Bank Holds

UNRs Center for Regional Studies used to publish a monthly report on Foreclosure Sales. You could compare this to the monthly foreclosures and sort of gauge the level of “shadow inventory” building up. Alas, budget cuts at UNR have curtailed the CRCs staffing and ability to continue their fine reporting.

There are a lot of vintage 2009 (and some 2008) defaults just showing up on my daily search of NODs. Some are refilings from NODs that have expired, but many just seem to have been lost in the system. The majority are Recontrust filings, but no servicer is immune.

The one place where I thought the banks were doing a pretty good job was in getting their foreclosures back on the MLS and sold once they actually foreclosed. Most TDs are listed within a month, some a little later if they need cosmetics or if there are eviction problems. But 2 new listings this week belied my beliefs:

3170 Plumb – Sold for $215,000 in 5/2000, and again for $365,000 in 4/2004. The NOD was issued on 3/10/2009 for a missed 12/1/2008 payment, and the TD was recorded on 12/3/2009. I can’t see any deaths, bankruptcies, liens or other reasons in this house’s history to explain why it has been off the market for close to 2 years.

55 Pronghorn – Gotta love the “Not Yo Cheese, LLC” moniker along way to foreclosure! The former owners build the house in 1997 pretty much for cash, then bumped the debt up to $650K in 2003 and then took a $927K Option ARM out in June 2007. (My guess is that the house funded a failing business, but that’s just a guess). The NOD was file in August 2008 on a missed February 2008 payment. The bank took the house back in a Deed in Lieu of Foreclosure (DIL) in January 2009. At the current listing price, the bank is going to make out just fine.

Why have these homes been just sitting there for nearly 2 years without any action? How many more like them are out there?

DILs are a wild card. There is simply no way to track how many properties are going back to the banks as DILs instead of TDs, and what happens to them later. Does RealtyTrac pick these up in their figures quoted monthly in the RGJ? Is there a strategy to get the bank to accept a DIL instead of the full foreclosure process, and is it more positive for the defaulter? Looking for your input, folks.

Ok, so Cedarwood is becoming my favorite street for odd listings. 5305 just hit the market. Whats up with that? “Has possibilities” but no water? This is just up the street from 5230 Cedarwood, the mystic castlesque thingie.

4 comments

  1. inclinejj

    I don’t think Deed In lieu’s are a very big amount of the residential foreclosures.

    Being You have to hire an attorney, to do one right and pay to get this done right so the lender accepts the deed in lieu not many people have the resourses to do this.

    Now probably more so for Commerical Properties but I have not personally seen it and or heard of it..

  2. CedarHood

    Mike,
    I live in the vicinity of your 5305 Cedarwood property. Of course, that also means I’m down the road from the “mystic castlesque thingee.” A few thoughts.

    The neighborhood. Imagine waking up and looking out your bedroom window and seeing Mt. Rose and Slide Mountain out your bedroom window. Nice. Also quail, blue jays, bunnies, robins, and hummingbirds all over your yard. Down the road is Galena Creek, which you can follow by footpath all the way up Marilyn’s Pond, and catch a few trout for lunch.

    Ok, enough of the idyllic, real-estate-esque description. It’s a great neighborhood, but there are a few curious properties, as you have noted. Many have lived here over 25 years, when most of the older properties were built in Callahan Ranch. I’ve also met a few neighbors who bought at/near the top of the bubble. Many, are still around, faithfully servicing their monthly payment, even though the value of their homes have dropped by >40%. Some seem to still be in a bit of denial. Check out 5260 Cross Creek Lane for an example of that….

    The old properties have wells, the newer ones are on city water. The city (county?) sunk a 900ft deep well years back, and many are up in arms as they perceive the city is drying up the existing wells. No more well drilling is allowed. Those with wells that dry up, have to pay to go on city water. Which brings us to your listing.

    From what I can gather, they were an older couple, well-liked in the neighborhood, whose well began to dry up. Ostensibly, they could not afford to hook up to city water and continue to pay their mortgage. The place has been vacant for over a year, maybe longer.

    I looked at the price on the place. The bank is smokin dope. $161k for a place that needs to line up city water ($20-30k) and has been vacant for that long? Seems like a microcosm of many foreclosed properties, though. The bank should just take the loss, unload it for a pittance, and let some energetic owner get in there and restore the place. It’d be good for the new owner, good for the neighborhood, and good for the bank, IMHO. But, no. They hold on, listing it years after foreclosure for an above-market rate on a place with NO WATER.

    I can live without alot of things — granite counter tops, marble bathrooms, slate flooring. No one, however, can live without water. Just who do they expect to make an offer on this place? And connecting to city water is not a do-it-yourself project for a handyman.

    In summary, Callahan Ranch is a great place to live. Lots of established properties on >1 acre lots. Nice folks. Beautiful views. But, at the risk of being master of the obvious, no one is going to pay $161k for a place with no water.

  3. Mike McGonagle

    Thanks for the neighborhood update, CedarWood. Glad you are still pleased with your purchase and are settling in. If you need an architect for your toy barn, let me know!

    Your response highlights an issue that I keep trying to ram home here – the Truckee Meadows is loaded with micro areas with their own issues. Callahan has the well issue, and anyone looking at buying a house with a well should not take the issue lightly. The County Assessor’s map site has a layer you can turn on for Fire Risk Rating and 1997 Flood Boundaries Urban. The Reno map server shows fire hydrant locations, and the FEMA Flood Plain ratings (you make have to toggle the map type to get the options you want). Flood insurance is expensive and often a surprise in a buying equation. The irrigation ditches are an issue for people below them – I’ve seen several breeches in Last Chance and Steamboat in my time here, and the ditch districts are not legally responsible since the ditches were here first. Somewhere out there, I’ve seen a map of known seismic faults in the area, heavy on Saddlehorn and Montreux, and we can add Somersett to the list after their cluster a couple years ago.

    Perfect home – up on a hill, anchored to bedrock, acres of green pasture land around you, on the emergency water grid, access to muni water if the well fails, no access to muni sewers if your septic goes bad (replacement field is WAY cheaper than buying into the sewer systems). And of course it must be Perfect For Entertaining.

  4. Backus

    You forgot designer paint.

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