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The Ayatollah Buggeri

Southern California B T L Anecdotal

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An interesting report from my fiancee's sister, who lives in a identikit but pleasant (large bungalows with three bedrooms/kitchen/bathroom/built in garage plus small back garden) housing estate in Yucaipa, CA. For several years she's had neighbours from Hell: an extended Mexican family with several dogs, doing noisy, smelly car maintenance in the front drive into the small hours, some of them she suspects were illegals, etc. About a fortnight ago and without warning, when she got back from work she discovered the Mexicans loading their possessions into a U-Haul, in which they then all disappeared, in the middle of the night, leaving two TVs, several old computers, a bedbug-ridden old sofa and several other bits and pieces by the roadside. A few days later, what looked like a property management company showed up and cleaned the place up, and last Friday a 'For Sale' board appeared.

Intrigued, my other half's sister (who bought the virtually identical property next door for $159k in August 2009) did some searching on the US equivalents of land registry, Propertysnake etc., and discovered that the house was bought by a lady, with a non-Mexican sounding name for $298k in February 2005, from the family that owned the place since it was built in 1985. Ownership then passed to the Bank of America in mid-July 2011, i.e. about six weeks before the Mexicans upped and left, who now have it on the market with an asking price of $145k. My other half's sister believes that this price is very optimistic, given that the house is in a pretty shabby state inside and that virtually no substantive maintenance appears to have been done on it since it was built 26 years ago - exterior paint peeling, etc.

What we are therefore surmising is as follows: the lady bought it in 2005 as a BTL, and at first all went swimmingly. Then the 2008 crash happened, and rents dropped to the point at which they fell well short of her outgoings (mortgage, maintenance and management company fees). The Mexicans moved arrived early in 2010, and from August '09 until then the place was empty: presumably in a void. Things eventually got to the point at which either she jingle mailed it, or BoA foreclosed. Anyway, BoA promptly gave the Mexicans notice to get out and is now trying to sell the place for, she reckons, about $20k more than a house on that estate and in that condition is likely to go for. There are currently three or four other foreclosed properties in that development on the market, some of which have been for sale for six months or more.

So, it seems that there hasn't been much of a recovery in that neck of the woods. On the contrary, there seems to have been a 7-10% fall in prices since the summer of 2009.

Edited by The Ayatollah Buggeri

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I read an article recently in the Los Angeles Times which chimes perfectly with your story - LINK:

New foreclosures surge during August in hardest-hit markets
September 15, 2011|By Alejandro Lazo, Los Angeles Times
California leads in new foreclosure proceedings with
an increase of 55%
over July. Metro areas in the inland parts of California
post big jumps, with Riverside and San Bernardino counties soaring 68%.
Significantly more properties entered the foreclosure process during August in the nation's hardest-hit markets, including battered parts
of inland California and other areas in the West, as
Bank of America Corp. stepped up its activity
in states where a court order is not
needed to take back a home.
Among the states with the highest foreclosure rates, California led the pack in new foreclosure proceedings with an increase of 55%
over July, according to data from Irvine-based RealtyTrac. Metro areas in the inland parts of California posted big jumps, with Riverside
and San Bernardino counties soaring 68%, Bakersfield 44% and Modesto 57%, the real estate information company said.

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BoA appears to have nowhere left to turn so has to foreclose to get back some of its assets

I wonder which bank(s) or building soc(s) in the UK are almost in a similar situation, and when the same thing will start happening here...

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Agreed - that struck me about the LA Times article, too. It appears to be BoA specifically that is trying to cut and run, by foreclosing and then immediately selling as much as possible. My guess is that this is either because they're making the tactical decision that the SoCal housing market has further to fall and thus to cut their losses on the underwater properties with mortgagees in trouble currently on their books, or, as you say, they need to liquidate as many assets as possible and are doing this out of necessity.

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Update: the couple who owner-occupy the house on the other side of my other half's sister told her yesterday that they were moving out. Turns out that they bought near the peak for over $300k and are going to jingle mail the house, having calculated that by moving to rent about half a mile away, their housing costs will instantly diminish by $1,050 a month. The bank, which is not BoA, have put the place on the market for $138k, which is about what the last comparable property in that development actually went for (as distinct from asking prices).

If jingle mail were legal here (i.e. you could simply hand a house back to the bank and they couldn't pursue you for outstanding mortgage debt), I shudder to think how many would do it. That having been said, the relative shortage of rental property, insecurity of ASTs etc., might act as a more significant brake.

Obviously my other half's sister is not at all happy at having two empty houses either side of her. I hope that the newly vacated house will be bought by an FTB couple or other professionals, given that it is priced more realistically. Obviously, her fear is of BTL-ers and a re-run of the Mexican tenant situation.

Edited by The Ayatollah Buggeri

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Update: the couple who owner-occupy the house on the other side of my other half's sister told her yesterday that they were moving out. Turns out that they bought near the peak for over $300k and are going to jingle mail the house, having calculated that by moving to rent about half a mile away, their housing costs will instantly diminish by $1,050 a month. The bank, which is not BoA, have put the place on the market for $138k, which is about what the last comparable property in that development actually went for (as distinct from asking prices).

If jingle mail were legal here (i.e. you could simply hand a house back to the bank and they couldn't pursue you for outstanding mortgage debt), I shudder to think how many would do it. That having been said, the relative shortage of rental property, insecurity of ASTs etc., might act as a more significant brake.

Obviously my other half's sister is not at all happy at having two empty houses either side of her. I hope that the newly vacated house will be bought by an FTB couple or other professionals, given that it is priced more realistically. Obviously, her fear is of BTL-ers and a re-run of the Mexican tenant situation.

It'be really funny if you could jingle-mail the house on the $300k, and then, since it's a non-recourse mortgage, buy it back with a $139k mortgage.

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It'be really funny if you could jingle-mail the house on the $300k, and then, since it's a non-recourse mortgage, buy it back with a $139k mortgage.

Getting the second mortgage would be the trick...

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It'be really funny if you could jingle-mail the house on the $300k, and then, since it's a non-recourse mortgage, buy it back with a $139k mortgage.

Once you've jingle mailed your credit rating drops through the floor and it's difficult to get another mortgage.

But an American can just approach their lender and say, "I could jingle mail, but I won't if you reduce my outstanding debt." The bank has a lot to gain from agreeing to that. A repo'ed house might never attract another buyer. Better to keep the existing 'owner'.

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Once you've jingle mailed your credit rating drops through the floor and it's difficult to get another mortgage.

But an American can just approach their lender and say, "I could jingle mail, but I won't if you reduce my outstanding debt." The bank has a lot to gain from agreeing to that. A repo'ed house might never attract another buyer. Better to keep the existing 'owner'.

You'd think so, but they can't always do that. If the loan was sold on and they are now just servicing the loan on behalf of another, then it's not their decision to make. So foreclosure is usually the easiest route for them.

Besides, it sort of opens the flood gates. Everyone, including those who haven't sunk, would jump on the bandwagon and say "my house is worth X less, I want the mortgage reduced too".

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Update: the first vacated property (the BTL inhabited by the Mexicans) has now been taken off the market by BoA - the 'for sale' signs have been taken down and it's gone from local EAs' websites. The second one (formerly owner occupied and then jingle mailed), which is now owned by Fannie Mae, has now had its asking price increased to $153k! Given that the last actual sales of comparable properties on that estate were in the mid-130s, my other half's sister is inferring from this that they have no intention of actually selling it, and that both BoA and Fannie Mae would prefer to sit on an empty house than write down the loss on their books.

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Once you've jingle mailed your credit rating drops through the floor and it's difficult to get another mortgage.

But an American can just approach their lender and say, "I could jingle mail, but I won't if you reduce my outstanding debt." The bank has a lot to gain from agreeing to that. A repo'ed house might never attract another buyer. Better to keep the existing 'owner'.

the banks were supposed to HAMP their non performing loans....they have done jack, so they deserve to die.

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Update: the first vacated property (the BTL inhabited by the Mexicans) has now been taken off the market by BoA - the 'for sale' signs have been taken down and it's gone from local EAs' websites. The second one (formerly owner occupied and then jingle mailed), which is now owned by Fannie Mae, has now had its asking price increased to $153k! Given that the last actual sales of comparable properties on that estate were in the mid-130s, my other half's sister is inferring from this that they have no intention of actually selling it, and that both BoA and Fannie Mae would prefer to sit on an empty house than write down the loss on their books.

That is one way for a bank to become solvent - take all their repossessed properties, value them X K higher and suddenly the bank is super rich! :blink:

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That is one way for a bank to become solvent - take all their repossessed properties, value them X K higher and suddenly the bank is super rich! :blink:

not quite....this is collateral to support their lending....they promise to sell it if they are a few bob short....just like CME group had billions in assets to cover a member like, say, MF global was to bust...thats the theory, but of course, they didnt do jack...they deserve to die.

My word is jack, as they say in the City these days.

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  • 332 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
      • up 2.5%
      • up 5%



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