24 Shady Lane, Irvine, CA 92603, was purchased in January 2005 for $1,157,000. The combined first and second mortgages totalled $1,156,730 leaving a downpayment of $270.
By April 2007, they had multiple refinances on it finally with a first mortgage for $999,999, and a HELOC for $491,000. These owners pulled $333,000 in HELOC money.
Assuming they spent the entire HELOC, and assuming the negative amortization on the first mortgage has increased the loan balance, the total debt on the property exceeds $1,500,000. The asking price of $1,249,000 does not look like a rollback, but if the property actually sells at this price, the lender on the HELOC will lose over $300,000.
This is the story of a lot of households in California.
The Winner - The owners (may be...)
The Loser - The bank (lack of due diligence and loan standards)
This information is courtesy IHB
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