Your New Property in Jefferson

There were two gamblers in today's featured example. Both were actually making the same bet - that housing prices would continue to keep rising at historic levels. The home owner bought the house with 100% financing hoping that the price would go through the roof and within a year there would be equity in the property. The lender basically made the same gamble based on house values only going one way. If property levels continued to increase even a foreclosure would not be a money loser.

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 -

Property Features
Single Family Property Status: Active County: Morris Year Built: 1950 4 total bedroom(s) 3 total bath(s) 3 total full bath(s) 9 total rooms Style: Cape Cod Master bedroom Living room Kitchen	Basement Laundry room Bathroom(s) on main floor Bedroom(s) on main floor Master bedroom is 16x10 Living room is 21x15 Dining room is 13x10 Kitchen is 10x9 Basement is Partially Finished Fireplace(s) Fireplace features: Wood Burning	2 car garage Parking features: Detached Garage Heating features: 1 Unit,Oil Forced air heat Interior features: Ground Level Rooms: 1 Bedroom, Bath(s) Other, Kitchen, Laundry Room, Living Room, Walkout, First Level Rooms: 1 Bedroom, Bath Main, Dining Room, Kitchen, Living Room, Second Level Rooms: 2 Bedrooms, Second Bedroom is: 12x10, Third Bedroom is: 12x9 Exterior construction: Vinyl Siding Roofing: Asphalt Shingle Approximate lot is 87x100 Approximately 0.2 acre(s) Lot size is less than 1/2 acre Utilities present: Septic,Public Water,Electric Service

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.

The property owner took out a piggy back loan which resulted in no money down No money down on a house - it sounds insane today and as well as prior to the Great Housing Bubble but that's how things were. So no money down to buy a house with financing through an extension of a realtor. That sounds crazy as well - realtors having mortgage brokers in house. But that's the way things were and it seemed normal at the time.

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.