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Funny Business
Text Size 
THIS IS HOW TO STOP THE HOUSING CRISIS?
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Billy Wynn, RE/MAX OTB Estates Fisher Home |
The Fishers owed $1,050,000 in mortgages, with a $568,000 first mortgage to Washington Mutual [WM
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()
], and a $500,000 second mortgage to Wells Fargo [WFC
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()
].
They originally asked $1,399,000 for the home in March, then reduced it to $1,299,000, then to $1,175,000 million, and finally to $1,139,000.
(Contd.)
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CNBC Special Feature:
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They got seven offers on the home, all in the $1,050,000 range -- the approximate amount owed on the mortgages. Both lenders were aware, says Kim Fisher, and seemed willing to work with them. They were even discussing the possibility of a short sale, where you sell the home for less than the mortgage(s) owed. This, as the Fishers started falling behind on payments.
But then things suddenly looked up. They got an offer for $1,130,000, and went into escrow the beginning of July. Escrow is set to close tomorrow. Success!
Not quite.
This week, they say they received notice from Washington Mutual that the bank is foreclosing on the home. What's more, closing costs are going to leave them $35,000 out of pocket -- money they say they don't have.
Part of those costs are $16,000 Wells Fargo is charging in interest and $2,000 WaMu is slapping on in foreclosure fees. Kim Fisher says when her husband called both banks, he was told, "We cannot help you."
We've called both banks. Stay tuned. Sure, it looks like the Fishers bit off more than they could chew, but with a decent resolution so close, why play hardball now?
CALIFORNIA FORECLOSURES DROP!
A lot of people are getting educated about short sales. The other day I was taking a walk in my neighborhood when I saw a home owner in his front yard speaking with a realtor. As I walked by, I caught a phrase of the conversation..."It's when you sell the house for less than what you owe the bank."
But there may be a glimmer of hope in the housing meltdown. While prices in California continue to drop, the number of homes going under may be starting to slow. And if California is a case of "first in, first out," well, a turnaround could begin.
Default Research reports that foreclosures and default notices in California dropped 8 percent from June to July. It's a small move in the positive direction, as foreclosure filings have doubled in a year.
The hardest hit area continues to be Riverside County, where one in ten homes has either defaulted on a mortgage or been sold in foreclosure over the last year. In Los Angeles County, for the first time, the number of homes in trouble over a 12-month period topped 100,000. San Francisco has weathered the storm pretty well -- although Default Research says that "even in San Francisco...median home prices have declined."
These figures don't include the short sales.
"Many areas (in Southern California) have seen home values fall over 30 percent since the middle of 2006 during the housing boom." says Default Research founder Serdar Bankaci. "Without a short sale or a few other options, it is nearly impossible to sell a home that was overly leveraged."
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