I Hate You — Slayer
I get surprisingly little hate mail. Some of the pieces I have received came after HELOC abuse posts. On one of them, I had several women from a support group relay a sob story to me attempting to justify the serial HELOC abuse of their friend. I replied that a group pity-party that enabled and justified their friend’s behavior was not doing her any favors. They were not impressed. So today’s featured song is dedicated to me — it comes from all the realtors, HELOC abusers, disgruntled homeowners, and anyone else who does not fully appreciate the public service we are providing here at the Irvine Housing Blog.
Today’s featured property is another pretender who made themselves look rich by spending the equity from their home in a spiral of ever-increasing debt. I wonder how much HELOC money is under that tree?
Asking Price: $750,000
Income Requirement: $187,500
Downpayment Needed: $150,000
Monthly Equity Burn: $6,250
Purchase Price:
$326,000
Purchase Date: 5/1/2001
Address: 4591 Lori Ann, Irvine, CA 92604
| Beds: | 5 |
| Baths: | 4 |
| Sq. Ft.: | 2,500 |
| $/Sq. Ft.: | $300 |
| Lot Size: | 5,594
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Other |
| Year Built: | 1970 |
| Stories: | 2 Levels |
| Area: | El Camino Real |
| County: | Orange |
| MLS#: | P640071 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 23 days |
and living area. Fireplace is in Family room. Two masters bedrooms.
Short Sale.
Rebuilt in 2004? I suppose that is where the half million dollars went… not.
This is a classic HELOC abuse story requiring the bullet-point recap:
- The house was purchased on 5/1/2001 for $326,000. The buyer put 20% down ($65,200) and borrowed $260,800
- On 10/10/2001 they opened their first HELOC for $50,000.
- On 1/29/2003 they refinanced with a $310,000 first mortgage.
- On 4/17/2003 they opened two HELOCs for $38,000 and $82,000 respectively.
- On 2/25/2004 they opened another HELOC for $107,000.
- On 11/29/2004 they refinanced with a $650,000 first mortgage.
- On 2/14/2005 they opened two HELOCs for $66,000 and $125,000 respectively.
- On 2/15/2007 they refinanced into an Option ARM with a 1% teaser rate for $744,000
- On 4/3/2007 they opened two HELOCs for $93,000 and $57,000 respectively.
- Total debt on the property is $894,000.
- Total Mortgage Equity withdrawal of $633,200 including their original downpayment.
If this property sells for its asking price and a 6% commission is paid, the total loss on the property will be $189,000. Wells Fargo will be absorbing most of that loss with its two HELOCs. Express Capital Lending originated the first mortgage and may be liable for some of the remainder.
Question of the day: Who was acting more foolishly, the lender or the borrower?
.
You were just a waste of sperm
They way you look
Makes my stomach turn
The way you think
Is no way at all
God you really think you have balls
I hate you aint it true
I hate you and everything you do
You walk around like a f@#$ing dick
And everytime youre near
You know I get real sick
Youre so stupid
Theres nothing in your head
God how I wish that you were dead
I hate you aint it true
I hate you and everything you do
I Hate You — Slayer
How much do you think the rebuilt cost?
Looking at their refi history, it is difficult to see where they financed this construction. There was a slow, steady withdrawal over a period of six years. If there had been one large lump sum, it would be easier to identify. My guess would be the HELOC in early 2004 paid for the remodel, and the refinance at the end of 2004 consolidated all their debts at the time.
It looks like they used some of the HELOC money to pay for the “Great Wall of Irvine” that is shown in the property photo. How hideous. I wonder what they are trying to protect from the Mongolians?
Great Wall Of Irvine? Awesome!
Come on, AZDavidPhx, this is a nice fat pitch hanging over the center of the plate … show us what you got!
http://www.crackthecode.us/images/LoriAnn4951.jpg
Cool! Good work AZ.
I get surprisingly little hate mail.
…today’s featured song is dedicated to me — it comes from all the realtors, HELOC abusers, disgruntled homeowners, and anyone else who does not fully appreciate the public service we are providing here at the Irvine Housing Blog.
IR, your work is appreciated. Factual presentation of issues in real time in this environment is a huge service. The fact that you post some controversial issues and still receive “little hate mail” speaks volumes.
On one of them, I had several women from a support group relay a sob story to me attempting to justify the serial HELOC abuse of their friend. I replied that a group pity-party that enabled and justified their friend’s behavior was not doing her any favors. They were not impressed.
Any chance you could post this email exchange?
I have thought about it, but I don’t want to stir the pot any further. If they had confronted anyone else, they might not have received a response, but the special problem that justified their friends behavior is also a problem my family faces. Obviously, I did not think that problem justifies HELOC abuse.
Addicts will always find excuses for their dysfunctional behavior.
What I found particularly sad was that this woman’s friends were encouraging the behavior that was going to cause her to lose her house.
Awe come on IrvineRenter,
PLEASE post that email exchange. 🙂 🙂
Ah, the old “tear it down, rebuild, and charge a bundle” routine.
Nice wall in the front yard. About as inviting as a penitentiary. The only thing missing is some elegant razor wire.
Laymen will not know this, but the multi-purpose retaining wall shown in the property photo actually serves to keep out bank officials and town sheriffs from knocking on the door and evicting the owner after foreclosure proceedings.
Notice how there are three gates? To the naked eye they just appear to be three identical ways to enter into this Irvine stronghold. But actually behind Gate #1 is a laser sighted night-vision motion-sensing machine gun with a silencer, Gate #2 has a sneaky Viet Cong bamboo spike trap box, and Gate #3 features a trip rope that engages a 600lb swinging barrel (like the kind used by the Ewoks in Return of the Jedi to take out Imperial Walkers).
Aside from keeping out the authorities this “Great Wall of Irvine” also doubles to keep Repo men from stealing presents under the tree at Christmas time. No longer will big scary guys with shaved heads, dark glasses, Hells Angels tattoos and a TV crew ruin Christmas for Mrs. Clause and the little ones.
The Great Wall also serves as a US Gov. Class 1 Armageddon facility, which under IRS code 17 section 140C gives the owner a massive tax break every year (I asked my CPA). In the event of total war the US Gov. can convert this Class 1 property into a fortified Southern California regional embassy to conduction black operations.
Go ahead, laugh now at the so-called superfluous HELOC abuse exhibited by these owners during the bubble ride, but thanks to their strategic planning they can rest easy at night knowing that they will be safe and sound when Armageddon befalls us all!
Remind me not to try and sell you Girl Scout cookies, POIG…
CHILD’S VOICE
Hold it rah chair!
You men from the bank?
PETE
You Wash’s boy?
CHILD
Yassir! And Daddy tolt me I’m to shoot whosoever from the bank!
LoL That’s too funny.
The next time the NAR or CAR says “prices always go up,” refer them to their own report:
http://www.car.org/index.php?id=Mzg1MzE=
http://latimesblogs.latimes.com/laland/2008/06/freefall-califo.html
As I posted last week – I would love to find out what even one of these HELOC abusers did with the money. Just one.
Me too!!
Hummers
The real estate agent is an “unknown real estate agent” according to this site:
Margarita Gorbunova
http://www.homethinking.com/1813566-Margarita-Gorbunova-California-Gold-Realtors.html
Whatever happened to those eastern european scam artists that were part of the bubble? This woman is representing several different properties all over the southland. Smells kind of fishy.
$3000 monthly rent @ GRM160=$480k.
The neighborhood looks old and matured. A knife catcher probably can “steal” this one in the high $600s this shopping season.
No wonder S class and LS sales are way down this year – No more housing ATM.
Not only cars, but boats too.
http://www.bloomberg.com/apps/news?pid=20601103&sid=astWYYOlBCJA&refer=news
“Consumers’ “ability and desire” to buy boats as well as Brunswick billiard tables and fitness equipment has been reduced by a shrinking U.S. job market, surging fuel prices and declining home values, Chief Executive Officer Dustan McCoy said in the statement.
“We are not assuming that these pressures will abate any time soon,”
You can say that again Dustan.
Dow down 300+ points. Ouch!
That part of Irvine is old old old! Also, be prepared for NASCAR-like traffic noise from the 5 fwy and train noise from the blue-line that passes close by there. Sure hope they added good A/C because opening a window in this neighborhood means letting in a ton of noise!
That’s exactly what I was going to say. No way anyone who’s lived in irivne for even 6 months would pay asking.
Can anyone shed any light on why prices are so low in El Camino Real? Other than what caveat said, of course. The prices there seem like they are disconnected entirely from the rest of Irvine.
El Camino Real is one of the first villages built in Irvine and therefore one of the oldest (1971). Because of this some homes have been redone, rebuilt and completely untouched. In addition some homes back to the train tracks and some back to apartment buildings. When these homes sell they hurt the comps. With that being said, there is no M.R. or HOA and you can still get larger lots with yards and pools. It’s a good starter home that is the same price as a condo (no land) elsewhere…….
If they remodled, why are there no pictures of the kitchen or bathrooms? Aren’t those the first rooms most people remodel?
Ok..I have a stupid question. I’m confused about HELOC abuse stories, whee you show the losses for the lender and borrower. Doesn’t the HELOC abuser have to pay back the money the spent??? Why does the lender lose the HELOC $?
I just don’t understand how you can spend a loan based on your “old Equity” with out having to pay it back?
The house is the collateral for the loans. The assumption by the lender is that, if the borrower fails to pay a loan back, they can foreclose on the home and sell it for roughly the full amount of the loans. Ideally, the lender shouldn’t let the borrower take 100% of the value out of the home, since there’s going to be some overhead and additional costs in the process which will be incurred as a cost by the bank.
Anyhow, this whole system breaks down once the numbers become arbitrary. If the home is “valued” at $800k but can really only sell for $500k, the bank is going to be out $300k if someone has extracted all of the equity and the bank’s only recourse is to repossess and sell the home.
So people were just willing to pull out HELOC’s for play money, only to destroy their credit for the next 7 years?
I guess if the housing market dumps for the next seven years, that is a pretty wise move. Depending on how fast you can repair your credit I guess.
7 years doesn’t seem like a long enough time to punish for pulling off crap like this.
“7 years doesn’t seem like a long enough time to punish for pulling off crap like this.”
A reason to fire off nasty grams to our “senators” to let them know our sentiments about bailing people out.
To add (or clarify), in California, only purchase money mortgages are non-recourse – that is to say only mortgages issued for the purpose of purchasing the home are non-recourse (ie the lender cannot seek a deficiency judgment all they can do is foreclose and cut their losses). HELOCs are not non-recourse (since they were not issued for the purpose of purchasing the house) and the lender can go after the borrower for any deficiency after foreclosure. That is all the legal crap. The practical reality is seeking a deficiency judgment rarely pays off for the lender since the borrower is usually either bankrupt or insolvent so lenders rarely pursue them. The lenders F’ed by assuming “real estate always goes up”. OOPS.
What if the forclosed property is in a trust? Is your credit safe?
I would imagine this would be similar to buying something in a corporation. Unless the trust/corporation is a large and established entity, they will require a personal guarantee. Who ever signs the personal guarantee will be on the hook if the loan is not repaid. The lenders are stupid, but not stupid to give away money with absolutely no strings attached.
“The practical reality is seeking a deficiency judgment rarely pays off for the lender since the borrower is usually either bankrupt or insolvent so lenders rarely pursue them.”
Historically, this may be true. However, with the large volume of HELOC abusers, I suspect an efficient industry to develop around the pursuit of these abusers; probably staffed with ex-mortgage people!
“On Redfin: 23 days”
Who has a Christmas tree up in June…
Kevin:
You have good eyes. I swear I did not see it, and I do wear glasses:-)
D’oh ! Good catch Kev.
“They were not impressed.”
ROTFLMAO
good, drive the market down and bring in more supplies! maybe the mess is too fvcked up, we’ll see pre-2000 prices. there are still tons and tons(70%+ ?) of sellers in denial mentality thinking some1 would buy their 3/2 for 550k while the lowest offerings are now seeking low 300k range. let the storm rage! your pain is my gain. I would prefer stronger and faster. two three years ago when i was out of college, I thought I would never be able to afford a house. now it seems those home owners were enslaved and i am in good shape to save a big chunk of down payment and get a good price soon.
“When the tide goes out, we find out who’s been swimming without a bathing suit” ~ Warren Buffett
“Question of the day: Who was acting more foolishly, the lender or the borrower?”
I vote for the lender.
Also, at least there is some decent furnature (other than that couch) in this home. Many of these homes look like their owners are complete paupers after paying for their 5x income mortgage.
I’d say the borrower. Banks control this country…and the world. These schemes are created throughout history.
The banks are not “hurting”. They knew all along what the consequences would be.
Everytime we have a bubble, the banks win. The wealth is re-distributed. It is never destroyed.
Don’t you understand why our schools don’t teach finance or economics?
For now, I would vote for “lender”. I will immediately switch that vote the minute a massive “Bail out the Banks Bill” gets passed by Congress.
Interesting sales in the neighborhood. 3 of the 4 in the area are rebuilds.
Still, gotta love those sales prices, judging by the one that isn’t rebuilt, they didn’t add a story to the home.
I’ll say only one more thing. “The house was purchased on 5/1/2001 for $326,000”
That was seven years ago and only 40% of today’s asking price. It should start making it clear how far prices really still have to fall.
I don’t think its fair to look at 2001 price as that was for a house that doesn’t ezxist anymore. It looks like a full rebuild or remodel. I do agree that this will fall but to use the 2001 price isn’t accurate.
Then look around the corner at Comet St. http://www.redfin.com/CA/Irvine/14722-Comet-St-92604/home/4664569
1999 at $219K. For sale at $790K.
Sorry, but remodeling a 40 year old house is what get’s you the inflation hedge.
I think Comet is the same situation. It’s a 2-story in the listing photos but a 1-story (with a pile of building materials out front) in the Google streets view on the same page.
I loved the write-up today. Everyone seems to have a fantastic reason for their heloc abuse; sudden phantom illnesses, job lose (may be truth for the brokers), more BS sicknesses for family members, claiming $150k spent in upgrades when the actual number is much closer to $20k.
However, I suspect the truth is that 99+ percent of the above are lying to justify tapping-out their home atm because they expected there would always be a bigger fool to come along and pay for their spending spree. Their lies are endless.
I have absolutely no sympathy for this, none whatsoever.
Wait, my friend! The biggest fools yet to come to rescue these $%#@! irresponsible abusers are our members of congress. They are about to pass a bill which is going to do just that.
Talking about birds of THE SAME feathers!
If that happens, then we deserve everything that is coming to us. Job loses, starvation and who knows what. China is going to get us!
I totally agree with you. Where is the personal responsibility? Did these folks not understand that one has to have the financial means to pay off their debts?
We bought our home in 1993 and spent LESS than we were told we could qualify for. About 6 years ago, we took out one VERY SMALL heloc for some flooring upgrades. It never occurred to us to use the $$$ for other purposes, and we have since paid off the heloc. We would never risk losing our home for silly status upgrades, cars, cosmetic surgery, etc.
Where has common sense gone?
The listing price history on Redfin is interesting:
Jun 02, 2008 $850,000
Jun 12, 2008 $800,000
Jun 18, 2008 $775,000
Jun 21, 2008 $750,000
Dropping $5K per day
I’m just a hard hearted SOB, but I would ask any abuser, whatever her/his story, just one question: What would you have done in the same situation if your house didn’t resemble an ATM?
As to who’s the greater fool, that would be the lenders of course. They’re the ones out the cash. Oh wait, they had a plan for all this – bribing Congress to bail them out when the bubble collapses. So I guess the greater fool is really all of us taxpayers.
Sadly,
I don’t think anyone in the world has respect for our monetary system. Not the banks, wall street,foreign countries, citizens, and most of all our own government.
You’ve just summed it all up.
We the tax payers are the greatest fools and losers in this debacle.
Every body else is walking out of this, happier, wealthier than ever.
Banks, lenders, irresponsible homebuyers, heloc abusers, re investers, and …. all have nothing to lose.
because there’re already the biggest losers, us, the US taxpayers, as willingly and as naively as ever.
Unless we can all start a revolution, to throw all of the bums out.
To start cleaning up the system.
But I doubt it.
We are too chicken to do anything…(sorry to you all real chickens out there 🙂 )
We are all walking with our tails (if we have them) in between our legs!
We are easily manipulated, used, and slaughtered!
It is not wise to save! You deprive yourself all your life to save as much as you can while the Heloc abusers spent, lived like a king and got bailed out by the “Saving Tax payer.”
Something is [b]VERY WRONG[/b] here. It can be fixed if we let our elected officials know how we feel about the bailout.
That is my question as well. They have an excuse for why they HAD to “borrow” against their homes equity. But if you didn’t have the so called equity to “borrow” what would you have done? The truth is that they never thought they would have had to pay it back, prices always go up…right?
Anybody else looking at the Google street level maps photos and thinking “ouch”.
Yes, I was thinking that it was a pretty decent looking house from the realator photo. Then I scrolled down and said whoa!
OK, I don’t get it. What’s so bad about the rest of the street? Looks like this might be the nicest place on the street, but it’s exactly in the ghetto.
Their front street neighboor has 2 piles of construction material outside sitting on the frontyard, I guess…she doesn’t want to be left behind and is “Keeping up with the Joneses” even though they are BK.
HA HA
“Who was acting more foolishly, the lender or the borrower?”
In general, you’d have to say the lenders were the fools. They’re the educated parties specialized in risk underwriting. The risk part of the equation was completely ignored for a few years.
Borrowers on the other hand, were told repeatedly by the media that “housing prices never go down.”
But in these HELOC abuse cases, the foolishness is divided evenly. What’s your plan when you take out a pay-option ARM? At some point, you will need to sell your home, and then what? The short-term thinking amazes me. But then again, I think I’d be much happier if I worried a lot less about the long-term…
Wow, such a shiny roof! Did it get a wax job?
Too Cool,
I just noticed Redfin has linked Google street view to their listings. That should be quite the eye-opener in some cases.
I wonder how often they update the images. You could really have some fun fcking with a neighbor who’s trying to sell. I have a feeling it’s probably a year or so between updates though.
Some of the google maps are quite old. For instance, a week or so ago a Turtle Ridge house that had been burned down was featured — the lot was for sale. But the Google map showed a house on the lot. I think those fires were at least a couple of years ago.
I mean Turtle Rock.
I am just so pissed right now. My industry did not benefit from the perpetual real estate scam of the 2000s so I did not get the chance to take any money and run. Now the banks are getting clobbered, no ones buying anything, credit is getting tight and inflation is out of control.
WTF did these “experts” think would be the consiquence of throwing trillions of dollars at average people? This scenerio was as obvious to me as the nose on Greenspans face, unfortunatly they started riding the free money tiger and could not bring themselves to turn the spigot off before it got too late.
Amazingly we still have morons that think they are going to get 2007 prices. My wife and I did our every 6 month open house tour this weekend and I still cant believe the WTF prices and smiling realtors to go along with them.
This country needs a solid recession without government intervention. Just let the “free market” take care of itself like you did when it was a scam.
Yes I am bitter, this debacle is going to hurt everyone, not just the ones that participated in it. As a matter of fact, they will be the ones that get bailed out of their hardship while I again pay the bill.
It is not wise to save! You deprive yourself all your life to save as much as you can while the Heloc abusers spent, lived like a king and got bailed out by the “Saving Tax payer.”
The abusers are laughing all the way. I have come across a few of these people and the worst thing is that are nonchalant about this whole process. They are acting if a foreclosure is nothing big, they are just moving on.
Makes me sick how irresponsible these abusers are.
Something is [b]VERY WRONG[/b] here. It can be fixed if we let our elected officials know how we feel about the bailout.
The problem is can you really save any money? Inflation is and has been a monster, I dont care what the “core”reading say, food, health care, energy and houseing have been skyrocketing for all of the 2000’s. Sure you can get a good deal on a 52” plasma, but how many of those do you need?
So what do you do? Put your money in a savings account and lose money against inflation?
Put in mutual funds or ETF’s and give up all your earnings in taxes and fund fees?
Invest in individual stocks only to have some scandal or another wipe you out?
I dont see how it can get fixed, elected officials pander to the rich as well, who do you think gives them all their money to run campaigns?
Jut ask Mozillo, is that ass in hand cuffs yet?
The days of getting a safe, secure job, working at a company for 30 years, enjoying your retirement and getting a pension are history. It seems that you either play the game or you end up being a slave to the system. Unfortunately for most, they don’t have the resources, education, or desire to play by the “new rules” to keep themselves above the fray. Robert Kiyosaki is one guy who has been preaching this for a few years now, as I’m sure most here have read some of his literature. While he certainly doesn’t break down specific strategies, his general message seems to ring true: you have to educate yourself, and you have to play within the rules that the rich have defined. You need to be the one providing housing, not the one looking to be housed. You need to be the seller of your own company’s stock, not the buyer. It’s a difficult to bridge the gap once you get trapped in the rat race. The government is obviously showing what hand it is continuing to play when it comes to its role in financial stewardship.
Actually, I think the old rules are just about to come back into play.
Lifelong employment: yeah, I’ll offer it. First to partners, then to employees as we acquire them. I don’t yet understand how to build pensions that work, but I do know they will be based on assets with real value.
Building my war chest now. ~$180k and growing.
My father came of age during the Great Depression. He told me he was never out of work. There was always something to do for the man who wanted to work.
U PAY OFF YOUR HOUSE.
….IF you bought before the bubble 😉
“It can be fixed if we let our elected officials know how we feel about the bailout.
”
uh, if you TRULY beleive that, I have a bridge to sell you.
Our “elected” officials are BOUGHT and PAID for, and they dont give a damn what we (US sheeple) think.
So, in other words we are screwed! Lets us roll over and give the elected officials better access to you know what.
People have to march up and take control of the local FED Banks.
Either we save the Dollar.. or we start a new one.
I like this call to action!
It may not be too late to throw all of them out of office. We pay for their service, don’t we. Collectively, we’re much stronger!
That is the key. How do we act collectively?
What what (In my butt?)
https://www.youtube.com/v/oyWvhnIEuYg&hl=en
Let me try this again….Here is the link if this doesn’t work either:
https://www.youtube.com/watch?v=oyWvhnIEuYg
I have written before about capitulatory selling. Today we saw some in the equities markets. Don’t be surprised if we see a short-term rally off today’s close.
I know there are words for what happened today such as capitulatory, but I tend to think things in the financial markets are a lot more orchestrated then what people think.
Check out this commentary about selling your house in this horrible market. It’s written by Janet Siderman, who’s a pretty big money Malibu realtor.
http://www.greenfaucet.com/real-estate/tips-for-selling-your-home-in-this-market
Main points: first impressions are huge, market history doesn’t matter anymore, and it’s a buyers market.
I feel sorry for anyone selling right now.
Hang in there man. Hate the haters, not the bloggers!
I’m getting extra doses of schedenfreude with all the Hummers, Escalades, and yes those dark windowed Bimmers. Where else did they come from but HELOCS?
So, I listen to KLOS. I hear ads for Nick Alexander Imports BMW dealership all the time. The BEST ones are the ones that have been on for a week…
“The 2005 vintage was a great year for BMWs, and now we have many of these great cars to sell.”
Anyone yet figure out WHY an LA BMW dealer has a ton of 2005 models to resell?
Those dark windowed Beamers were LEASED with HELOC money….and people can’t afford the payments any more.