This Deutsche Bank-owned foreclosure is priced 40% off its early 2006 selling prices.
20379 W COUNTRY CLUB DR # 1232, Aventura, FL 33180
- 2 Bed, 2 Bath Condo
- Bought in January 2006 for $310,000
- On the MLS for $184,500
- Days on the MLS: 17 Days
- Loss before the Realtor® commission: $125,500
- Loss after the Realtor® commission: $136,570
Stumble It!
16 comments:
Not a bad deal at the price, but couldn't the listed put the complex name in?
Maybe one of you guys can clue me in to what's happening around me:
I'm seeing quite a few condos in my area of cental Palm Beach county being offered for sale for WAY less than the mortgage amount owed. As far as I can tell they are NOT in foreclosure, i.e., no "LP" recorded on the county clerk's web site. Here is one example of many:
http://tinyurl.com/ystr3y
In this particular case the condo is being offered for sale for $199k and the mortgage is $298k, which means that either the borrower will have to come up with the ~$100k shortfall or the bank will have to agree to take much less than what they are owed before the property can change hands.
So my question is... What is going on here? Has the "owner" just stopped making payments and is he hoping that the bank will go along with a short sale rather than go through the trouble and expense of foreclosing? How can a potential buyer expect to complete a purchase if the seller really isn't in any position to sell?
Any insights appreciated.
Lenders are increasingly allowing these "short sales," where they allow the borrower to sell for far less than outstanding loan balance.
It's advantageous to the lender to allow short sales because they save the money of court proceedings and they can typically negotiate some monthly payments out of the borrower.
The most important part of the short sales is the lenders can keep the bad loans off their books. Losses associated with a foreclosure must be recognized immediately. On the other hand, losses associated with a short sale do not need to be recognized until the final sale occurs.
Incidentally, Ziprealty.com has a great feature that allows you to limit your search to only show short sales.
Deutsche Bank isn't taking the loss on this property.
They are only the bond trustee who represents the bondholders who bought the RMBS certificate, like Merrill Lynch, and also Bank of America.
Here is a little primer on how it works.
A lender, say called CW, lends to 10 homeowners 100,000 each for 1 million in lending. The 1 million dollars in loans are sold to an investment bank at a discount so the lender is now out of the picture. Similar loans are put together into a 1 million dollar bond issue, which is then sold to investors for face value. The investment bank then turns over the records of the bondholders to a bond trustee, who starts representing their interest.
Ironically, bond trustees make more money when a homeowner defaults because there is extra work involved and they get to charge the costs against the bondholders.
Two of the biggest bond trustees are Bank of NY and Deutsche Bank, which is why they appear in the records more than anybody else. It is highly unlikely they were the originating lender in these cases.
"The most important part of the short sales is the lenders can keep the bad loans off their books. Losses associated with a foreclosure must be recognized immediately. On the other hand, losses associated with a short sale do not need to be recognized until the final sale occurs."
Wouldn't foreclosure be a longer process than short-sale?
Foreclosures take at least 6 months usually. Then you'd have to put it on the market and go through that whole process. And they won't know what the loss really is until the foreclosure sells, since it will likely be well below what the final default judgement amount was.
If someone immediately puts their property on the market way below the amount owed as a short-sale, it seems to me that this would speed up the process of selling the property and thus would cause a loss to be incurred earlier than a foreclosure.
Maybe it's not done to "keep the loss off the books longer", but rather to get the process of the inevitable (a default and re-sale) done sooner and with less costs (legal costs and property taxes, etc).
Most of the people that I have seen trying to short-sale their property are doing it simply to try and salvage their credit and possibly avoid bankruptcy. Most of these properties are already on the road to foreclosure. If the short-sale is not accomplished within the 6-month period, then they'll likely be foreclosed upon.
I don't disagree that most banks wish to delay their losses (foolishly, though). Most of these executives have bonuses tied to performance, and want to delay these losses until after they get their bonus paycheck.
Re:
"Most of the people that I have seen trying to short-sale their property are doing it simply to try and salvage their credit and possibly avoid bankruptcy. Most of these properties are already on the road to foreclosure. If the short-sale is not accomplished within the 6-month period, then they'll likely be foreclosed upon."
That's the thing I don't get. The borrower must already be in default for the bank to agree to a short sale. Isn't the borrower's credit already shot at this point? Isn't the damage to the borrower's credit the same as just walking away and letting the property go into foreclosure?
Here is another F*cked Buyer
1769 HARBOR POINTE CIRCLE , WESTON
Paid $1,050,000 1/31/07
http://www.bcpa.net/RecInfo.asp?URL_Folio=503911050250
Asking Price
$895,000
http://homes.realtor.com/search/listingdetail.aspx?zp=33327&mnp=38&mxp=37&typ=7&sid=42fb430ba852458db5966880048fc0c2&lid=1090997100&lsn=9&srcnt=11#Detail
You need to start a contest to find the most F*cked Buyer every week.
What were these banks/lenders thinking?
Court judgments are much worse on a credit report than late payments.
Hence a short sale would only impair credit for 2-3 years.
A foreclosure nails your credit for 10 years
2I, what you say makes sense, ( where a short sale is far better for a person's credit then a foreclosure ). Do you have any idea where I might find out more about this ? I have a friend in a situation, would want to show them how a short sale might be better far better then foreclosure> Thanx
anon,
2 things:
1/ You should get a handle so that people can address you directly.
2/ Be advised that short sales will impact your tax bill. The amount forgiven shows up as income. I think they are trying to change the tax bill to address this. Don't know if they have.
I was talking to a Realtor the other day who said she has terrible luck trying to deal with these short sales.
She says they take forever to respond to offers (sometimes 7-8 weeks), and are unreasonable and inflexible.
Like the other sellers, I guess they need to get beat up a little bit out there.
331 SE 5 TE, Pompano Beach, FL 33060
Purchased: 4/17/2006 for $745,000
Currently listed at: $550,000
MLS #: F838148
Price history...
Price Reduced: 06/15/07 -- $799,000 to $775,000
Price Reduced: 06/20/07 -- $775,000 to $750,000
Price Reduced: 07/07/07 -- $750,000 to $730,000
Price Reduced: 08/09/07 -- $730,000 to $680,000
Price Reduced: 08/29/07 -- $680,000 to $670,000
Price Reduced: 09/06/07 -- $670,000 to $655,000
Price Reduced: 09/13/07 -- $655,000 to $649,999
Price Reduced: 09/18/07 -- $649,999 to $645,000
Price Reduced: 10/02/07 -- $645,000 to $639,000
Price Reduced: 10/04/07 -- $639,000 to $635,000
Price Reduced: 10/09/07 -- $635,000 to $599,000
Price Reduced: 10/31/07 -- $599,000 to $585,000
Price Reduced: 11/10/07 -- $585,000 to $575,000
Price Reduced: 11/16/07 -- $575,000 to $550,000
They also seem to own 208 S RIVERSIDE DRIVE , POMPANO BEACH which oddly enough, was purchased on the same day.
Regarding short sales: yes, they can be very messy to deal with as a buyer.
First of all, many of these short sales aren't necessarily authorized by the lenders who hold the mortgage. People just put them on the market hoping that if they get an offer, they can convince the bank to take it.
Banks are VERY strict in making sure that the owners really can't make the payments. They're not going to discount the mortgage just because someone doesn't "feel like" paying the mortgage. They require mountains of paperwork from the potential short seller to disclose all sorts of things and show that they are incapable of making the payments.
The thing that complicates matters quite a bit is that many people have more than one mortgage on the property. Any secondary mortgage holders essentially get nothing if the sale price isn't enough to even cover the first mortgage. In other cases, there is enough to cover the first mortgage but not the second. In that case, the first mortgage holder has no real incentive to discount their payoff amount. They would rather foreclose and get their money back. And the second mortgage holder has little incentive to want to give up their claim on the house, since they will only be getting pennies on the dollar, if anything. This is where what SFHB mentioned comes into play: the second holder knows the money is gone, and would rather delay recording that loss as much as possible.
So, in summary, these short sales involve a LOT of paperwork, significant negotiation, and lots of waiting on the part of anyone wanting to buy one of these properties. Many short sales are not approved and the buyer just ended up wasting a bunch of time.
If I were a potential buyer, I would stick to the REOs and not waste my time with short sales. They are a headache for everyone involved. They ARE do-able, but like I said, don't expect it to go smoothly.
REOs are much easier to deal with, and usually much better deals since most banks are dumping their properties. Once the first mortgage holder forecloses and erases the secondary mortgages, there is more room to lower the asking price.
I would think a foreclosure is better than a short. Since lenders know that you can't file bankruptcy again for what..another 10 years or so..
Well guys i was robed today, left my wallet on the seat while looking at the boat at a gas station..... Im still pissed. Anyways anyone see this in the Miami Herald, it's unreal...
http://www.miamiherald.com/news/miami_dade/story/311706.html
Total unpaid amount: $365 million.
In Miami-Dade County, 41,544 residential property owners -- one of every 16 households -- failed to pay their 2006 property-tax bills. That's an increase of 41 percent from the year before, according to an analysis of county tax data. In Broward, the number grew 54 percent to 29,962 -- about one per 21 households.
In both counties, roughly 65 percent of unpaid accounts were from investors, second-home owners, and others with no homestead exemption, the analysis showed
$100 a SQFT
Investors who buy the tax certificates can't bring the property to tax deed auction for 2 years.
So, if I were in financial trouble I would think leaving the property tax bill unpaid (temporarily) would be the smartest thing to do. You have 2 years to pay it and most certificates get sold at only a quarter percent (5% minimum the first year), so there is not a lot of accrued interest after it's delinquent.
Post a Comment