4362 Clybourn, Burbank/Toluca Lake -- there's a lot to this story

This is yet another short sale tale. I promise to stop telling these. The property above is 4362 Clybourn, in the Burbank portion of Toluca Lake.  The house and guest house combined are over 5,000 square feet.  The lot is over half an acre.  And it is spitting distance from the Toluca Lake Country Club.  It's a real trophy property.  It's also a short sale, and listed for $1,349,000. If you've seen this property, or made an offer on it, there's a lot to this story.

I represented some buyers who made an offer on this in December, when it was listed for $1,350,000. The seller accepted our offer. It went back and forth between my clients and Bank of America for four months, the bank wouldn't budge on it's counter of $1,820,000, and they wanted a cash contribution from the seller. My clients weren't willing to pay that amount, nor were any of the other folks who had submitted offers around the same time.

The file was closed in April when it looked like the foreclosure sale was imminent, and my exhausted clients indicated that they were not going to pursue the property further. Somehow, the seller managed to have the foreclosure sale postponed then -- for the fourth time. That must be a record. It subsequently listed with another Realtor (it was a different listing agent the first time around) for $1,349,000. The mls says the house has several offers on it now and the prevailing offer is in to the bank. Will the bank still want $1.8+ mil? Did it get offers in that range? How many appraisals have been done so far? What's the story with the seller?  Why did Countrywide, BofA's lending predecessor on the property, fund a loan of $3.2 million on it in 2009? Ah, sweet mysteries of short sales! Perhaps we'll have answers some day.

Countrywide rides to the rescue. Or not.

In case you didn't see the paper today, Countrywide plans to cut the interest rate on some of its option arm loans to 2.5%, and possibly even reduce the principal on others in order to help people stay in their homes. I think these efforts should help some people from losing their homes to foreclosure, and that's a good thing.

And, as we all know, the holders of California mortgages now have to actually try to contact homeowners before they're foreclosed and try to do workouts, which is also a good thing and has led to a drop-off in foreclosures.

However, our office's short sale expert tells me that banks are largely paying lip service to these loan modifications. For example, I'm told that many loan servicers will now take calls from distressed homeowners and promise a workout, but then not ever follow up. And the banks are not staffing up to meet these new challenges, even though they've had ample time to recognize the problems in the housing market and prepare for workouts. So, is this all just a game? Will banks have title to most of the residential real estate out there by the end of the decade? Stay tuned.

Countrywide is going to do workouts. Finally.

Finally, Countrywide is going to help some of its mortgage holders modify problematic mortgages. Read the L.A. Times story here. This is something that they should have been doing, not just pretending to do, a year ago. And of course, it took legal action, in the form of California Attorney General Jerry Brown, to get Countrywide/BofA serious about doing this. This will be too late for some people who are in deep financial trouble, of course, but in California alone, there are apparently over 125,000 Countrywide mortgages that may be able to be modified in order to keep people a) in their homes and b) making their loan payments.

Short sales and Countrywide

The latest that I've heard on short sales is that it's taking Countrywide over 12 weeks to approve them. This info is from a Realtor colleague with 4 short sale properties where Countrywide has the 1st note. In other words, if you make an offer on a short sale property, don't expect to hear anything for, uh, awhile. OMG, why? Apparently, Countrywide is completely backed up on processing these -- I'd say they're more likely overwhelmed.

New Loan Restrictions on New Condo Complexes

This is a rumor, but if it's true, it's not so great news for condo developers: As of May 1, Countrywide will not fund any purchase money loans for condos in developments that aren't at least already 50% sold. For example, if you'd like to buy a condo in a new development with, say, 40 units, at least 20 units need to be already sold for you to get a loan from Countrywide. Okay, you may not want a loan from Countrywide (who would?) but this is just another restriction on your choice of lenders. And if Countrywide is going this way, expect the rest of the lending industry to follow.