Back to '02 in Laguna Niguel

There are five properties in some stage of the foreclosure process on this Laguna Niguel street, but we're going to focus on one that caught our attention because (shock) the current owner actually used a decent downpayment and is still in trouble.

We wonder whether this will continue to be more common. If so, it's a sad commentary on the local market, since these were the people who bought real estate the "right way" - by using some of their own money. What a novel concept.

28121 Mariposa #211, 92677
Asking price: $225,000
Asking price/ sq ft: $199
Purchase price: $420,000
Purchase date: 3/30/06
Size: 3 beds, 2 baths, 1,131 sq ft (built in 1985)
MLS: S570970 (21 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/05/09 -- $239,900 to $225,000
Zillow Zestimate: $253,000
HOA dues: $373
Type: Condominium
Style: Mediterranean
Stories: 1
From listing: Ground level 3 Bedroom 2 Bath bargain priced for first-time buyer or investor. Sunny Southeast exposure with patio area. Excellent across from pool and with plenty of guest parking + garage. Great floor plan has living room with fireplace, dining area, modern kitchen and 3 full bedrooms. Inside laundry. Convenient to shopping, schools & freeway.

This is what happens when you take a photo of a mirror straight on using flash: You're in the picture. Three beds and two full baths in 1,131 square feet? We doubt some of the rooms are very big.

It's your choice: Buy this for the asking price of $225,000 (assuming the lender lets it go for that much), or rent the same model for $1,695 per month. At least, that's the asking rate of 28121 Mariposa #214. Assuming a target 160 GRM for an owner-occupant, this condo currently would be worth $271,200 to them. Again, that assumes $1,695 is actually how much this property should rent for each month, and the potential owner is looking for a general breakeven point for owning as opposed to renting. We think this property is not worth renting for $1,695 per month.

The problem is the HOA dues are very high, and this is not the type of property most people would want to live in long-term. As the listing says, this could be a first-time buyer-type place.

The current owner used 85% financing from what was Countrywide in 2006 and a downpayment of $63,000. The property went into default in early March. Assuming the property can be sold for the current asking price, the owner's investment would be wiped out and the remaining hit would be felt by the lender.

All told, the total loss would be more than $200,000, assuming 6% sales costs. Not including sales costs, the sales price would be 32% below the 2004 price of $330,000 and just $10,000 above the March 2002 price of $215,000.