2-time distress in Laguna Niguel

Countrywide served up the Kool-Aid-laden bucket 'o cash. The buyer provided the optimism.

The current owner took control of this Laguna Niguel condo in early 2007 - not long after it had gone through foreclosure the year before.

Perhaps they thought they were getting a steal and were betting that the real estate market would make a quick turnaround so they could move up. After all, this isn't the type of property you usually associate with long-term ownership.

You will see how both sides (including what used to be Countrywide) are now paying the price. Though, we would argue the lender is getting the worse end of it...

33 Dover Pl #33, 92677
Asking price: $219,000
Asking price/ sq ft: $293
Income requirement: $54,750
Purchase price: $325,000
Purchase date: 2/13/07
Size: 1 bed, 1 bath, 747 sq ft (built in 1985)
MLS: S531255 (92 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/12/08 -- $249,000 to $219,000
Zillow Zestimate: $311,500
HOA dues: $349
Type: Condominium
Style: Cape Cod
Stories: 1 Level
From listing: What an opportunity for an investor or first-time buyer to own a unit in prime Beacon Hill! This spacious one bedroom with vaulted cathedral ceilings is on a secluded and private greenbelt and features full-size inside laundry and beautiful tiled cozy fireplace! So close to many attractions including movies, restaurants, award winning schools, Dana Point Harbor, world class resorts and beaches. All this and complete access to all Beacon Hill amenities, including tennis, pools, spas, greenbelts, playgrounds, parks, and walking trails to beach. What an opportunity to be in this wonderful community at such a fantastic price. HURRY!

The current owner purchased in 2007 using 100% financing from Countrywide. The first loan on the property received its notice of default in May.

It would appear the potential buyer pool for this property is fairly limited. A target owner-occupant would probably be a single professional, since there does not seem to be enough space for two people, let alone a family. A smart buyer also would realize they would have to be committed to the property for a fairly long time (most likely five plus years), in case property values continue falling or are stagnant.

A quick scan shows values could very easily continue to decline. ForeclosureRadar says there are three other properties in distress on the same street - two REOs and a third that has received its notice of trustee sale.

Would you want to be priced into this property for half a decade or more?

An investor would be interested if the price were low enough and they could achieve positive cash flow. We don't think the price is low enough yet.

The owner doesn't have too much more to lose except a credit score at this point - if they won't be able to keep the condo. Assuming a sale is allowed to close for the current asking price, the lender will be out $119,140. On a 1-bedroom, 23-year-old condo.

It would also mean a depreciation of about 33% - not including sales costs - in about a year and a half.