Murrieta, and we have squatters, scary renters, empty houses, etc. etc.

JS

The amount of time you can go without paying property tax before the county sells the property at the tax sale is at least 6.5 years.

I researched this on the county tax collector site (http://www.sdtreastax.com) after I found a property that has gone 5 years without paying the property tax.

Five years after the property is in default it becomes subject to the county's power to sell. It isn't in default until the end of the first year with no payments. So the first year of not paying is free. Then, after five more years of no payments, the county can sell at the tax sale (and must within 3 years). The tax sale is in February and July is the default month. 6.5 years from last tax payment made to tax sale date can be safely assumed.

The June 8, 2009 Notice of Impending Power to Sell Tax Defaulted Properties does not list the property I am watching (last current in June 2004, no payments made 2005-2009). The most recent properties to be served notice: PROPERTY TAX DEFAULTED ON JUNE 30, 2004 FOR THE TAXES ASSESSED
AND OTHER CHARGES FOR THE 2003-2004 FISCAL YEAR.

This means the taxes for these properties were last current on June 30, 2003. They will make the February 2010 tax sale.

Another possibility (sdr you can correct me on this one as well) is that sometimes investors also make deals with builders as well for purchasing models. I have heard of cases where investors were able to purchase a few models and everything was kind of setup very much ahead of time.

At any rate 643 is a pending short sale at 605k and at first glance it is comparable.

Thanks. I guess we don't know much at this time.

643 is not a loaded model, 636 probably comes with furniture and fixtures. Richmond American managed to find a buyer who paid 670k for 826 Luminara (another one of its models), which is substantially smaller. Also, it's hard to explain the listing price increase from 750k to 799k just before the house went into escrow.

The deed is #2009-0520784 from Richmond American to Harold and Paula Vickery.

ANd we may never know. There are lots of reasons it could have sold for a below market price. RE is not a perfect market and people find and/or create opportunities. Thats where the best deals are. No matter where you are in a cycle there are always opportunities that present themselves. They end up in the hands of the fleet, the nimble, the well connected and/or the well represented.

this kinda makes me think FHA is the way to go, with a 15k tax credit. take an option to buy the house; if the price increases, great. if it stays flat, keep the house if you still need it or like it...if the price goes way down, just use it for free rent, self or rent it out. the PMI hit calculation should take into account the option of just not paying and the value fo the free rent minus the value of your credit. seems a lot better than actively putting 20% into a place where the neighbors are paying zero.

Tax payers' lament

Back to my original topic....WTF? I'm so angry!

The problem with the question is that there is no answer. If you asked me how long do you have to date a woman before she sleeps with you, I'd give you same answer as to how long it takes to foreclose.....it varies. I've seen people go 6 months from missed payment to curbside and others sitting there twelve months without a notice of trustee sale or extensions, while some don't get an extension. The ones I know of that have lasted longer just got lucky, their lender went under and after being seized by the fdic, another bank bought them, so the paper trail was probably a nightmare. We've had posters show up on the boards who are angry they are being tossed out in 4 or 5 months, that they aren't getting the free year they thought they would, some even wondered if the had some recourse for getting jipped.

I even know a guy who lost his job and owned two houses, stopped paying for both on the same day, but they were with two different lenders. One was taken back inside of six months (credit union), he still doesn't have a notice of default on the other and it is nearing 10 months without a payment (subprime lender now defunct). Same guy, same scenario, same start day for missing payments, different banks, wildly different results.

My guess is that the lenders that took over some of the failed lenders are the ones with the more difficult task and are likely the slower ones to foreclose.

tg - considering how many loans were written by Wamu, Countrywide, and Indymac... I'd say that there are a lot of folks that stand to win the "free rent" roulette.

Dude, if you pull the existing grant deed, you can reverse-engineer the price based on the DTT.
Most builder sales don't explicitly mention the price (thus necessitating this maneuver). SDR, do you know the reason for that?
I always assumed it was 'cuz they wanted to control the openness of the market info.

Your thoughts?