Hat tip to JimG for leaving this comment yesterday:
Really can’t say if this is a one day event or will be something more but LPS, who is a outsourcer of REOs for many banks just dropped 609 REOs in California today, all from Bank of America. Guess that means BAC has been sitting on foreclosed properties and who knows how many they have in their little piggy bank. About 40 of the 609 are in San Diego County today. Normal California daily assets for LPS is around 20-30 as a point of reference with 2 to 3 in San Diego County.
We’ll never know if there is any big changes afloat with any of these banks, unless they come out and say it. But I’ve had a couple of new items too.
I got Bank of America to sign off their rights to pursue a deficiency judgement on a short sale, when the mortgage was purchase money. You’d think it would make sense for the lenders to cooperate when the borrower can walk without recourse, but it’s not automatic.
Maybe this example is a sign of BofA trying to clean out the drawer? This short sale has been in process since September, and we already lost the buyer.
In addition, for the first time they’ve issued a prompt for me to hurry up with my BPOs. They are making their agents produce two opinions of value before listing, which is annoying, but getting some additional pressure from them might mean they’re trying to pick up steam?
I was also told that they are giving their loan managers some pull with the supervisors to push short sales through. The Equator system is still hit and miss, but a good idea. If we can get some assistance with return calls/emails, it could only help.
Let’s get this ship moving!
We’ve been watching a property that went REO about a month ago. BofA is administering the property, but it’s owned by another bank. I’ve been calling BofA (there’s number to call for info on REO’s) to see if there’s been an agent assigned to the property yet. As of today the answer is still no.
They’re always very nice and encourage me to call back in a couple of days, but if BofA is jumping on stuff, they sure aren’t jumping on this one. It’s vacant. It’s ready to sell. Just stick the sign in the yard. Literally, if they’d do the BPO’s and list it I’d make them an offer.
Sorry, just a bit of the frustration showing.
“I got Bank of America to sign off their rights to pursue a deficiency judgement on a short sale, when the mortgage was purchase money”
Dont you mean when the mortgage was a refinance? Purchase money has no recourse.
It’d be good if REO/SS volume is increasing, So much better to deal with a problem than ignore it.
ED,
I don’t want to speak for Jim, but if I understood correctly, when it comes to purchase money loans, in most cases foreclosure is the better option for the borrower since it’s cleaner.
In a short sale, it doesn’t matter whether it’s purchase money or a refi; all lenders showing any reasonable loss can pursue deficiency judgements for as long as the statute of limitations applies. This applies to both principal, interest, and fees.
This is why I beat the drum that in many cases, foreclosure is better for a borrower than short sale in California. Once the property is sold at auction, noone can come back to the buyer. I think if this basic understanding got out, we’d have a whole lot more walkers than we do now. It has only been by the ease of manipulating the mainstream media that lenders have gotten out the false word that “short sales are better for you”. It’s absolutely in *I dare say* most cases the better option for underwater homeowners.
Chuck Ponzi
Jim was right — BofA has been sending out their approval letters on NON-recourse loans saying they reserve the right to pursue. Whether they can or not remains to be seen, but their letters are all saying they reserve the right. I also got one last week however, that specifically said they would NOT pursue, and they are moving fast on a short sale I have with them now — we shall see…
Dont you mean when the mortgage was a refinance? Purchase money has no recourse.
I know it’s a head-scratcher, but yes, B of A has been sending letters asking the sellers to acknowledge the bank’s right to pursue a judgement on short-sale losses when the mortgage was purchase-money.
They must figure that many borrowers and realtors aren’t paying attention and sign them anyway, even though foreclosure is the much better solution – they’re non-recourse!
Thanks for checking in Jodi, good to hear from you!
So far the drop was a one day event but I’ll keep a look out for more. Several of the properties were foreclosed on in January and February so they have been sitting on them, didn’t have time to go through the whole list.
It’d be really interesting to see if that was legally enforceable since the lender never had any recourse to begin with I doubt the borrower saying they have recourse would matter.
That said, I wouldn’t want to be the test case!
I read an article where Wells Fargo sent threatening letters to people who had non-recourse debt and got foreclosed on saying they should pay them money (a percentage of the balance due). In some cases the people paid even though they didn’t have to.. when confronted Wells basically said there was nothing against the borrower voluntarily paying the balance. I’d bet there is a class action case waiting to happen on that one as well.
It doesn’t make a lot of sense for a servicer to be menacing with a person who is cooperating on a short sale with a non-recourse loan. The person is in possession and has legal ownership of the property and can make life very tough on the servicer (increase their loss severity through lengthening out the time to possess and damage the property). I would get them out ASAP and move on, but that’s just me.
The servicers don’t have the many checks against short sale fraud that they should have but they harass the sellers of non-recourse debt. Insanity.
What does “dropped” mean in this situation? BofA put them up for auction?
Sorry REO lingo. “Dropped” in this case means the bank already foreclosed on the asset and “dropped” it to be assigned to a listing agent.
Could we hear some more about the properties under $500,000. Not all of us can afford Carmel Valley.
Depends on where you’re looking, Ray Ong. For a single family detached home, under 500K in Oceanside or Vista will buy you a gorgeous home. Maybe some parts of inland Carlsbad. Under 500K along the coast in Cardiff or Encinitas will buy a shack by the freeway with power lines in your backyard, and you’ll be in a bidding war to get it. I’ve found a few older fixers inland Encinitas/south Carlsbad, but most have had foundation and structure problems or else they’ve been bid up too high.
JTR and ED,
Jim G’s report and JTR’s observations may sync with the statements widely discussed about BoA ramping up the NPL disposition machine, and ED’s very nice charts of Recontrust’s NTS and trustee sales numbers each week. I do wish somebody who gets paid to write about the RE biz would run charts like that for all the major CA lenders/servicers, but I know that’s very difficult with so many loans being owned by RMBS pools. Still . . .
I sure hope all of these tea leaves support that hypothesis, because there are ALOT of way, way underwater Countrywide loans with NODs that have had NTSs filed since January, and I’m praying that BoA dumps them within 60 days of the original sale date, as opposed to the endless postponement approach taken by some lenders/servicers (e.g. Aurora).
I can tell you that of the people I know who wanted to buy a house, since the Fed tax credit just expired and the state one is widely thought to be gone within a few weeks, they’ve all signed 1-year leases instead. Most feel they will be able to find an equivalent house for less this time next year.
I’m in the prime first-time homebuying generation; I’ll be 29 in a couple months, and most of my friends are in their late 20s to mid 30s.
-Erica
Ray Ong, I don’t know what your preferences are, but you can find some nice homes in Mira Mesa and Rancho Peñasquitos for $500k or less.
The $500k houses in Peñasquitos are going to be generally less than 2k sf and 35 years old and older.
What’s wrong with less than 2k sf and 35 years old or older?
A whole of people live quite comfortably and happily in houses that match that description.
What does 500k buy in Mira Mesa?
Thanks
Effective Demand,
Sorry, perhaps I wasn’t clear. Non recourse only refers to foreclosure, not short sale.
Short sales are, by definition, a negotiation between the seller and their lender as to “who eats what?”, not a cram-down from seller to lender (that, by definition, is a foreclosure).
It cannot be said any clearer, in MOST cases, foreclosure is a better option to the seller than a short sale. There are rare instances when a short sale is better, but they are not common in the current environment.
Too many people want to believe there is some way that will mitigate the pain and shame associated with a failed home purchase. Sadly, often the best course is not commonly pursued.
Chuck Ponzi
Relative to comments 14 and 15, I was just trying to quantify the word “nice” with some specifics. Not everyone is going to define “nice” in the same way.
I’ve seen some “nice” homes in penasquitos for under 500K, but as you point out, they’re 25-35 years old. There’s absolutely nothing wrong with a house being older, it’s just that you have to figure in some extra costs for remodeling. Even if you don’t mind living with orange shag carpets, mirrored wet bars and linoleum floors, parts will break and deteriorate and have to be replaced.
Most of the homes are in the far north east corner of PQ. I don’t know if that area is less desirable than central PQ? Maybe someone who lives there can offer their 2 cents.
You can get more for your money in Mira Mesa, but then you aren’t in the Poway school district.
Re #17, in eastern MM there is a development called Mesa Del Sol (where I own a home). They were built in the mid-90s and run around 2k sq ft, 3-5 br. You can get any one of those for $500k or less. Granted, they’re tract homes and suffer from large-home-small-lot syndrome, but the area has a lot to offer. Easy freeway access, LOTS of businesses nearby, peaceful and quiet, easy to find a home on a cul-de-sac, etc. I put my money where my mouth is!
I grew up in Penasquitos. If you can live in the area to the west of Black Mtn Rd., that is the best area.
South of Oviedo Rd and West of Black Mtn. Rd in the Sundance Elementary areas was built in the 1970s. North of Oviedo was built in the 1980s, when I grew up there. The areas near Mt. Carmel were built in the 1970s and seem not as nice as the north west areas.
Do not, at any cost, live off of Carmel Mountain road, heading up from 24 Hour Fitness up to the Doubletree. That area is pretty shady, IMHO.