Reno Real Estate Blog

Leventina was purchased in April 2006 for $610,000.  It had been on the market for a long time at $680,000, so it looked like a good deal.  80% first loan at 7.25% interest only, and a 20% second.  In January 2007, our friends at BNC Mortgage did a refi for $710,000 at 9.025%, 50 year term 2/48, LIBOR +4.95%.  Bad move.

With the new loan in place and the cash out financing, it was time for Extreme Makeover, Belli Ranch Edition.  Somehow, this plywood siding clad house grew a French Provincial cottage interior with antique brick walls peeking out of the faux plaster walls, "chefs kitchen perfect for entertaining",  "designer paint", the whole works.  Except that the cash out didn’t cover the remodel costs, and the owners went to a hard money lender for an additional $49,999 loan (smarten, any idea why this wasn’t just 50K?).  The July 2007 payment on the first loan was missed, and a NOD was filed in October 2007.  About this time, the house hit the MLS at $895,000.

I toured it and chatted up the listing agent a bit.  The house was still a work in progress, with much of the remodel incomplete.  Do you get the warm fuzzies when you tour an "upscale" home and there are Post-Its all over with "This Will Be….".  I asked the agent if he had set the asking price, or if he had input from the owners, and he chuckled.  I told him my prediction of $650,000 Short, and he nodded at me.

Then nothing happened for 8 months.  It looked like some work might be going on to complete the interiors, but the house didn’t move to NOS status.  I think the bank realised that they didn’t want a half finished house on their books, and cut the owners some slack to get the work finished up and then try to sell it (no permit record, BTW) .  Winds then blew a large portion of the roofing off, just to make things worse.

In June 2008, another NOD was filed and it looked like the bank was going to get serious, and they filed a NOS in October.  The estimated amount due at sale was $804,502, still based on that July 2007 missed payment – they have been living mortgage free for over a year and a half.  The owners 95% completed moving out by Christmas.

The owners have pretty clearly stated that they don’t want the house.  The bank is saying that they don’t want it either, and won’t complete the foreclosure process.  Why not?  To complete the TD will cost them $10,000 or so – legal fees, HOA liens, and transfer taxes – on top of the legal expenses they have already incurred.   And what would be their reward taking Leventina back onto their books?

I’m not ragging on the owner for their exuberance and subsequent failure.  There are a lot of things that went bad for them at once (some of their own making – they sold their old home as a Contract of Sale, and the other party defaulted).   My interest is in how the bank is handling this property and I suspect 100′s like it.  I think there are a lot of these orphan properties out there.

The Belvedere – Scheduled for the courthouse steps next Tuesday at 11 AM.   Estimated due at sales date is $28,858,616.34, and there is another default behind this one for $15,900,000.  This may be the South Tower only – there are so many players involved that it is hard to keep them all straight.  The vacant lot just west of the project went back to the bank in December, and there are at least 20 units in some stage of foreclosure.

89595 – Did you know that the Grand Sierra Resort has it’s own zip code?  Sales of units stopped during the summer, Nikki Beach does not seem to be associated with the hotel portion anymore, about 15 units have already gone TD with about the same number in the pipeline.  There have been ZERO resales at the GSR since the project opened.  1714, originally $630,000, now listed at $280,000.  1720, originally $292,658, listed at $99,900.  Would you take a unit here if they were giving them away?  That’s a serious question.

Montage – No closings as of end of business Friday, so it doesn’t look like the promised February 16 move-ins are going to happen.  A cabal of "owners" that want to get out of their contracts and get their 10% deposits back met with an attorney yesterday.  I have mixed feelings about this.  Montage has certainly delivered the product they promised, but not in the time frame and ownership that the buyers anticipated.  Stay tuned.

Waterstone at Kiley Ranch – Originally designed to be condos, this 203 unit apartment complex received an NOD Friday for $40,632,000. 

Hope for Homeowners – Remember the program that was supposed to save 400,000 homeowners from default?  A total of 25 have received modified loans under the program.   This and more interesting reading at How the Banks are Worsening the Foreclosure Crisis from Business Week.

Short Sales and Foreclosures – The Irvine Housing Blog is always a fun read.  They had a guest letter from a real estate attorney detailing the Financial Implications of Short Sales and Foreclosures.  It is must reading.  The implications here in Nevada are very similar.

I’m really an "up" person – I swear!

Gonowabie is a magical little street in Crystal Bay.   The name is even magically fun to say.  The even numbered houses are lakefront, and the views are unparalleled.  They’re not making any more lakefront, right?  Not the sort of place you would expect to see a Notice of Default show up.

The house I’m talking about is a little cracker-box cabin built in 1974.  It is a dinky 3/2 that the county shows as 1365 SF with a 990 SF unfinished basement and no record of any permit work.  The house was listed last July, and the current asking price is $3,995,000 noting 1827 SF and 103 feet of lakefront.  The listing agent hasn’t gotten around to posting pictures yet, AKA this is a knock down,  it will never sell. (why take the listing?)

Purchased 9/01 for $1,500,000 with a $1,000,000 first and $500,000 down. (WFB)

HELOC 1/02 for $800,000.  Down payment and $300,000 extracted in 4 months. Where did the HELOC money go?  931 La Rue. (WFB)

Refi 11/02 for $1,824,000 with a 125% Option ARM.  (WAMU)

HELOC 1/04 for $200,000.  (Deepgreen)

HELOC 11/05 for $1,000,000.  (Countrywide)

Refi 8/06 fore $3,500,000 with a 115% Option ARM,  $11,542 minimum monthly payment.  (Platinum Capital Group)

HELOC 1/07 for $400,000.  (Countrywide)

NOD 2/10/2009.

Assuming minimum payments on the Option ARM and 5% per year negative amortization, there is about another $400,000 in debt on the property, though the MLS listing didn’t specifically  call this out as a short sale.  Over the last 8 years, this cabin increased in value (according to what the banks lent) by $25,000 a month, $300,000 a year, $2,400,000 total.  It just totally burns me that these are the financial wizards our tax dollars are now bailing out.  Loans in this stratosphere are not securitized and and sold off – they are held in portfolio and should be rather conservative investments.  Not the case here.

I have no clue where the money went – it certainly didn’t go back into the property and I hope the owners had a really fun time.  But I’m ready to round up the posse, and I’m searching  for some tall trees with overhanging limbs.  Yes, I know I’m going to have to pay for this mess, and it ticks me off no end.  Where are the judicial foreclosures?  
And why are we saving these institutions that made these Wonderland loans if they are unwilling to aggressively pursue to their dead beat borrowers?