Sunday, April 19, 2009

Leaving Behind Lake Hopatcong *Update Below

Last fall we embedded a devastating video about the things people leave behind after their properties are foreclosed. The lenders usually hire companies to then come in a do a trash out - in other words landfill everything the owners left behind. Some very valuable stuff ends up as garbage. And some of the former owners most valuable possessions are left behind. Take a look at the video here.

The trauma that people must be going through to leave a property with so many valuables is devastating. Things that could be yard-saled or craigslisted instead left behind. Very sad state of affairs.

Often when we featured foreclosed properties they are empty. So today when we came across a heavily HELOCed property with valuable furniture inside we knew we were seeing firsthand a local trash-out. A family so torn by losing the property that they left valuables for the bank. The realtor who posted these pictures works for the lender, so little is left to the imagination. Lets take a look -

Here is the property -

The front of the home.

The kitchen, with a little left behind.

The forgotten plants and decor from the family room.
A beautiful desk left behind in the office.
Matching wood furniture left in the bedroom.
The saddest trash out - where is the baby sleeping now?

Here is the property info -

Property Features

  • Single Family Property

  • Status: Active
  • County: Morris
  • Year Built: 1955
  • 3 total bedroom(s)
  • 2 total bath(s)
  • 2 total full bath(s)
  • 8 total rooms
  • Style: Ranch
  • Master bedroom
  • Living room
  • Dining room
  • Kitchen
  • Den
  • Basement
  • Laundry room
  • Master bedroom is 27x11,Includes: Full Bath
  • Living room is 21x11
  • Dining room is 13x11,Formal Dining Room
  • Kitchen is 13x9
  • Den is 11x10
  • Basement is Full, Unfinished, Walkout
  • Hardwood floors
  • Fireplace(s)
  • Fireplace features: Living Room, Wood Burning
  • Parking space(s): 6
  • Carport
  • Attached parking
  • Parking features: Carport-Attached
  • Heating features: Baseboard - Hotwater, Multi-Zone,Oil
  • Central air conditioning
  • Cooling features: 1 Unit
  • Exterior construction: Wood
  • Roofing: Asphalt Shingle
  • Approximate lot is 97x122
  • Lot features: Level Lot
  • Utilities present: Septic, Public Water, Electric Service

Here are the financials -

  • The property was purchased in May 2003 for $332,000.
  • The original mortgage at time of purchase was for $265,600 using a 30-year fixed with Fleet National Bank.
  • In September 2003 a HELOC was opened for $35,000 with Fleet National Bank.
  • The following May the original HELOC was closed and a new one for $57,700 was opened again with Fleet.
  • In June 2005 the previous HELOC was closed down and a new one was opened again, this time for $103,300 with Fleet of course.
  • In May 2006 the HELOC line was closed and re-opened again, this time for $153,000 this time with Bank of America.
  • The foreclosure process started with a Lis Pendens filed in May 2007 for the original mortgage with Fleet.
  • 15 days later another Lis Pendens was filed for the last HELOC with Bank of America.
  • The property is currently listed as an REO for sale a through a realtor for $259,900.
  • The property taxes for 2008 were $7,385.54.

At time of purchase the owners were able to put a 20% down payment of $66,400 for the property. This was very hefty, especially since it was during the bubble.

The opening of the first HELOC was little suprise. As we saw in our last post financial advisers were telling clients to use their equity as an emergency fund. The owners had put down such a substantial down payment having some extra funds for repairs and fixing up the place. This was very normal and ordinary at the time.

When the owners refinanced the HELOC a year after purchase the potential was to available to extract the full down payment except for $8,700. But that would be most likely extracted the next year with a new HELOC that would allow for the full down-payment to be withdrawn as well as another $36,900 of equity that may have built up over time (or through improvements?). But just another year passed and another potential $49,700 was available to be extracted. The last HELOC allowed for the full extraction of the down payment (of $66,400) plus another $86,600.

So when the foreclosure process started the lenders had lent out $418,600 for the property. Thus, bring the loss to, at least, $174,576 if the property sells for the full asking price and the realtor gets the standard commission. Plus the expenses for the trash-out and other foreclosure costs.

For those interest in purchasing the property, if they are able to put 20% down and received a 30-year fixed at today's Bankrate rate of 4.86% the monthly payments would be $1098.44. Adding in the property taxes and the monthly payments would be about $1713.90 per month - plus utilities and insurance.

Unfortunately this is probably the saddest foreclosure we have featured so far...


Update - Recently one of our readers noted that very few buyers can actually put down the 20%. So we found a new calculator that includes the PMI charges and the new rate. So let us suppose the potential new buyer is only able to put down 5% or $12,995. The monthly mortgage payment would be $1304.39, plus a PMI of $160.49, and the taxes of $615.46 totaling $2080.34.

Let's look at a buyer who puts only 3% down - the mortgage would be $1331.86, PMI now $218.49, the taxes stay at $615.46 for a total monthly payment of $2165.78.

What a difference a larger downpayment can make.

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