Back to earth in San Clemente

This Forster Ranch property in San Clemente used to be a million-dollar home during the bubble, but is now back up for sale in six-digit price land.

1620 Vista Luna, San Clemente, 92673
Asking price: $897,000
Asking price/ sq ft: $337
Income requirement: $224,250
Purchase price: $1,020,000
Purchase date: 11/30/06
Size: 4 beds, 3 baths, 2,663 sq ft (built in 2004)
MLS: S525487 (89 days on Redfin)
Zillow Zestimate: $853,000
2007 property tax: $8,399
HOA dues: $248
Type: Single Family Residence
Style: Cape Cod
Stories: 2 Levels
Lot size: 6,000 sq ft
From listing: Panaromic Ocean Views at this home in the gated community of The Reserve South. This spacious home has 4 bedrooms + Large loft with Tech Center, 3 bathrooms & 3-car Garage. 1BR/1 BA located on the first floor for guests. Travertine flooring throughout first floor. Granite counter tops in the kitchen with island bar. Great viewing deck from the master bedroom.

When this property last sold in 2006, it went for $383/sq ft. As you can see, those days are gone.

The previous owner took over the property thanks to $918,000 (90%) financing. Even if they had stopped there, they likely would be in trouble considering the home's current market value and asking price. They didn't stop, though.

In April (less than five months later), they took out a $75,000 stand-alone second from E-LOAN and also refinanced into a $862,500 ARM from Sierra Pacific Mortgage. Two months after that, another loan - we're not sure what type - was taken out from National City Bank, this time for $150,000.

If all that money was extracted, the total debt on this property could have been as high as $1,087,500 - more than 100% of the cost of the property, right as it begun to quickly depreciate.

Assuming a sale for the current asking price, the loss could be as much as $244,320, including 6% sales costs and assuming there is in fact $1,087,500 of debt on the property.