Sunday, October 12, 2008

Sales, Sales, Sales

Today in our featured example listing we will take a look of some of the properties we looked at over the past year that did finally sell and how much the lender was forced to write-off. Or as the new truth is we, the taxpayers will be reimbursing them for. Many of the houses featured so far are still owned by the bank. But we did find three HELOCed properties that finally found new, non-bank owners.

Back in March we featured a property in Morristown. This was one of the HELOCed properties where everything that could be extracted was.

Here is the financial history of the property -
  • The home was purchased for $335,000 in June 2004
  • The first mortgage in June 2004 was for $301,500 with an ARM from Coldwell Banker Mortgage
  • In August 2004 a mortgage of $34,962.47 (yes that number is right) Beneficial Mortgage Corp
  • A third mortgage was taken out in March 2005 for $80,000 with Irwin Mortgage Corp
  • In Sept. 2006 Coldwell Banker started the foreclosure process.
  • Currently the property is bank-owned and for sale at $299,900 - approx 10% less than the 2004 purchase price.
Well, the house finally did sell in May for $286,000. That means the lender ate $147,622 just on the loans and the realtor fees just for this property. Add in all the other foreclosure costs and the lender lost easily in the $175,000 area.

Now onto one of our May property features from Randolph. This property was another owner that took all the equity out of the property.

Here is a look at the history of the financials -
  • The property was purchased June 2003 for $322,500.
  • The first mortgage in June 2003 was for $258,000 and taken with Sullivan Financial Services.
  • A second mortgage also in June 2003 was taken for $48,375 also with Sullivan Financial Services.
  • Home Equity loan was taken August 2004 for $47,000 with Morristown Federal Credit.
  • The property is currently for sale with realtor for $385,000.
The property did sell in July for $365,000. The total loss for the lender only ended up being $10,275 for the mortgage losses and realtor fees. Not that bad as compared to most.

Our final property that we reviewed is from Pequannock. This was another HELOCed property where all the available funds were extracted and the lender took a loss. Another final success story where the property was finally sold.

And now lets review the financials -
  • The property was purchased in Jan. 2002 for $209,000.
  • The original mortgage in Jan. 2002 was for $188,100 with Washington Mutual.
  • The property was refinanced with cash-out in July 2003 for a new mortgage of $215,000 with First Magnus Financial Corp.
  • It was refinanced again in October 2004 for $217,000 with Commerce Bank.
  • A HELOC was opened in November 2004 for $43,000 with Citibank.
  • The foreclosure process started Jan 2007.
  • The property is currently for sale with a realtor, listed at $279,900.
Well, the property finally sold for in August for $240,000. The lender ended up losing $34,400 from the sale when the original mortgages and realtor fees are covered.

So just with these three sales the lenders lost a total of $192,297 from just the original mortgages and the realtor fees. This does not include the other foreclosure costs that the lenders also incurred. Remember these costs will be made up with job cuts and increased taxes. The money is lost has a much greater impact than at first glance.

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