Now it is obvious that the losses are throughout our entire economic system. Everyone is going to pay a share. Some of the players are paying the biggest price but the transfer of losses is now a burden on our entire country. Like it or not is irrelevant, it has happened.
So knowing we are paying for bad decisions, which brings us to today's example where both the lender and the buyer are losing money. Unfortunately the innocent tax-paying bystanders will probably be the one that ends up losing the most. Also these posts are almost now more important than others - we have to document the atrocities of the housing bubble so hopefully the next generations will not make the same mistakes. So lets stroll over to Dover and see today's example.
Here is the property -
Here is the property info -
Here are the financials -
- The property was purchased for $412,500 in August 2006.
- The original mortgage at time of purchase was for $371,500 using an ARM with Accredited Home Lenders.
- Foreclosure started by a Lis Pendens filed August 2007.
- The property is currently an REO for sale using a realtor for $279,900.
The homeowners down payment of $41,000 or just below 10% of the purchase price is lost. Big amount of savings/equity to lose. And since the Lis Pendens was filed within a year of the purchase the homeowner was basically in trouble just after the ink was dry.
The lender will be writing off a minimum of $108,394 for this property. This is the $91,600 for the difference between the original mortgage and the current selling price of $279,900. The lender will also lose $16,974 if the property sells for the full asking price and the realtor which has listed the property receives the standard commission.
The combine losses just between the buyer and lender total $149,394 for an investment that lasted less than 2 years. That is some loss.