Posts Tagged ‘real estate’

10 Moreno Valley Homes Sold 3 Years Ago and What Happened to Them Since

23802 Parkland Avenue

1474sq’        built 1986    .11 acre lot

Sale History: 5/30/2006 $355,500 $241 per Sq’ 100% financing 7.35% ADJ
4/14/2009 $55,000 $37 per Sq’ as an REO
-$300,500 -$8586 per month

16605 Vista Conejo Drive Read the rest of this entry »

The Murrieta (CA) Real Estate Scam

The accused: James B. Duncan, Hendrix Montecastro (a real estate broker), Maurice E. McLeod

Offense: violated Federal Securities Laws – seeking restitution for “ill-gotten gains”

Also Named: Pacific Wealth Management, Stonewood Consulting Inc and Total Return Fund LLC

The opportunity: Investors in Southern California, Arizona and elsewhere were invited to participate (invest) in the California Real Estate Boom.

The recruits: Military Personal, Filipino families and church members

The Scheme: The investors (recruits) were directed to purchase more than $118 million worth of homes (many in Murrieta).

The Fraud: Falsified loan applications allowed the investors to purchase multiple properties; inflated appraisals allowed excess mortgage proceeds to go to Duncan, Montecastro and / or McLeod.  Those excess fees was more then $100,000 on some transactions.  Investors were told the excess fees would be invested – and those investments would cover the mortgage payments on the properties the investors purchased in their own names, not covered by the rental income.

“Stonewood typically paid $50,000 to $100,000 more than the listed sales price for a house.  Sellers received their asking price and the remaining money went to Stonewood agents in the form of commissions.  The prices investors paid for the houses were justified by appraisals that Stonewood ordered.”

The Harm Done: Because the investors (recruits) often borrowed money from lines of credit, credit cards and retirement funds – in the end the money was gone the properties foreclosed and their credit ruined.  Lenders who made the loans based on false income and appraisals ended up with loans exceeding value and eventual foreclosures (any deception to a Federal Lending Institution is a Federal Offence).  And the perpetrators pocketed tons of cash (Montecastro was estimated to have pocketed millions).

Foreclosures, Affordability and Financing

Bayer Facts of Moreno Valley, CA: 3/5/2008

Moreno Valley Foreclosures

Notices of Default reported: 2/5/2008 70
2/12/2008 63
2/20/2008 56
2/26/2008 127
3/4/2008 101

= about 333 NODs per month – and for February 2008 about 108 homes are reported as sold in MLS (some by the auto close option).  There are 380 properties in Moreno Valley listed as pending in MLS – 244 pending since: 2/5/2008.  So even if each pending over the past month sold – there are more new Notices of Default.


On 2/19/2008 C.A.R. reported the entry level affordability in California reached 33%, in the 4th quarter of 2007.  Which is the percentage of homebuyers can afford an entry level home. The calculation of mortgage payment is based on an interest rate of 6.21% with a 10% down payment.
The improvement was from 1 in 4 families that could afford the statewide entry-level home in the 4th quarter of 2006 to 1 in 3 families in the 4th quarter of 2007.

For Riverside / San Bernardino the affordability rate for the current period is 46% (almost ½) compared to 34% (about 1 family out of 3) 1 year ago.  For Riverside / San Bernardino the entry-level home price for the 4th quarter of 2007 was: $287,330 (basically 85% of the median home price per area) – with an estimated monthly mortgage payment with taxes and insurance at: $1920 and a qualifying income of: $57,600 (30%).



We at Bayer Appraisals have been surveying listings reported as sold by “auto sale” in MLS and finding the following:  7 out of 15 properties (we called about) reported as “closed” had not, due to the auto closing feature now part of our MLS.  Agents when asked did not like the new feature and sometimes did not know their pending sales were coming up as “closed”.   All together 10 agents were kind enough to talk about what they are seeing now.  They are seeing more activity and reported multiple offers – generally on the lower priced homes – typically on properties in move in condition.

FHA financing is hot in the around $200,000 price range and below; with down payment assistance common.  Tighter underwriting is a problem, often with last minute demands (such as larger down payments) extending the escrow times, or killing deals.  Some agents report an increase in desk reviews.  One agent had a problem where a desk review came in lower then the appraised value / purchase price.  100% financing is basically gone, and even 5% down might not be enough, for conventional loans.  Agents expressed a belief that foreclosures will remain a problem and prices will continue downward.

Hot news from Wil at – the new Fannie Mae / Freddie Mac – conforming loan limit is now: $500,000 in Riverside / San Bernardino Counties.

It’s a Tough Real Estate World


Last night on 60 minutes there was a major segment on the sub-prime problem.  They talked to one couple who are having problems with their adjusting mortgage – their only option (they believe) is to walk away.  They were looking at Stockton, California as a foreclosure hotspot using:  I went to the site the Moreno Valley map is jam packed with pre-foreclosure, foreclosure and lender owned properties.  They are using as the source for current values of the listed properties.  I have found zillow is not reporting the current (real) values in Moreno Valley.

Report from DataQuick (1-22-2008) found the number of mortgage defaults in California in the fourth quarter of 2007 was the highest in 15 years.  They reported the statewide median home price hit a high of $484,000 last March, going down to $402,000 at the end of the year.  Most of the loans in default originated in August to October 2006.  For Riverside County the default numbers were from 4528 in the 4th quarter of 2006 to 9913 in the 4th quarter of 2007.

A homeowner is suing her real estate agent for she believes the agent mislead her about the true value of the home she purchased.  The case goes to trial today in North San Diego County.  The agent claims the buyers did not do their due diligence, the buyers claimed they trusted the real estate agent – who not only sold them the house, but also worked as a loan broker.  Requests to see the appraisal were stalled, thus the appraiser was also sued, but settled.

On Friday 1/18/2007 a vice president of a collapsed subprime mortgage lender (Fieldstone Mortgage) jumped to his death, after apparently after killing his wife in a murder-suicide.

Per MLS: 8 homes closed escrow

2297 square foot house on Cattail for: $475,000  ($206.79 per square foot)
It was first listed for sale 8/10/2006 for $749,900 – with the following price reductions: $715,000 (9/20/2006); $685,000 (10/24/2006); $633,000 (12/18/2006); $599,999 (2/25/2007); $569,990 (5/14/2007); $559,000 (6/21/2007); $549,000 (7/12/2007); $555,000 (7/12/2007); $545,000 (8/22/2007); $525,000 (8/30/2007); $524,900 (8/31/2007) – going pending on 10/22/2007 – with a final sales price $274,000 less then original list price 14 months back.

3771 square foot new home on Salt Mission for $455,000 ($120.66 per square foot)
First listed in MLS 2/13/2007 for $561,990 – selling in 203 days for $106,990 less.  New owner got almost 100% financing.

1858 square foot new home on Quail Creek for $342,500 ($184.33 per square foot)
First listed in MLS 6/8/2007 for $402,990 – selling in 49 days for $60,490 less.

2677 square foot home on Zaharias for: $320,000 ($119.54 per square foot)
This was a lender REO with a prior sale 3/31/2005 for $460,000 (selling now for $140,000 less in 31 months = a loss of value of $4516 per month).  House was first listed for sale 3/16/2006 for $505,000 – taking 288 days to sell with 13 price reductions, and selling for $19,000 below the final list price.

1795 square foot home on Cherrylaurel for: $270,000 ($150.42 per square foot)
A lender REO originally listed for sale 11/27/2006 at $410,000 – on the market 256 days – selling in the end for $140,000 less then the original list price.

1070 square foot 2 bedroom, 2 bath home sold for $265,000 ($247.66 per square foot) on Red Mahogany was originally listed for sale 11/22/2006 at $325,000 – taking 304 days to sell – in the end for $60,000 below original list price.  New owner purchased with 100% financing.

1308 square foot home on Shady Glen for: $253,000 ($193.43 per square foot)
It took 90 days to sell with an original list price of $289,900 – per MLS seller paid $10,000 of buyer’s closing costs with 100% financing.

1420 square foot home on Hartland for: $247,000 ($173.94 per square foot)
Another lender REO with a prior sale on 2/27/2006 for $385,000 – with is $138,000 more than recent sale 20 months later = a loss of $6900 a month. It was originally listed on 29 days at: $259,900 – with no price reductions, but sold for $12,900 below the list price.

4 homes went pending

A lender REO 2034 square foot home on Snowbell – with a final list price of: $309,900
Prior sale $440,000 (5/12/2006) – a decline of $130,100 in 17 months (= $7653 per month).  Has been listed 192 days – starting at $414,900.

1317 square foot home on Rena – with a final list price of: $249,900 – listed 108 days with an original price of $270,000.

A lender REO 1512 square foot home on Gorrion – with a final list price of: $247,500
Prior sale 8/11/2006 for $420,000 (that is a drop of  $172,500 in 14 months = $12,321 per month).  The final list price at that time was $372,000 (so it looks like the purchase price was elevated $48,000 in 2006 – with 100% financing – I think that might be mortgage fraud).

Lender REO 1261 square foot home on Mead – with a final list price of: $234,900
Originally listed for sale 7/24/2006 at $369,999 – for a total of 195 days.

14 Notices of Default filed

On the following streets: Calle Agua; Fay: Beal; Dabney; Finley; Tonadilla; Barley; Venetian; Morningside; Myers; Marston; Woodpecker; Canvasback; and Cleveland Bay.

Conclusions and More

Of the 12 sold and pending sales on day in Moreno Valley – 6 (1/2) are lender REOs.  2 of the ones that sold (1/4) had 100% financing.  2 of the sold homes were new homes.  Of the 12 solds and pending sales only 1 sold in less than 1 month; 4 total sales under 100 days; 3 took between 100 and 200 days to sell; 3 sold between 200 and 300 days; and 1 took 304 days to sell and the home on Cattail took 428 days to sell.  The average time on the market was: 180 days (6 months).  The chart below shows the number of closed sales, pending sales and notices of default filed on one day for Moreno Valley homes: 10/26/2007.


Data Quick just came out with the October 2007 sales data – it is not good!  Only 81 homes sold in Moreno Valley for the month (in Oct 2006 289 homes sold) – with prices down in 1 year:

18.4% for zip code 92551                    17% for zip code 92553           23.3% for zip code 92555
23.5% for zip code 92557

That on average equals a drop in prices in 1-year (October 2006 to October 2007) in Moreno Valley of 20.9% or on average 1.745% per month – on a $400,000 house that would be almost $7000 per month or almost $84,000 in 1 year.  The average sales price per square foot is now: $186.

This chart is median Moreno Valley home prices from Dqnews for every October since 1988


This chart is for zip code 92557 since January 2005 for the median sales prices – with a trend line showing the increase in prices and then the decline.


Taking 3 of the recent sales and pulling model match sales – this is what I found:

For the 2677 square foot home on Zaharias sales by date =
8/2002             $257,900                     up        $62,100  in 5 years, 2 months
1/2003             $282,000                     up        $38,000 in 4 years, 9 months
10/2004           $449,900                     down    $129,900 in 3 years
10/2005           $477,000                     down    $157,000 in 2 years
2/2006             $479,900                     down    $159,000 in 1 year, 8 months
1/2007             $424,500                     down    $104,500 in 9 months
10/2007           $320,000         down    $159,900 from the high in 20 months = – $7995 per month

For the 1795 square foot home on Cherrylaurel
2/2005             $350,000
4/2005             $359,000
4/2005             $367,000
5/2005             $369,000
5/2005             $375,000
6/2005             $369,000
6/2005             $369,000
7/2005             $380,000
8/2005             $384,900
8/2005             $387,500
8/2005             $390,000
8/2005             $399,000
9/2005             $415,000
10/2005           $398,999
12/2005           $411,000
3/2006             $389,000
3/2006             $419,000
3/2006             $420,000
5/2006             $419,900
5/2006             $429,000         high      up $79,000 in 1 year, 3 months = + $5267 per month
6/2006             $409,000
10/2006           $415,000
10/2006           $415,000
3/2007             $369,900
10/2007           $335,000
10/2007           $310,000
10/2007           $270,000         down $159,000 in 1year, 4 months = – $9937.50 a month

For the 1070 square foot home on Red Mahogany
8/2002             $127,500
11/2002           $129,600
9/2003             $145,000
4/2004             $210,000
7/2004             $210,000
11/2004           $225,000
11/2004           $250,000
6/2005             $270,000
11/2005           $285,000
11/2005           $288,000
12/2005           $290,500
6/2006             $314,000
9/2006             $320,000         high      up $192,500 in 4 years, 1 month = + $3928 per month
10/2007           $265,000         down    $55,000 in 1 year, 1 month = – $4231 per month

On 11/30/2007 there were 88 single family homes listed for sale in Moreno Valley priced at $200,000 or less; with an average price per square foot of: $178; with 12 pending sales – with an average list price per square foot of: $164; but only 2 sales since 1-1-2007 for $200,000 or less.  Looking at the data – we see a large inventory of homes for sale, long marketing times, few sales per month, dropping prices, under cutting prices and future foreclosures – insuring prices will continue downward for some time, until the number of home sales per day adequately exceeds the number of new listings per day.

What Direction are Inland Empire Home Prices Going?

On October 10, 2007 – the California Association of Realtors reported their Housing Forecast for 2008. They predict (keep in mind they tend to be very conservative in a downward trending market) prices on average will go down 4% statewide; with the number of homes sold expected to drop 9%.

CAR indicates that home prices in Riverside / San Bernardino area hit a peak in January 2007 – with a price of: $415,160 – dropping 9.2% to an August 2007 median of: $377,130. That is a loss of about $5400 per month.

The fall issue of Economic Real Estate Trends, from PMI predicts home prices in the Riverside / San Bernardino / Ontario, California will have a 60% likelihood of being lower in 2 years.

An article in the Wall Street Journal (10/11/2007) reports on “The United States of Subprime”. WSJ estimated that high-rate mortgages accounted for 29% of the total of mortgage loans in 2006, up from 16% in 2004. Per the map of our area of California 40% of mortgage loans made between 2004 and 2006 were subprime. “High-rate loans are those that carry interest rates of 3 percentage points or more over U.S. Treasurys of comparable durations.” “As home prices accelerated across the country over the past decade, more affluent families turned to high-rate loans to buy expensive homes they could not have qualified under conventional lending standards.”

“We had an aggressive home-mortgage industry trying to get people into homes they couldn’t afford at a time when home prices were very high. It turned out to be a house of cards, says Karl Case, an economics professor at Wellesley College. We’re in the early stages of the cleanup.”

The WSJ article estimated there is $600 billion of adjustable-rate subprime loans due to adjust to higher interest rates by the end of 2008; resulting in more loans likely to fail in the future.

At the annual Convention of the Mortgage Bankers Association it was reported (10/16/2007) by The Associated Press that “U.S. housing prices will continue to decline at least through the end of next year and may not begin creeping upward again until 2010, executives from the biggest mortgage financiers said Monday.”

Thomas Lund of Fannie Mae said: “I think this year we will see a 2 percent decline in national home prices, and we’re projected about a 4 percent decline next year”.

Patricia Cook of Freddie Mae said: “investors of mortgage-backed securities likely will remain wary of committing more money to the cash-hungry market until they see a slowing in foreclosures. But that’s unlikely in the short-term, since many at-risk homeowners will see their adjustable mortgages reset to higher interest rates in coming months and years.”

12 Moreno Valley foreclosure homes are scheduled for auction: Nov. 3, 2007 at Fairplex, in Pomona. Homes are available for viewing: 10/20 and 10/21 from: 10am – 5pm. Specific information on these homes in the Bayer Facts section. Of the 12 homes going up for auction – 8 had prior sales in the last 29 months compared to recent list prices – values have gone down per month at least:

  • 29 months down $1831 per month
  • 25 months down $3804 per month
  • 33 months down $1275 per month
  • 24 months down $5754 per month
  • 24 months down $467 per month
  • 17 months down $3829 per month
  • 15 months down $5006 per month
  • 14 months down $4642 per month

Information obtained from First American Title of Notices of Default (the first step toward foreclosure) filed against Moreno Valley homes on 9/21 (18); 9/24 (19); 9/27 (17); 9/28 (18). If you figure 18 a day times 260 week days (about a year) that would be 4680 homes headed for foreclosure or about 9% of the 52,000 Moreno Valley homes. The glut of that many home loans in trouble now – could only result in an over-supply of homes for sale, in the future.

Subprime loans are causing havoc across America, and the problem is ongoing as more adjustable rate loans have mortgage payment increases upcoming. Easy lending put many families into homes beyond their means, and pushed up home prices to unsustainable levels. Once prices started to drop many homeowners find they can not sell their homes for what they owe and can not refinance out of their bad loans. Many of those homes will end up as foreclosures. The rate of home sales is now at 20 year lows in Moreno Valley at a time when the number of homes for sale grows and will continue to grow. Home prices in this area are expected to continue on a downward trek, while potential buyers are looking for bargains or waiting for prices to hit bottom.