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Real Estate Believe it or Not
This home at 442 North Walnut Avenue was among 180 listings available in the Manteca resale market as of Tuesday. - photo by DENNIS WYATT
What a strange long year it’s been.

This past year has seen things happen in real estate that no one thought they’d ever see ranging from McMansions dropping from $750,000 at the market’s peak in 2005 to some selling for $265,000 in mid-2009.

And who would have thought you’d ever see homes selling in Manteca for less than $300,000  - the price fetched by old, two bedroom one bathroom houses back four years ago. If you have the cash, you could buy three that are twice the size and newer than homes that sold on postage stamp sized lots on Rose Lane and Goodale Court a skip and a holler away from the train tracks in Central Manteca just four years ago.

By comparison, that seemed reasonable given the weirdness of the 2009 Manteca housing market.

Bank offers “rewards” program for foreclosures
The Year 2009 was when we learned it pays to go into foreclosure.

Banks – tired of having to clean-up and repair property - started offering “cash for keys”  to people who went into default on loans and stopped making payments. They lived rent free while the bank went through the foreclosure process and then ended up being offered anywhere from $1,500 to $3,000 if they get out by a certain date and left the house clean and in good shape.

One couple that knew how to play the game ended up skipping seven $1,650 mortgage payments prior to and during the foreclosure process and then got another $1,500 through “cash for keys.”

The “cash for keys” was sold as a way to help foreclosure victims with moving expenses. Maybe so, but in the case of the couple what did they do with the $11,550 they saved by not making mortgage payments? And before you say that’s because the mortgage payment jumped, the $1,650 is what they were paying before the mortgage payment adjusted upward to $2,415 a month.

For the record, that may not as seem as obscene as you think it is. There was an instance where someone in Malibu was paid $45,000 in a “cash for keys” exchange.”

It was defended by the bank whose spokesman said owners of a more upscale home had additional money concerns involving moving.

In other words, they’re not about to rent a U-Haul. It just proves the rich – even in foreclosure – are different than you and I.

Congress creates housing walk-a-thon
Then there were the folks who weren’t hurting financially but were just upset that the home they bought was worth less than what they paid for it.

One buyer of a new home  walked away from it 14 months after buying even though they had more than ample income – the family has a six-figure income – simply because a buyer of the same model that was built a year after they paid $45,000 less.

You can thank Congress for not conditioning the temporary exemption from tax liability for borrowers in default with banks that write off money they are owed.

Apologists for the Shirk Your Responsibility Act argued that very few people would take advantage of what they termed a “loophole.” By years’ end people taking advantage of not being hit with a large tax bill when they walked away from their homes that they could still afford was reaching epidemic proportions.

Throwing a pool party before moving out
People angry at the world started getting more creative about the damage they inflicted on homes entering foreclosure as 2009 drew to a close. Gone was the wholesome trashing of the house – pouring liquids on the carpet. Intentionally marking walls, and smashing a couple of holes in the wall or sledge hammering the toilet. Instead they became much more creative such as one family that decided to dump much of their household furniture and belongings into a swimming pool. Yes, the swimming pool was full of water.

George Bailey goes to Washington
Mr. Potter of Bedford Falls fame is probably spinning in his grave given the number of true working class households that bought homes in 2009 thanks to the $8,000 federal tax credit.

The credit is getting credit for a big chunk of Manteca’s 1,211 closed escrows last year.

And if giving a first time homebuyer (in governmentese that’s someone who hasn’t owned a home for at least three years) $8,000 wasn’t enough, some got an extra $10,000 state credit from Sacramento if they bought a new home.

The $8,000 tax credit was extended through April 30 of this year with another $6,500 carrot added for repeat home buyers.

Who would have thought Uncle Sam would ever be that generous or the state could give away millions when they were bleeding red ink?

Foxes guarding the hen house
Remember the good old days when banks actually sold homes for the most money they could get?

In 2009 all-cash buyers were king sometimes snatching homes out from under people with preapproved loans willing to pay $20,000 more.

It’s not as much that the banks have gone crazy. It’s just that appraisers are all over the map these days with many – some believe, any way – intentionally undervaluing property to avoid being too high which would put them out of work.

This sounds kind of strange but another reason why some banks may be skittish knowing that FHA appraisals stick with a house for three months.  They’d rather risk having an appraisal for a conventional loan getting less on the deal than taking a risk with a FHA appraisal that may not end up panning out with the buyer and being stuck with that value.

Actually the more plausible scenarios are being repeated by more than a few frustrated real estate agents. They believe all of the people who processed the paperwork for the liar loans have been hired by banks to handle asset management paperwork for banks.

Such a scenario – if it is the case – is akin to hiring a fox to guard the hen house for a second time.