Friday, April 18, 2008

The Biggest Losers

Call it a morbid sense of curiosity, but I always like to take a peek at tax records for any house I look at in MLS. While it helps when negotiating for a buyer, it also helps me gain insight into just how messed up things were for the past few years. Last night, I was looking at some homes at the Ranch in Wilton, and found two short sales that blew me away. Max has shows some huge losses over at the Flipper in Trouble site, but these two listings seem to have set a new record.

Take a look:

Listing #80031129
6 bedrooms, 5 baths
5,450 sf
2.46 acres

Sold by JTS on 11/9/05 for $1,322,500
Two loans taken out - $198,350 & $991,600 ($1,189,950)
Currently listed for $600,000 (21 days on market)

Listing #80031360
5-10 bedrooms, 4 baths (it really does say up to 10 bedrooms)
4,850 sf
2.8 acres

Sold by JTS on 6/30/05 for $1,240,000
Sold by 1st owners on 3/31/06 for $1,397,000
Two loans taken out - $975,000 & $365,900 ($1,340,900)
Currently listed for $600,000 (21 days on market)

So, on the first one, we have a minimum loss of $722,500 + fees.

On the second one, a minimum loss of $797,000 + fees. And that's in just 2 years.


Josh said...

Looks like the first one is $14,000 behind on their property tax as well.

FYI, these weren't showing up on the FIT site because I set a cutoff of 50% loss or less. Maybe I need to revisit that... :)

AgentBubble said...

Take the cutoff away and let's see some real action ;-)

Josh said...

I bumped to 60%. That should capture both of these, as well as many others. :)

Adam Bradley said...

These are both short sales, which I believe means the asking price may not be approved by the lender even if a qualified full-price offer comes in. They'll probably be foreclosed then wind up on FIT with a green line for an price increase from the bank.

AgentBubble said...

I'm very curious to see what MLS #80031271 sells for. Listed for $450K and 5,450 sf ($83/sf). There's another 4,850 sf pending at $679K that isn't a REO or short sale that should be closing soon too.

patient renter said...

Those are some pretty incredibly losses.

I bumped to 60%. That should capture both of these, as well as many others. :)

Curious, why even have a limit?

Josh said...

Curious, why even have a limit?

To filter out errors. The purpose of the FIT site is not to capture all FITs, just most of them. Back when I was setting up the algorithm, most of the houses showing 50% "loss" were actually split lots or duplexes or things like that.

The emphasis is on quality, not quantity. Anyway, we'll see what bumping to 60% looks like. If I get a lot of hate mail, I'll switch it back again.

Deflationary Jane said...

Speaking of errors
MLS# 80015866
I know this house well. Went to auction last July and sold for 262k with the 5% commission. Entry says it changed hands for 369k? If so, it was a strawbuyer. It never changed hands. Something smells like fraud.

Wadin' In said...


You made the right call. It appears many of the JTS homes were sold to mortgage fraudsters. I always had to laugh when JTS had sign spinners with only the saying "SPECIAL INCENTIVES" and "JTS" on the boards. If you look at all the JTS records, you will see hundreds of homes with 100% financing, where it appears the buyer placed $200,000 more in loans on the property than the JTS "advertised price".

Now those fraudsters are trying to walk away. A funny thing is happening though: The FBI & IRS are making tag team calls in those neighborhoods! It happened to a co-worker who is renting from an appearant fraudster in Elk Grove:

Knock, knock.

"Who's there?"

"The FBI & IRS."

"I'm not home anymore....."

The joke is on the fraudsters now. Proceeds from fraud is taxable income in the year you receive it. $200,000 in proceeds tosses you into the AMT bracket, so recapture all your deductions, add interest, penalties, perhaps some legal and accounting fees and the poor fraudsters are way upside down today.

And as we see here, that asset they mortgaged for $1,200,000 is going to sell for $500,000. Add more insult to injury. Many of these idiots are going to live life on the lam for a long long time. That suits me fine.

The real tragedy is all the unsuspecting legitimate home buyers who got caught up trying to buy their own homes while these fraudsters were running rampant with Bear Stearns money. Imagine living out on The Ranch in Wilton, having paid $1,000,000 for a $500,000 home. Your $800,000 mortgage is $6,000/mon, plus $2,000/mon for taxes and bonds. How long would you pay $96,000/year to protect a negative equity of $500,000?

Deflationary Jane said...

Actually, that MLS points to a badly done flip in Woodland. I was wondering if they committed fraud to move it off the books or if the bank took it back.

Josh said...

Entry says it changed hands for 369k?

Yeah, it looks like the bank was the "buyer."

The FBI & IRS are making tag team calls in those neighborhoods!

Well, better two and a half years late than never. The JTS fraud has been taking place since 2005, and this blog was making highly suggestive posts since mid-2006. Hopefully we'll see some indictments soon, and we'll have a complete picture of the fraud.

I can't believe the company is still in business.

Anonymous said...

Well at least you can say the homes are a "steal" for any potential new buyer. I may have to take a drive out to Wilton to see the quality of the homes at The Ranch for myself.