What once was in LN

We're hearing about some interesting credit market activity, thanks to our friends over at The Great Loan.com.

Jumbo loans (those for more than $729,000) for properties in LA and OC are now up into the mid-7 percent range in most scenarios. This in turn is causing listing prices in some high-end homes to fall.

Here is one example of a Laguna Niguel property with an already restricted buyer pool, since the asking price is in the $800k+ range. This REO sold for $1.2 million in 2007.

17 Westgate, 92677
Asking price: $825,500
Asking price/ sq ft: $316
Bank purchase price: $777,400
Purchase date: 8/29/08
Size: 3 beds, 3 baths, 2,610 sq ft (built in 1990)
MLS: S550604 (7 days on Redfin)
Zillow Zestimate: $900,000
HOA dues: $125
Type: Single Family Residence
Style: Mediterranean
Stories: 2 Levels
From listing: GATED COMMUNITY NEXT TO OCEAN & BEAR BRAND RANCH.'BANK OWNED', OPEN FLOORPLAN/W CATHEDRAL CEILINGS. WONDERFUL KITCHEN W/GRANITE COUNTER TOPS AND BREAKFAST AREA. PLANTATION SHUTTERS THROUGHOUT. GARAGE IS A TANDDEM 3-CAR. CLOSE TO OCEAN,SHOPPING, THEATER, CHURCHES,SCHOOLS AND FREEWAYS.

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $159,000, assumes no other debt/obligations.
Downpayment needed: $95,875
Monthly Payment on 30Y Fixed at 6.25% with property taxes and insurance estimated: $5,651.72
Minimum Income Requirement (using 5Y fixed): $150,000, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 5.80% with property taxes and mortgage insurance estimated: $5,440.53
Disclosure: All rates offered to the client with 1 point cost. Rate quotes assume a purchase transaction with the required minimum down payment, 720 credit score, full income qualification and required reserves. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by visiting www.thegreatloan.com.

The previous owner's timing probably couldn't have been much worse - but it's hard to feel too bad when you see the financing. They bought at the peak for $1.2 million. That's $460 per square foot. They put $120,900 down and financed the rest. Less than a month later they took out an additional loan from Indymac for $200,000.

That effectively withdrew their downpayment plus an additional $79,100. The property went into default in April and went back to the bank for $777,400. The notice of trustee sale amount had been $965,203.a

Assuming the property sells for the full asking price, it would mean a decline of 31%, or $374,500 off the peak 2006 price.