We've said it before, and we're going to say it again: the 100% crazy financing deals from 2004, 2005 and 2006 are old news since many have already exploded. Now, we're starting to see a trickle of later (2007) purchases start to go wrong. The difference is many of these actually used downpayments, so borrowers are feeling pain along with the lenders.
Here is one example in Mission Viejo.
27397 Via Primero, 92692
Asking price: $549,900
Asking price/ sq ft: $250
Purchase price: $860,000
Purchase date: 11/28/07
Size: 4 beds, 2.75 baths, 2,200 sq ft (built in 1973)
MLS: S560020 (83 days on Redfin)
Zillow Zestimate: $663,000
Type: Single Family Residence
Style: Mediterranean
Stories: 2
Lot size: 9,514 Sq. Ft.
From listing: Madrid home is priced to sell! Gourmet Kitchen w Center Island. Formal Living & Dining Rooms, Large family room w/built-ins & wet bar, patio area with pool. Newer Air Conditioner, double entry fron doors, Great family neighborhood. Walk to shopping, parks, YMCA, the Mission Viejo Natadores Aquatics Swim Complex featuring a 50 meter competition swimming pool. Property only has Lake Mission Viejo's Master Association on it which gives homeowner all Mission Viejo Lake Priveledges including boating, fishing, swimming, concerts on the lake etc.
The current owner used 90% financing from B F Saul Mortgage company. A notice of default was filed in December 2008, and the notice of trustee sale came in mid-March.
Comparable houses in Mission are asking $2,500 a month to rent. If we use a GRM of 160 to estimate value, this property would be worth about $400,000 to an owner-occupant. You can see the asking price is essentially $150,000 above that. Remember too that this is a short sale and we're not even sure the lender would let it go for this price.
Assuming a sale for the current asking price, the loss would be $343,094, including 6% sales costs. The owner would be out her downpayment of $86,100 and the bank would be on the hook for the rest. Not including sales costs, it would be a depreciation of 36% in about a year and a half.
Wednesday, April 08, 2009
More of the same in Mission
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4 comments:
Another piece of crap listing full of misspellings and bad pictures.
It's somehow still amazing that any individual would willingly sign up for $800K in debt for a piece of shit single family home that is only 2,200 square feet in size. It's early 2009 and our favorite question is "Just WTF were these people thinking?", yet the entire real estate establishment during 2007 and 2008 were still you-rah-rahing the run up in sf home prices in OC the whole time. "Get in now or be price out for ever".
Priced out indeed.
There are a number of toxic mortgages that were vintage 2005-6 that have not yet exploded. They were 5 and 10 year Interest Only loans, and they'll wreak havoc when they recast.
Just wondering where you are getting the GRM of 160 from. Is that pretty standard for Mission Viejo? I am just now learning about GRM, effective gross income, and cap rates, so I'm just trying to understand your math. Thanks! :)
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