You gotta know when to hold’em, know when to fold’em

The news has been full of reporting on foreclosures and I’ve mentioned it several times here. Currently the number one city for foreclosures in the country is Stockton, CA, followed by Coral Gables, FL, Merced, CA, Modesto, CA and Riverside, CA, Las Vegas, Vallejo-Fairfield, CA, Bakersfield, CA, Sacramento and Port Lucie, FL is #10. In the top ten there is only one city that isn’t in California or Florida and that’s Las Vegas, NV. I hope you saw that one coming. It was obvious, no infrastructure for the massive amount of housing they were building down there. Prices off the hook for living in a sand box, that one’s a no brainer. The troubles are pretty localized. Check out this graphic from The Mortgage Report

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California is getting whacked. If you have a good mortgage and can make the payment, stay pat. If yours is adjusting call a reputable mortgage broker or bank for help getting your loan re-written. At some point these lenders are going to realize that re-writing loans is more beneficial than taking beating after beating on property that they over lent on. Get the payments in line and cut your losses. This is just like the 80’s when people were signing deeds and mailing them to the bank with their keys. Don’t get caught flat footed. Be proactive in protecting your family’s home.

Fire on the mountain, lightning in the air

We had our first grass fire today. Originally I heard Sherman Island out in the Delta, but now they’re saying some other island. There’s a slew of ’em up in the Delta, so who knows. April 11 is sure pretty early to be coming home to this kind of smoke in the air. It’s nice that the weather has taken a turn for the better, should be an awesome weekend in these parts. It was 82 degrees in San Francisco today.

I’m sticking with my current favorite topic, foreclosures. It spawns the spam, but I’ll deal with it so that I can impart some information. The difference between the smart guys and the Bart Simpsons of this world is simply information. Oakland’s City Attorney just filed an action against a guy alleging unfair and predatory business practices. My gut says this is grandstanding. I don’t think the City Attorney has spit. I think this guy walks away with a little muss on his jacket and that’s about it, because I don’t think he crossed the line. I might be wrong, but my gut says this is grandstanding. I think this is up there with Cuomo and the suit against the appraisal company. I don’t think they’re great guys, I just don’t think they did what they’re accused of. Time will tell. I do know that there are some pretty crummy deals going down out there. I saw one a couple of weeks ago. The mother had deeded the house to the son, who proceeded to take out $250k loan and essentially smoke it. Then he never made a payment and the loan on the home, which the mother had lived in for nearly 40 years, was foreclosed by the bank. Now, there isn’t a law called felonious stupidity, but if there were, it would come in to play here. Except the mother is/was/continues to be cuckoo for cocoa puffs. Whacked. Insane in the membrane. She cut holes in the drywall and installed shelves in the frame of the house. She installed medicine cabinets throughout the place and hung things all over the ceiling. It was a virtual fun house. She’s now moved out and the place is being renovated by the bank for sale. As a title officer, I know that the deed to the son is voidable. She may very well have been incompetent when she signed it. If the deed to the son is void, then the mortgage is invalid, title has failed and the crazy old gal gets the place back, plus a fat check for damages. In this case, no one has attacked the title or the foreclosure, but this is one of the most dangerous ones I’ve seen. This deal right here is why you buy title insurance. The $2000 that was paid on this one would reap hundreds of thousands if the title were attacked. Pretty good ROI.

Can we call it a loan, And a debt that I owe

There’s been a lot of talk in the news and on the street about foreclosures. I am more intimately involved in this than most people, being in the title business. It helps that one of my closest friends is the Junkman. Yesterday, I held an open house for another friend of mine. This pig was going to auction. It wasn’t thrashed as badly as a lot of them are, but it’s best days were behind it. One of the neighbors came by and said that if Harry ever saw this place he’d just up and die. Harry was the former owner with the nice wife and four daughters who put the bric brac wallpaper throughout. It was probably very nice when he originally did it. He did the add on. The neighbor across the street helped him with a lot of the work. His brother had laid the carpet in for him, a long time ago. Harry sold the place in 2000 for $332, 000. He and his wife probably went and retired somewhere. Last year homes were selling in the $600k range in that neighborhood. The neighbors who came by to visit were really nice people. It was a real neighborhood. The one lady was the original owner, from 1956. This thing will be going to auction with a starting bid of $169k. Really.

How does that affect property values?

All of the neighbors told me they wanted this thing going for as much as possible (like that was something I could control). A house bought at auction is as “as is” as it comes. You get it, warts and all for the winning bid. Does that reflect the neighborhood? I opened the doors and windows because the place smelled. It smelled of a roach infestation. Later during the day, I found dead roaches on the counter tops. There were dead ants by the patio slider. Ants tend to mean water leaks or termites or both. Parts of this house were very nice, but while I talked to one of the potential bidders he was running the figures out loud. I said “you can probably get it up to snuff for around $50k”. He said he’d be lucky if he got it turned around for only $50k. Now the auctions have been well attended and the properties get bid right up. I would imagine this thing will go for around $220-$275 range, but it could get bid up even higher. Saying I’m full of crap and it really does take $75-$100k to make it nice again, you’re in for $375-$400k, which wouldn’t be bad for a decent neighborhood. (This property is not in Contra Costa County) It does not reflect the neighborhood and should not be used for a comparable sale because it’s not comparable to anything on the block. It’s unique to every other house in that neighborhood in that it is run down, neglected and in disrepair. Getting this pig into the right hands is good for the neighborhood. Getting a nice family to buy in at any cost will ultimately help the neighborhood and the property values.