Sunday, August 24, 2008

HELOC or ReFi? Do both in Roxbury

The great housing bubble brought easy refinancing and even easier HELOCs. Many people were lulled into the belief that they could refinance forever. Need to pay off that credit card - just use the money that your house is making you with a HELOC. When you ran through that cash one could just refinance again and take out even more money. It seemed that house prices went only one way - up. And for a few years that up was even in the double digits. But the bubble burst. And many of those who took everything out and then some are facing dire consequences. Today's featured home looks at a homeowner that refinanced and HELOCed themselves all the way into foreclosure. Let's take a look -

Here is the property -
Here is the property info -
  • Single Family Property
  • Status: Active
  • County: Morris
  • Year Built: 1972
  • 4 total bedroom(s)
  • 3 total bath(s)
  • 3 total full bath(s)
  • 11 total rooms
  • Type: Split Level
  • Master bedroom
  • Living room
  • Family room
  • Kitchen
  • Den
  • Basement
  • Master bedroom is 20x19
  • Living room is 12x10
  • Dining room is 17x13
  • Family room is 31x21
  • Kitchen is 27x10
  • Basement is Finished
  • 2 car garage
  • Attached parking
  • Heating features: Baseboard - Hotwater,Oil
  • Interior features: Eat-In Kitchen,Ground Level Rooms: 1 Bedroom, Bath(s) Other, Kitchen, Utility Room, Walkout, First Level Rooms: Den, Family Room, Foyer, Porch, Second Level Rooms: Dining Room, Kitchen, Living Room, Third Level Rooms: 3 Bedrooms, Bath Main, Bath(s) Other, Inlaw Suite, Inlaw Suit Includes: One Bedroom, Full Bath, Kitchen, Second Bedroom is: 12x11, Third Bedroom is: 11x9, Fourth Bedroom is: 18x14
  • Exterior construction: Aluminum Siding
  • Roofing: Asphalt Shingle
  • Approximately 2.77 acre(s)
Here are the financials -
  • The property was purchased in June 2000 for $312,500.
  • The original mortgage at the time of purchase is not available on the internet database.
  • In October 2001 a second mortgage was taken for $88,000 with Bank One.
  • The property was refinanced in March 2002 for $342,800 with Federal Mortgage Investment Corp.
  • A new second mortgage was taken later in the month of March 2002 for $64,275 Also with Federal Mortgage Investment Corp.
  • In September 2004 the property was refinanced again with a cash-out totaling $518,500 through an ARM with Ameriquest Mortgage.
  • The property was refinanced again in March 2005 for $531,250 with an ARM by Accredited Home Lenders.
  • The foreclosure process started in August 2007 with a Lis Pendens filing.
  • The property is currently for sale with a realtor for $406,500 reduced from $427,500 as listed last month.
Unfortunately we can not see what the homeowner put down at the purchase. But most likely bu October for 2001 they pulled everything out. And if it did not happen in 2001 it any original investment was extracted in March 2002 with another $30,300. Within the same month the total additional extraction aside from the full purchase price was $94,575. They took a bit of a breather then took out another $111,425 just two years later. The next year they took out an additional $12,750.

Within 5 years of ownership the extraction totaled at least $218,750 - maybe more if the second mortgages were not closed. However the final extraction proved to be too much and the owners fell into foreclosure just over 2 years - perhaps the ARM reset to an unaffordable payment. Whatever happened the property provided the former owner a second income of $31,250 a year.

And for the lender, who ever currently owns the mortgage will lose at least $149,140 if the house sells for the full asking price and the realtor receives the standard fees.

Interesting case today - the previous owners won over $218,750 with the house but lost it in the end along with some of their credit ratings. The final lender just lost.



the bruiser said...

The happy homeowners may have used the HELOC to pay off their high-interest debts, went back to school for Masters degrees, bought gold coins, purchased stocks, and are now well positioned for their future as renters with high net worth.


They probably blew the whole nut on Hummer leases and trips to the Caribbean.


Anonymous said...

This why these homedebtors should be tossed out in the streets where they belong. They drove prices up to stupid levels now homedetors are losing their phoney lifestyle.

Lots of problems ahead for these homedebtors as the walls cave in around them as they can no longer afford to live. Prices are going to tank in NNJ.