Thursday, July 12, 2012

Why foreclosure reform might be a good thing

This property is 10633 Chiquita in the Universal City area of Toluca Lake.  I sold this to Carlos and Elaine back in 2007 for $867k.  It had been extensively remodeled and was gorgeous.  Unfortunately, Carlos and Elaine fell on hard times (didn't everybody?) and attempted to modify their loan last year.  RCS, the servicer, gave them the run-around.  At the beginning of this year, just as the owners began to consider the short sale process, the lien holders foreclosed on the owners.

And then turned around and sold it to an investor for $440,000, stating that it was a 2+1 instead of a 3+3.

But somehow, before that, RCS couldn't be bothered to reduce the interest rate for Carlos and Elaine even a little bit, let alone write down principal.  Or give them time to short sale it.

Why not? If the lien holders were willing to take such a big hit, for way under market value, why couldn't they modify the original loan? Your guess is as good as mine.

Something is really, really wrong here.

By the way, the house is back on the market now in the mid-$500's and the listing agent (and I) think it will go for the mid-$600's.  That's a tidy little profit for the current owner.


  1. The fall of the economy and the devaluation of money is the loss of all. Corporations, lenders, and banks on the other hand will squeeze out money as much as possible from everyone through bailouts. This is what's happening to America now. definitely something is wrong here.

    barry trujillo
    Real Estate Investor at Epic Pro Academy

  2. The original lien holder will turn a profit over the original loan amount, thru the mortgage gov bail outs and mortgage insurance. Their profit will most likely be around 75K instead of the amortized amount.