Empires rise and fall. The Great Housing Bubble witnessed the creation of many real estate financial empires. These are now starting to crumble.

Today’s featured property is one of 15 owned by the same man. Will his empire survive?

Asking Price: $1,219,900

Address: 30 Foxboro, Irvine, CA 92614

{book2}

Everybody Wants to Rule the World — Tears for Fears

All for freedom and for pleasure
Nothing ever lasts forever
Everybody wants to rule the world

Empires are created and destroyed every day. The Egyptians created an entire culture around the idea that humans could create something permanent and everlasting. Of course, even the Pharaohs turned to sand.

This fact doesn’t stop many of us from trying. Building political and financial empires is a practice as old as humanity itself. The drives of the ego for power and pleasure compel many to forego more meaningful and spiritually fulfilling pursuits. People who pursue these goals think they are creating something significant for their families, yet these people often die isolated and lonely. The only evidence of their existence is a group of spoiled heirs waiting to pick over the bones and to consume the remains of the emperor’s financial carcass.

The Seven Deadly Sins and the Four Last Things

Building a financial empire is not an inherently evil thing. Much of the progress in our capitalist system comes through the invisible hand of capitalism guided by the greed of individuals. Problems come with when the acts of individuals building their financial empire have negative consequences for other individuals in society.

The housing bubble is a classic example of people building financial empires at the expense of other individuals and families. As people buy up multiple properties using loose financing and unstable loan terms, prices are driven up and ordinary citizens are “priced out” of the real estate market. This would not have occurred had lenders not enabled would-be Donald Trumps to acquire multiple properties using liar loans, Option ARMs, and other dubious mortgage techniques.

There is no overriding societal benefit obtained by allowing people to create these unstable real estate empires. In fact, there is a large societal cost associated with bailing out lenders and speculators who created this mess. Also the individuals and families caught up in the mania are going to pay a tremendous emotional and financial price for their mistakes as the bubble deflates. There are few identifiable societal benefits and many identifiable societal costs.

The conventional wisdom among property owners in the Irvine market today is they must wait out this “temporary” downturn in the market and the economy. It is a comforting delusion. It is natural to maintain such denial particularly when you have no other viable options.

What else can these people do? They’re underwater so they can’t sell and they can’t refinance, they are facing a loss of income, and they have reached the limit of their available credit lines. Realistically they have only two options: hope and hold on, or give up and lose their financial empires. Given these two realistic alternatives it is not surprising that most are choosing to hope and hold on. Unfortunately, since this was a financial mania, both roads lead to the same destination: financial disaster. Everyone capitulates to market forces in the end.

Theres a room where the light wont find you
Holding hands while the walls come tumbling down
When they do Ill be right behind you

Today we are going to look at more than just a single featured
property. Today we are going to examine one man’s entire financial
empire. There is only one property this man owns that is for sale
today, but it is one of 15 highly-leveraged properties this man owns.

Please do not refer to this owner by name in the comments. It is not difficult to figure out who owns these properties, but I am not out to humiliate anyone. He is one of many who did the same thing. We can learn from the behavior without making it personal.

{book1}

Asking Price: $1,219,900

Income Requirement: $304,975

Downpayment Needed: $243,980

Monthly Equity Burn: $10,165

Purchase Price: $1,000,000

Purchase Date: 6/2/2004

Address: 30 Foxboro, Irvine, CA 92614

IMMACULATE HOME AND WHAT AN OPPORTUNITY TO BUY IN WOODBRIDGE’S MOST
DESIRABLE NEIGHBOURHOOD LANDING 2 BY J M PETERS, HOME WAS REFURBISHED
WITH APPROX 1500SQ FT OF TRAVERTINE ON GROUND FLOOR, REMODELLED ISLAND
KITCHEN WITH GRANITE COUNTERS, NEW KITCHEN CABINETS, NEWER APPLIANCES
AND BUILT-IN FRIDGE. DOWNSTAIRS BEDROOM & BATH IS ALSO SET UP FOR
OFFICE. PLANTATION SHUTTERS, DESIGNER COLOURS, TANKLESS WATER HEATER,
ELECTRIC AWNING OVER KITCHEN WINDOW, EXTRA LARGE YARD FOR
NEIGHBOURHOOD. STEPS TO LAKE, TENNIS COURTS AND SPRINGBROOK ELEMENTARY

The Financial Empire

There are a couple of key numbers at the bottom of the table that are worth noting: 1. This gentleman purchased $12,144,000 in real estate at inflated bubble prices, mostly in 2004, 2005 and 2006. 2. He owes $12,240,200 on these properties due to a high degree of initial leverage and multiple refinances. It is hard to evaluate what these properties are worth today as some are still above water and some are not. Also, the actual loan balances are higher than what is reported here. I would estimate he is about $2,000,000 underwater, and he will be worth a negative $5,000,000 before prices stabilize.

If you look at the properties that he has refinanced and the mortgage debt is greater than the original purchase price, excluding his downpayments, he has extracted $1,675,000 in mortgage equity withdrawal. Some of this was likely used to acquire other property. There is no way to know. Given the amount, you have to suspect some of it was used to fuel consumer spending. After all, he is rich. He should be able to spend like a rich guy, right?

Of course none of this is going to matter to this guy because almost all of his first mortgages are Option ARMs with 1% teaser rates. His bets are pure speculation with a minimum of ongoing debt service. All these Option ARMs are going to explode over the next couple of years. He will be underwater, so he will be unable to refinance. The rent on these properties only covers about half of his ownership costs, so he will not be able to survive as a floplord. His equity curve is the worst possible combination of market forces and increasing costs. In short, he is totally screwed.

So what do you do if you are in this guy’s shoes? Based on what he does for a living, he certainly is not going to make enough to service $12,240,200 in debt. Perhaps if he can sell off some of his properties that he believes are not underwater, he can hope to delay the inevitable. That explains today’s WTF listing. A floorplan identical to this one just sold at 4 Rainstar for $920,000. Perhaps this neighborhood commands a $300,000 premium for the exact same product. Somehow I doubt it.

If this property sells for its asking price, and if a 3% commission is paid to the buyer’s broker, the total gain on the sale will be $183,303. He will eliminate $950,000 in debt which will at least start chipping away at the $12,240,200 mountain. Of course, there is little or no chance of this property selling for this price, but the listing will maintain denial a little bit longer.

Lets keep an eye out for the other 14 properties. We will see them on the market soon enough.

This speculator is not alone. Many people bet that prices would go up forever and that they could serial refinance from one Option ARM to another and service their debt endlessly at 1% interest rates. The folly is easy to indentify in hindsight. For some it was easy to identify in foresight.

This system was a Ponzi Scheme. Financial prosperity cannot come at the cost of ever-increasing debt. Contrary to popular belief, creating and sustaining financial Ponzi Schemes is not sophisticated financial management. Many individuals, corporations and government regulators came to believe complicated financial structures are something other than unsustainable Ponzi Schemes. They were sadly mistaken.

Prosperity is obtained through retiring debt and increasing cashflow. Buy cashflow and retire debt: it is a simple formula. Using complex debt structures and relying on speculative gains may result in temporary prosperity, but it is all an illusion. It is an illusion that is crashing down around us all right now. This is not an abberation or some freak, random occurrence. This crash and the resulting termoil were the inevitable results of bahaviors and practices that built our house of cards.

I hope we can all learn the lessons of the Great Housing Bubble and not repeat them in our own lives. If the writings on this blog prevents even one person from repeating the mistakes we have seen here, it will all have been worthwhile.

{book7}

Welcome to your life
Theres no turning back
Even while we sleep
We will find you
Acting on your best behaviour
Turn your back on mother nature
Everybody wants to rule the world

Its my own design
Its my own remorse
Help me to decide
Help me make the most
Of freedom and of pleasure
Nothing ever lasts forever
Everybody wants to rule the world

All for freedom and for pleasure
Nothing ever lasts forever
Everybody wants to rule the world

Everybody Wants to Rule the World — Tears for Fears

What will be the enduring legacy of market price supports and HELOC abuse? Will there be valuable lessons learned, or have we tainted the next generation by policies loaded with moral hazard?

Today’s featured property is yet another HELOC abuse case where they more than doubled their mortgage, and now they are walking away.

Asking Price: $499,000

Address: 91 Legacy Way, Irvine, CA 92602

The Legacy — Iron Maiden

But do you think that they care
They benefit from death and pain and despair

Have you ever stopped to ponder the issue of moral hazard? At its most basic, moral hazard is any change in behavior that comes about when people believe their actions have no consequences.

The housing bubble was built on moral hazard. None of the parties to the real estate transaction believed they had any risk. Borrowers and lenders both believed real estate always goes up, so there was no market risk. Some savvy borrowers realized that 100% financing was transferring all the risk to the lender, so they risked nothing other than their credit score. Most lenders believed they were transferring the risk either to investors or counterparties to their credit default swaps. The people assuming these risks ran their fancy actuarial analyses and determined the risk to be minimal. Nobody grasped the systemic risk that took down the entire house of cards.

The moral hazard of investing in California real estate has gotten worse with each subsequent real estate bubble. Prior to our first bubble in the 1970s, real estate prices were around three-times income just like the rest of the country (that would be like a $275,000 median in Irvine today). The fallout from this first bubble ruined the fortunes of many, but it did not wipe out everyone. The people who profited from this bubble spread the word of riches in California real estate — if you know how to play the game.

Prices never did fall back down to pre-bubble fundamentals. At three-times income, there is a premium for rental (as there should be). Once people equated ownership with investment, people concocted an ownership premium, and a new era dawned.

The bottom of that first bubble saw price levels reach four-times income. This is the approximate level of rental parity in the market. As prices found support here in the mid 80s, it was only a matter of time before the toxic beliefs spawned by the moral hazard of the first bubble inflated the next one.

{book2}

The bubble of the late 80s pushed prices up even higher, and when it collapsed, it resulted in widespread economic malaise, across-the-board declines in home prices, and more survivors who profited from the bubble. As interest rates declined during the 90s, prices became artificially supported at higher levels, and the decline was blunted. If interest rates had not declined 30% from 1990-1997, the overall market declines almost certainly would have been greater.

The bottom of that second bubble also saw price levels reach four-times income. With the lower interest rates, this was likely an improvement over rental parity in most markets. There was an overshoot of fundamentals caused by adverse market psychology. Everyone sobered up from kool aid intoxication.

I do not believe market bubbles are inevitable, but since California has a history of this behavior, it is prone to fall victim to its Siren’s Song. The State is a bit like an alcoholic: one drink of kool aid and California goes on a bender. In the late 90s, the markets witnessed several years of sustained appreciation. Many were still skeptical, and in 2000, there were open grumblings about prices being too high. They were. When they kept going up from here, we saw all the pent-up beliefs of kool aid intoxication get released on the populace. The Great Housing Bubble began to inflate.

The moral hazards of this latest housing bubble abound. People who bought between 2001-2003 paid too much. Right now, these people believe they are financial geniuses. If the market is not allowed to take its natural course down to 2001 price levels, people who overpaid at the beginning of the bubble will be imbued with moral hazard. They will not be punished for their mistake. We will create a new generation of people who believe in the myths of California real estate, and we will inflate another housing bubble — assuming of course that the lenders enable it.

In my opinion, all of the policies coming out of Washington that seek to prop up a flagging market only serve to create moral hazard. Another generation will have to endure a housing bubble complete with its commensurate fallout recession. If prices do not crash, if everyone who participated is not punished for their foolishness, we will almost certainly do this again. Perhaps Washington will put regulatory controls in place that prevent lenders from enabling this behavior, perhaps these regulations will be effective, and perhaps they will not be repealed before kool aid intoxication is purged from our collective memories. Perhaps not. I don’t have much faith in Washington getting it right.

We seem destined to live in fear
And some that would say Armageddon is near
But where there’s a life while there’s hope
That man won’t self destruct

Asking Price: $499,000

Income Requirement: $124,750

Downpayment Needed: $99,800

Monthly Equity Burn: $4,158

Purchase Price: $299,000

Purchase Date: 7/27/1999

Address: 91 Legacy Way, Irvine, CA 92602

neighbourhood?

washlet; wash-toilet. You have to check out this website. It is hilarious. I had no idea what a washlet was…

Today’s featured property is a profile in HELOC abuse. Look at what these people did:

• This property was purchased on 2/27/1998 for $299,000. The owner used a $239,200 first mortgage and a $59,800 downpayment.
• On 12/12/2002 the owner opened a HELOC for $30,000.
• On 6/3/2004 he refinanced with a $472,500 first mortgage.
• On 3/15/2006 he refinanced with a $576,000 Option ARM first mortgage.
• Total property debt is $576,000 plus negative amortization.
• Total mortgage equity withdrawal is $336,800 including his downpayment.

If this property sells for its asking price, and if a 6% commission is paid, the total gain on the property will be $170,060. The total loss to the lender will be $106,940 plus negative amortization. Lenders are stupid.

How are these people being punished? Is the lack of consequences for their behavior also creating moral hazard? Yes, it is.

I argue that the greatest moral hazard to come from the Great Housing Bubble is the enabling of HELOC abuse. Think about how desirable HELOC abuse makes California real estate. If you buy property in a state with price volatility as extreme as ours, you have the opportunity to convert this equity appreciation to cash and spend it with little or no repercussion for your activity. The greater the amount of volatility, the more money you can extract from your lender and spend. Why would anyone own in Kansas where prices are stable when they could own in California where they can live the good life off their houses?

The kool aid intoxication from appreciation created by the previous bubble helped inflate this last bubble. Add to that the ability to convert this appreciation to cash, and you have a recipe for major kool aid addiction. If previous bubbles brought us kool aid that is as addictive as cocaine, this last bubble with its refined ability to access the appreciation through HELOCS is as addictive as freebasing crack.

So what is the natural result of all the moral hazard we have created? We now have a population of kool aid intoxicated fools
waiting for the next credit cycle to enable them to bid up house
prices, create false equity, and convert that equity to cash so they
can spend it like the entitled, Nouveau riche they have become…

Just let me buy my house first.

{book5}

We seem destined to live in fear
And some that would say Armageddon is near
But where there’s a life while there’s hope
That man won’t self destruct

Why can’t we treat our fellow men
With more respect and a shake of their hands
But anger and loathing is rife
The death on all sides is
becoming a way of life

But if they do stop to think
That man is teetering right on the brink
But do you think that they care
They benefit from death and pain and despair

The Legacy — Iron Maiden

The few discretionary sellers out there are still living in a bubble fantasy world. Short sales and REOs in their neighborhood are forcing them to face reality. I doubt they like it. HELOC abuse is everywhere, and wherever the problems of excessive debt surface, prices fall.

There are two featured properties that are side-by-side neighbors. One is distressed, and one is not. These properties are nearly identical, except for the $315,000 difference in their prices. The distressed property is also a 2003 rollback.

Asking Price: $1,160,000

Address: 31 Lynnfield, Irvine, CA 92620

{book3}

Congratulations, I Hate You — Alesana

Suffer alone in emptiness
I lust to see you swallowed by the mess that you left in your wake

Occasionally, you will see people interviewed where they hide their personal greed by claiming they were unwilling to lower the price of their home to sell it because “they didn’t want to upset the neighbors.” This is hard to believe because these people were about to sell their home. They were not going to be neighbors anymore.

The crash of the housing bubble is stripping away these pretenses. Not long ago I wrote a post on The Difference Distress Makes. In it I showed two very similar properties with a 50% price differential. The only reason for the difference is the financial distress one of the owners is in. Today, I have another example of this phenomenon. This shows the previous post is not a special case, but it is typical of the price differentials that occur when sellers become motivated.

In the early stages of a price decline, particularly in residential real estate, bids decline before asking prices do. This widens the gap between bids and asks. The result is a dramatic decline in transaction volumes. Bidders determine where the market is. If tight financing terms reduces the amount people can finance and ultimately bid for property, prices eventually must fall to reach these support levels.

In subprime areas, the large number of foreclosures due to the ARM resets has forced properties onto the market, so pricing in these areas are reflective of the new level of market bids. However, in areas like Irvine where our resets are just now happening, the influx of must-sell inventory that pushes prices down to the new support levels is somewhat delayed. This is why you see significant transaction volumes in the subprime markets and very light transaction volumes in higher priced areas. (Has anyone else noticed the uptick in inventory?)

Don’t count on lenders loosening their standards and allowing borrowers to increase their bids any time soon. They just lost a trillion dollars doing that. If it were not for the buyers with very large cash downpayments who are still active, we would have almost no transaction volume at all.

{book4}

So let’s examine these two properties. Can you spot the house worth more than $1,000,000 in this photo? Oh wait, it’s Irvine, they all are.

These two houses for sale are side-by-side neighbors. One of them is 400SF larger than the other, but the smaller house is a corner lot with an extra bedroom. Neither one has a pool. In fact, these properties are so similar that they were originally purchased from the builder on the same day, December 30, 1998. The original purchase prices were $478,000 and $468,000 respectively. Which one do you think currently warrants the $315,000 premium over the other?

Asking Price: $1,160,000

Income Requirement: $290,000

Downpayment Needed: $232,000

Monthly Equity Burn: $9,666

Purchase Price: $478,000

Purchase Date: 12/30/1998

Address: 31 Lynnfield, Irvine, CA 92620

{book5}

Taste your vanity and it’s sweet bitterness
As you hide behind your veil of my stolen hopes and lost dreams

This owners of this property behaved as typical Irvine homeowners. They doubled their mortgage and pretended to be richer than they are, but they did not spend their entire home. If they sell now, they still have some bubble equity they can convert to cash.

• This property was purchased on 12/30/1998 for $478,000. The owners used a $382,000 first mortgage and a $96,000 downpayment.
• On 5/20/1999, they liberated some of their downpayment equity with a $45,000 second mortgage.
• On 5/23/2000 they refinanced with a $538,000 first mortgage and a $26,900 stand-alone second stripping out their entire downpayment plus $86,900.
• On 2/5/2001 they refinanced with a $496,000 first mortgage and paid back a significant amount of borrowed money. Remember, these are the conservative borrowers who are not a short sale.
• On 9/27/2002 they refinanced with a $530,000 first mortgage.
• On 8/28/2003 they refinanced with a $533,000 first mortgage.
• On 6/23/2004 they opened a HELOC for $100,000.
• On 3/2/2005 they refinanced with a $650,000 first mortgage.
• On 1/9/2006 they took out a stand-alone second for $30,000.
• On 5/31/2006 they refinanced with a $678,000 first mortgage.
• On 4/6/2007 they opened a stand-alone second for $69,171.
• On 3/31/2008 they opened a HELOC for $120,000. There is not way of knowing if they took it out and spent it.
• Total property debt is either $747,171 or $867,171 depending on the HELOC.
• Total mortgage equity withdrawal is either $365,171 or $485,171.

Remember, these are typical Irvine homeowners who bought before 2002. From what I see:

1. There is the rare, very conservative borrower who has not added to his mortgage,
2. then there is the conservative borrower (relatively speaking) that has added to his mortgage, but did not get carried away,
3. then there is the average Irvine homeowner who doubled his mortgage, and finally
4. there is the HELOC abuser who more than doubled his mortgage and is losing his home.

This is what I see every day when researching these properties.

Asking Price: $845,000

Income Requirement: $212,250

Downpayment Needed: $169,000

Monthly Equity Burn: $7,041

Purchase Price: $865,000

Purchase Date: 9/23/2003

Address: 33 Lynnfield, Irvine, CA 92620

This homeowner also behaved like a typical Irvine resident except that he bought later and borrowed more, so he is a short sale (REO in waiting).

• This house was originally purchased from the builder on 12/30/1998 for $468,000.
• The property was purchased by the short seller on 9/23/2003 for $865,000. The owner used a $650,000 first mortgage, a $85,000 second mortgage, and a $130,000 downpayment.
• On 1/25/2007 he refinanced with a $937,500 first mortgage.
• In 2/9/2007 he opened a HELOC for $187,500. Let’s assume he took it out and spent it. I don’t know for sure.
• Total property debt is $1,125,000.
• Total mortgage equity withdrawal is $390,000 including his $130,000 downpayment.

If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $330,700.

So there you have it. One semi-responsible borrower hoping to squeeze a few more bucks out of their property before they dump it, and one irresponsible borrower who got his $390,000 out of the bank so he is walking away. The one common thread they share is the huge amount of mortgage equity withdrawal. Of course, they share this with most Irvine property owners who are listed for sale today.

The discretionary seller is living in some kind of WTF fantasy world where house prices go up 120% in 10 years. The short seller has to sell, so they are getting whatever they can for the property. This is the mechanism that will cause prices to drop quickly once the high end REOs start to enter the market in larger numbers. We can track the influx of future REOs by simply scanning Redfin for short sales. We know that short sales are rarely approved, so they are really pre-foreclosure advertisements. If you see a short sale you want, just wait 6 to 9 months, and buy it as REO. They are coming.

{book6}

No one ever said that life was fair and I’m not saying that it should be
So knowing that you are what you want to be and I’m not comes as no surprise
But don’t expect me to be happy for you
And don’t smile at me and tell me things will work out for me too
I don’t want your pity… I hate your pity

Taste your vanity and it’s sweet bitterness
As you hide behind your veil of my stolen hopes and lost dreams
… You took them all…
I watched you steal my thoughts and had to see you smile

Congratulations, I Hate You — Alesana

Are you curious how people spent their HELOCs? I am. Let’s see if anyone will share their experiences.

Since this is turning into HELOC abuse week here at the IHB, I
thought I would share yet another one (They are not difficult to find). It is a high-end property in Turtle Ridge with a WTF asking price.

Asking Price: $1,250,000

Address: 53 Sweet Bay, Irvine, CA 92603

Sweet Surrender — Sarah McLachlan

It doesn’t mean much
it doesn’t mean anything at all
the life I’ve left behind me
is a cold room
I’ve crossed the last line
from where I can’t return
where every step I took in faith
betrayed me
and led me from my home

The lure of free money led many people astray. They all had faith in
the Gods of market pricing and credit availability. There was an
absolute certainty among most people that real estate could only go up,
and opportunities to serial refinance large debts would always be
there. Each refinancing added to their troubles until they reached a
point of no return where they could not possibly pay back the money
they borrowed. Every step they took down this road was met with
betrayal, and it led them away from their homes. Now these people sit
in their rental pondering the life they left behind wondering if they
will ever see that free-money lifestyle again. They won’t.

One of the great things about an anonymous blog is that people can
tell the truth if they want without fear of embarrassment. I would like
to take advantage of that today and ask people to admit to some of the
items they spent HELOC money on.

Earlier this week in the comments, I mentioned that I have been
contemplating writing another book. I am tentatively titling it House
Spenders: Mortgage Fraud, Predatory Borrowing, Refinance Abuse and
other Cautionary Tales from The Great Housing Bubble. I think the title
and tag line describes what I want to accomplish. I will recycle some
of the material from The Great Housing Bubble, but I plan to add a
discussion on the morality of walking away from debt, an analysis of
personal Ponzi Scheme financing, and up to 100 HELOC abuse posts from
the IHB (I feel I need a lot of them to people do not think it is a
rare and isolated occurrence).

I have been discussing my idea for my next book with my wife, and
she suggested that I get some interviews or comments from people who
really did spend money they got from their house. We speculate a lot on
the blog about what people spent it on, but we have few first-hand
accounts. With that preamble, I ask you,

On what did you spend your HELOC money?

You take me in
no questions asked
you strip away the ugliness
that surrounds me
(who are you?)

{book}

Since this is turning into HELOC abuse week here at the IHB, I
thought I would share yet another one (They are not difficult to find).

Asking Price: $1,250,000

Income Requirement: $312,500

Downpayment Needed: $250,000

Monthly Equity Burn: $10,416

Purchase Price: $1,025,000

Purchase Date: 8/27/2004

Address: 53 Sweet Bay, Irvine, CA 92603

Note the feeble attempt to justify this asking price by pointing out the amount spent on upgrades. Upgrades from what? Did this woman spend over a million to buy the property and then spend $500,000 improving it? You could tear the house down and rebuild it for that.

• This property was purchased on 8/27/2004 for $1,025,000. (Does this look like a million dollar property to you?) The owner used a $575,648 first mortgage, a $346,000 second mortgage, and a $103,352 downpayment.
• On 12/7/2004, barely two months later, the property was refinanced with a $942,000 first mortgage pulling out about $20,000 of the downpayment money.
• On 1/31/2005, the owner opened a HELOC for $228,000. She did not take out much of it.
• On 8/24/2005, she refinanced with a $1,000,000 first mortgage.
• On 10/3/2006 she opened a HELOC for $440,000. She must have taken out a significant amount because this property is listed as a short sale.
• Total property debt is $1,440,000
• Total mortgage equity withdrawal is $518,352 including her $103,352 downpayment.

So now we have another Turtle Ridge dreamer thinking her house has appreciated by 10% since 2004. I guess Turtle Ridge is different because the rest of Irvine is at or below 2004 pricing. Wells Fargo is hoping that is the case. This “conservative” lender is the brilliant party behind the $440,000 HELOC on this property. If it sells for its asking price (not a chance), and if a 6% commission is paid, the total loss to Wells Fargo will be $265,000.

As a reminder, our question of the day is:

On what did you spend your HELOC money?

{book}

It doesn’t mean much
it doesn’t mean anything at all
the life I’ve left behind me
is a cold room
I’ve crossed the last line
from where I can’t return
where every step I took in faith
betrayed me
and led me from my home

You take me in
no questions asked
you strip away the ugliness
that surrounds me
(who are you?)
are you an angel?
am I already that gone?
I only hope
that I won’t disappoint you
when I’m down here
on my knees
(who are you?)
And sweet surrender
is all that I have to give

Sweet Surrender — Sarah McLachlan