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 A group of happy patrons on the deck of the Yodler Saturday enjoy the fun and sun after a day on the slopes. Photo by Susan Morning |
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Mono County foreclosure rate up, but not devastating |
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Thursday, 13 March 2008 |
By Stacey Powells
Mammoth Times Staff Writer
Foreclosures have been in the news almost daily for more than a year. On July 23, 2007, Richard Gonzales from National Public Radio's Your Money said California is becoming one of the “new, big casualties in the ongoing home mortgage foreclosure crisis.” The state now accounts for six of the nation's top 10 metro areas with the most foreclosures per household. Properties are going to auction and being sold "as is." The winner of a bid must put down five percent of the property price and be able to close within a month.
The auctions are becoming increasingly common, says Dave Webb of Hudson and Marshall, a firm specializing in foreclosure auctions around the country. "Everybody wins in this deal," he says, adding, "The banks know that they are going to move a lot of property and close within 30 days, and the buyers know that when they go home, they got themselves a good price on a property."
“There are a lot more foreclosures in Mono County than I would have expected six months ago,” said Mike Shuttleworth, broker for Century 21 in Mammoth Lakes. “I don’t know how many actually go to sale, but by law the trustee is required to publish the potential foreclosures.”
Shuttleworth said that buying a house in foreclosure is like buying a pig in a poke. “You buy the house sight unseen. You can drive by it, but you don't know what the inside of the property looks like and it's possible you have no idea for sure who is living in it.” A big problem new owners have with a house they bought that was in foreclosure is getting the previous owners out of the property. “It’s not up to the lender that foreclosed on the house to get them out. There’s no warranty on the property.”
When buying a foreclosure the buyer has to go in with cash to cover the amount of the loan being foreclosed. Whatever is in default has to be covered. “You have to remember that, even though you may be covering the default on a third mortgage, there might be a second and a first mortgage that are also behind in payments,” Shuttleworth said. “The new buyer has to make those up as well or the banks that have those loans can close on the buyer.” Buyers of a foreclosure have to spend money in advance to make sure the property is worth bidding on, and there’s a chance that the house won't go to sale should the present owners manage to come up with past due money.
Shuttleworth would never buy a house in foreclosure unless it was 40 percent below market value. “There are legal expenses that can be incurred if you have to get the previous owners out and sometimes they even take all the appliances with them when they leave,” he said. “There is a $4 million dollar house in Mammoth about to go up for auction, but it has no appliances. It’s not the typical foreclosure because it was seized by the government when they found out the owners got the property with money that was acquired illegally. The inside is pretty much trashed. There’s no heat, no appliances.”
Mono County
Shuttleworth said foreclosures in Mono County are comparably less than what’s going on in other parts of California. “Not very many people in our area had sub-prime loans. The market is down, but not like it is in Stockton or Riverside.”
Denise Hayden of Inyo Mono Title Company's Bishop branch said there are two different angles regarding foreclosures. “We do foreclosures and non-judicial foreclosures that are based on a deed of trust that was used as security against the piece of property,” Hayden said. “We don't do institutional foreclosures for lenders like Bank of America and Washington Mutual. They handle their own foreclosures.”
Hayden said it’s hard to tell how many foreclosures are in Mono County, because a lot of loan companies do their own. “Some are done on the front steps of the courthouse in Bridgeport,” she said. “We’re not sure how many there truly are, but we are seeing an increase in them based on what’s happening with the economy. The good thing is that not all of them go to sale. The lenders are working with the people. So, many of the lenders have properties they have to take back and they would rather work with the owners.”
Sometimes the person whose house is being foreclosed is scared to call the lenders and tell them they are having trouble paying their mortgage. The lenders don't want the properties back, consequently many sales are being postponed while they try to work with the owners. “That's a good thing because we don’t want to see them go to sale,” Hayden said. “It’s usually people that got caught up in the adjustable rates mortgages that are in trouble. Very rarely of late have we had one that goes completely to sale.”
Hayden said there is one mistake home buyers make all the time. “Read the fine print when signing the loan documents. Many buyers sign the documents without reading them because they feel pressured and feel they don't have the time to read everything, but the title company is not the bank, so we can't go over the loan documents with them, even if we think they shouldn’t be signing them. We don't know if the buyer has talked it all out with the lender. We are notaries, so we can't say, 'Are you sure you want to do this?'”
The bottom line is, people have to know what they are signing. “Sometimes we don't have enough time because of things being sent electronically. We have to turn the documents around almost immediately,” Hayden said. “A good lender will explain everything to the buyer and we can tell which buyers have been informed by the lender.”
Comparably, this is the lowest that the home values have been in this country since 1945. “The values are no longer in the houses like they were when they were bought a few years ago,” Hayden said. “Many people can't refinance. They are stuck.”
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Last Updated ( Friday, 21 March 2008 )
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