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OO,
I am afraid I need anti-deficiency explained for dummies.
Nod once if the bank can sue.
Nod twice if they cannot sue.
Clearly there is either manipulation of data from the MLS/realtors, or the foreclosure data is wrong. I just searched mls in Palo Alto, and for SFR, multi-family units (entire apt bldgs), and condos, I came up with 84 units total available in Palo Alto.
It seems in the best interest of the Realtors to keep foreclosure properties off the mls, as it removes the risk that short sales will add to the downward trend in comps.
Just sayin'...
Shouldn’t that be the ultimate fortress that will never crack come hell or high water?
Many "rich" people are highly leveraged.
Supposedly, realtors should hope that any correction be quick and sharp so that transactions can take place again.
Duke,
anti-deficiency means if you walk, the bank cannot go after your ass if they cannot recover the full extent of their loan after the sale of the foreclosed property.
If this is the property you occupy as your primary residence (with proof of course), then under CA law, you can walk away a free man.
If this property is NOT your primary residence (2nd home or investment property), you cannot walk. Even in CA, the banks can come after your ass for the amount that they cannot recover.
If you refinance, even once, on your primary residence, you lose that anti-deficiency privilege and give the bank the right to come after your ass in foreclosure events.
Anti-deficiency ruling is strict. It is not like you can just walk. The court has to be convinced that you have made reasonable attempts to pay back as much as possible, which includes liquidating other assets. It is mistaken to be a very easy way out for borrowers, which it is not. People who went through anti-deficiency will get a huge ding on their credit score similar to that of a bankruptcy, which will take a long time to repair.
Some sites like Countrywide list their bank owned properties. At least they used to.
OO Says:
April 7th, 2008 at 12:02 pm
"Anti-deficiency ruling is strict. It is not like you can just walk. The court has to be convinced that you have made reasonable attempts to pay back as much as possible, which includes liquidating other assets."
How sure are you about this? Non-reourse loans are a pretty clear cut concept. I'm not aware of the need for a court to affirm that a debtor can walk away, a loan is either a recourse or non-recourse loan in the event of default. I've never heard of a bank challenging the protection of a purchase money non-recourse loan.
OO, I thought the One-Action rule (not necessarily Anti-Deficiency) applies to all mortgages in California.
Won't you think that most lenders will choose foreclosure over litigation?
Not legal advice.
OO, is right about it just being on the primary residence.
Here is a good link for general questions.
http://eastbayplus.wordpress.com/2007/09/15/172/
Here is a link from another site (unchecked link) which is the actual law.
http://www.legaltips.org/california/california_code_of_civil_procedure/577-582.5.aspx
580b. No deficiency judgment shall lie in any event after a sale of
real property or an estate for years therein for failure of the
purchaser to complete his or her contract of sale, or under a deed of
trust or mortgage given to the vendor to secure payment of the
balance of the purchase price of that real property or estate for
years therein, or under a deed of trust or mortgage on a dwelling for
not more than four families given to a lender to secure repayment of
a loan which was in fact used to pay all or part of the purchase
price of that dwelling occupied, entirely or in part, by the
purchaser.
Where both a chattel mortgage and a deed of trust or mortgage have
been given to secure payment of the balance of the combined purchase
price of both real and personal property, no deficiency judgment
shall lie at any time under any one thereof if no deficiency judgment
would lie under the deed of trust or mortgage on the real property"
or estate for years therein.
Umm, then I am back to being confused.
If the bank can come after you because it is a second home then we have an even bigger problem.
Namely, they sell your spec home and have a large deificiency. Then they come after you for that money which may trigger bakruptcy? Force a sale of your first home since almost everyone re-fid?
They get some fraud for free as well after they prove the loan was not for a princpal residence since ya never lived in it.
Good Lord, this is all kinds of scary.
The class-actions are bad enough, can you imagine how many individual law suits are coming for all the rampant speculation in CA, Las Vegas, Florida?
In a nutshell, yes Duke, that sounds like a very real possibility. Also, people need to undestand that a non-recourse loan does not protect a primary home from liens which could very well be recorded as a judgement claim from the second home. Dennis can add some insight here but when talking about some of the homes declines in values there is a real possibility that a judgement could be big enough for a single creditor(lender) to force a bankruptcy.
Forgive my slow motion realizations. But if Danville, land of the $1m homes, has 102 homes of 338 for sale are in foreclosure - then we are seeing the wheels come off the bus WAY faster than I thought possible.
I am trying to think who, yet, would be under that much pressure in Danville? I mean Fed Funds and LIBOR are just too low to have it be rests. No big lay-offs anywhere near that labor force.
Maybe this is sepculation at the really spooky level? A host of totally non-qualified buyers over the last few years who can afford bankruptcy since they have no real assets?
I am in the dark here. What intha heck is going on?
OT,
but after hours Q1 earnings reports are looking ugly. Alcoa (Dow bellwether) reports profits cut in half. AMD (Bay Area jobs) cutting 10% of workforce...
The logical conclusion is, tomorrow, the DOW and NASDAQ will rally!!!
Duke,
I don't think there's anything 'wrong' w/ you or your level of understanding. Believe me I've been beside myself w/ disbelief at how quickly the assessment has turned toward the perception that this is a "mean" economy.
Even before the re-sets have had much of a chance at all to work on owner's personal finances we're already seeing all this pressure? I think in ways these multiple residences were just another way of "playing a split hand" and having the option to declare the one w/ the better appreciation as "primary". But then again I'm always thinking that.
Are there legions of FB self-help blogs focused on 'your next move'?
skibum says:
The logical conclusion is, tomorrow, the DOW and NASDAQ will rally!!!
Well, they have a buffer of about 600 points. They can let it slip for a couple of days and then we have bottomed out again, stocks are cheap, oversold rally and crap.
Palo Alto “Proper,†CA: 150 total homes for sale, of which 74 (49%) are in various stages of the foreclosure process (the range is from lenders who have filed a Notice of Foreclosure at the recorder’s office to REO properties).
Patrick, I appreciate all the work you put into the site, but John's rantings are a bit over the top. For those of you interested, go to Trulia.com and you'll find their (RealtyTrac) numbers pretty much match the numbers on the foreclosures_percent.html link at patrick.net. However, 49%(74) of the actual MLS listings in Palo Alto are not in some state of foreclosure. The 74 houses vary from Notice of Defaults to fullblown REOs and are not necessarily listed. You would need to compare both sets of data (listings and foreclosures sets) on Trulia.com to find the actual percent of listings that are "distressed". Note, on Trulia, that many of the NODs are on small HELOC lines that likely won't go all the way through the foreclosure process. I don't dispute, though, that the numbers are growing and that this ominous trend shows no sign of abating. Bubble sitters will be rewarded.
Bubble sitters will be rewarded.
I still doubt the prospect of being rewarded as a fiscally responsible person.
I still doubt the prospect of being rewarded as a fiscally responsible person.
Okay, then, how about taxpayers will get hosed.
Okay, then, how about taxpayers will get hosed.
Now that's more like it.
I wish it was by zip code - I am disheartened at the moment because the "better" zip codes in Mountain View/Los Altos are still holding up :-(
Has anyone checked out all those townhouses (?) going up on Miramonte by St Joseph's? They are going up very fast - but boy do they look crowded in together!
# OO Says:
What surprised me is Hillsborough. Shouldn’t that be the ultimate fortress that will never crack come hell or high water? I thought people only buy in Hillsborough with cash, how can you get into foreclosure if you buy a home all cash?
I personally know SIX different individuals who bought in Hillsborough using their startup company stock as collateral. Four of them had to dump their houses in a hurry after the dot-com bust - when their stocks tanked, they got a margin call from the bank. I don't know exactly what the details of the arrangement was, but that was the gist of it...
The point is that there are probably a few other "creative" financial schemes behind the houses there - some of which may turn out naked in the current counterparty/solvency crisis.
"I am absolutely depressed that my bubble bust profit is still minimal."
I'm depressed that gold/silver dealers are starting to run out of stock! First the US mint discontinues sales; now this! https://online.kitco.com/bullion/
*Kitco Gold Bar 1 oz (Currently out of Stock)
$937.30
*Silver Eagle 1 oz (Currently out of Stock)
$20.63
*Silver Maple 1 oz (Currently out of Stock)
$20.38
*Palladium Maple 1 oz (Currently out of Stock)
$499.00
Duke :
I have been trying to gauge this problem for months now. There is hardly much information on this. I know "many" people in BA took out "equity" in their home and bought 2nd (and more) homes in Sacramento / Bakersfield and what not.
That particular problem is either not that big OR it hasn't even started in a meaningful way OR both.
EBGuy :
I concur with your observation. The numbers given by John C are not necessarily listings. They kind of match the numbers on Trulia - but most of these notices of default and not yet a foreclosure.
That Trulia doesn't show the the exact address. It only shows the street name. I was very surprised to find a known street name listed as NOD. Now only if knew the street number ...
The only Gellar I want to picture in leather pants is Sarah Michelle. :twisted:
This doesn't make sense to me. I can't imagine much unemployment in Palo Alto proper, at least at this point. Home values haven't dropped but MAYBE 10% in some areas - enough to squeeze out an appraisal for refinancing for those ARM resets. Who are these people?
I'd speculate the Palo Alto NOD's are largely composed of single income MEW earners. The water has receded and left those naked who have been living off their house appreciation. For reasons mentioned earlier in this thread, unlikely speculation property walkaways.
So these are the people that have been factually unemployed all along, with maybe a few relitters and mortgage brokers mixed in for good measure.
First "victims" whose genitalia get exposed in credit stop loss environment are those without cash flow. Apologies for being so obvious.
>> First “victims†whose genitalia get exposed in credit stop loss environment are those without cash flow. Apologies for being so obvious.
I like this kind of language ....
OO,
Regarding REO listings. I read about them on the site a month or so ago and did some hunting, do a search for REO (I used Google) and several come up in the results:
http://www.countrywide.com/purchase/f_reo.asp
http://www.ocwen.com/reo/home.cfm
http://bankofamerica.reo.com/search/
http://www.fanniemae.com/reoSearchApplication/fanniemae/reoSearch.jsp?p=Fannie+Mae-Owned+Property+Search
From the prices I saw a month ago, it would appear than there are many people still paying too much for houses, as the prices did not seem like the banks were in a hurry to unload. No need to I guess since they will be bailed out...
Brand Says:
The only Gellar I want to picture in leather pants is Sarah Michelle.
You forgot to add, "leather pants optional." :evil:
NV,
Okay. I can buy the Danville "I used to wok at 7-11 and now I am just a seriel re-fi person to make my income" since some homes there were $500-$600k before 'the doubling'. But PA has always been pricey as heck. Are we seeing VC money that dried up 6 months ago slapping these people around?
This level of distress is just not jiving with my instricts. Unless fraud was way worse, the job front is much worse, or people just do not understand how much risk they were (and are taking) with speculation.
Hrm.
Negative Amrotization threshold triggers? Since the fall in prices was faster than expected maybe we are seeing two things: 1( banks pull back on HELOCs and 2) Re-index and fully ammortize neg-am loans?
Duke,
I have started looking at East Bay after I noticed some big price drops in Dublin. Just RE porn.
Here is a nice San Ramon schadendreude for you.
http://www.zillow.com/HomeDetails.htm?zprop=68040384
Purchased for 1.02M, now on sale for 869K. I would be shocked it it actually sells at that price. Even the idiotic Zestimate says the value has dropped from 1.06M to 872K. So it's likely much worse than that. Based on propertyshark's loan information, this will be a short sale.
Point is people have stretched too thin. Not everyone who bought an expensive house had a matching income. Some may have bought in Palo Alto thinking it's a sure win - "you can always sell it for a profit" type of thinking.
The BA is special. We don't face foreclose for "tiny" amounts like 500K. We like getting foreclosed for 1M.
I too am very perplexed by this information - if it's accurate. I'm leaning towards StuckInBA's explanation:
Point is people have stretched too thin. Not everyone who bought an expensive house had a matching income. Some may have bought in Palo Alto thinking it’s a sure win - “you can always sell it for a profit†type of thinking.
StuckInBA,
I think you're missing the point here? Whether or not they had an income to 'match' just the fact they were willing to become debt slaves (however temporary) should be sufficient to guarantee profitability.
(I'm sure it's in the Constitution somewhere) look it up.
What is UP w/ the IMF? Why aren't they in their usual nod-off mode? Why are they making announcements, selling gold and trimming budgets? Why now?
Just thought I should point it out...
The 74 listings on Trulia include 13 times
Cambridge Avenue, Palo Alto CA 94306
$1,680,467
StuckInBA,
Great house. I looked it up and what shocked me was the property tax of $16k -- nearly $1350 per month. A little back of the envelope calculation shows that income required for a 30 yr mortgage at original purchase would require about 7500/mo with 0 down and 6300/mo with 20% down. To put those into perspective -- annual income of 300K or 250K -- or 2.5s to 3x the median income in San Ramon in 2005. A comparably sized house rents for $2800-3500 and a 2BR apartment (admittedly an inferior substitute) rents for 1500-1800.
I don't know San Ramon so I have no way of knowing if this is a "median" house but if it is, under traditional guidelines (20% down, 30% piti to gross), a "median" house in San Ramon should sell for around $480k. Less than half of the orginal selling price -- and with nearly $100k down.
It all comes back to affordability. So whether we talk about PA or San Ramon or Des Moines, house prices, over the long term, need to reflect what families can reasonably afford to pay.
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A reader named John sent me a bunch of data on foreclosures, which I posted here:
http://patrick.net/housing/contrib/foreclosures_percent.html">http://patrick.net/housing/contrib/foreclosures_percent.html
The data says that there are 74 houses in some stage of foreclosure in Palo Alto, or 55% of all the houses for sale.
Another reader, named Carl, object that:
I forwarded the objection to John, who replied:
#housing