Three years after the purchase we are looking at these purchases through a different perspective. This was a bad bet. The home owner lost their home and their credit - but no money down. A week ago the lender would have been out the funds for allowing 100% financing on a property that is now worth significantly less than the 2005 "appraised" value. Now it looks like the public will be a loser taking the burden off the lender. Let's take a look at the house we (hopefully won't) collectively own -
Here is the property -
Here is the property info -
Here are the financials -
- The property was purchased in April 2005 for $319,000.
- The original mortgage was taken in April 2005 for $255,200 with Weichert Financial Services.
- A second mortgage was opened the same day in April 2005 for $63,800 with Weichert Financial Services.
- The property started the foreclosure process with a lis pendens in October 2007.
- The property is currently an REO for sale with a realtor for $254,000.
But lets get back to the example - the no money down property was in trouble 2-1/2 years after the purchase. A Lis Pendens was filed last October and the results were foreclosure. The lender will stand to lose at least $80,240 if the property sells for the full asking price and the realtor receives the standard fees.
That would be a big loss for a lender. Are you looking forward to being the potential owner? Didn't think so.