Baffled in Burbank: 43% off foreclosured house

AK writes, via e-mail, that this one is baffling. Here's the Redfin listing, here's the short history of 1248 E. Elmwood Ave. in Burbank, now in foreclosure:

Date sold        Price

May 1989: $350,000
Dec. 1997: $250,000
Mar. 1999: $364,000
June 2000: $445,000
June 2002: $444,443
Mar. 2003: $640,000
Aug 2003: $675,000
Mar. 2004: $775,000
Dec. 2004: $648,703
Feb. 2006: $812,500
Oct. 2006: $1,150,000
Feb. 2008: $969,000
Now listed for $659,900
Decline in value from peak sales price: 43%

Notes: The $300,000-plus run-up in eight months in 2006 is intriguing. A remodel? Of course, there was a bigger run-up in percentage terms, of almost $200,000, in nine months in 2002-2003.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com

Comments

[the problemwithcaring]

This can quickly turn into OC Renters' Bubble Market Inventory blog...so much fraud out here: where to begin?

My relatives are a part of a large Real Estate family in LA and I keep reading these bubble blogs waiting the day that I see my family skewered for fraud...

Ugh..

[Wilson]

Still not low enough...Take another 50+ percent off of that price, and maybe, maybe I would consider it...

We are at Summer 2003 prices now. How long before we are at 1999 prices? Then and only then will the market become reasonable...

[Cal]

sfvrealeste: "I'm going to go out on a limb here, and I know most of you won't like this, but since I'm in the industry, here goes. I believe that there was no appraisal fraud in the areas I've been working in -- sales of existing homes."

http://latimesblogs.latimes.com/laland/2008/03/
cuomo-sees-ramp.html

No appraisal fraud. None. Zip. Zilch. Nada. Goose egg.

[DK]

Oh horrors....possibly the ugliest home I have ever seen in my life. Did they get a deal on the orange paint or what?

[JohnnyB]

Ten sales in as many years... what a joke. A real flippers paradise. This one's going full deca circle. Really a 400k-ish house - that includes the Burbank premium... take that to the burrrr bank owner.

[Cindy]

Hmm...this scenario sounds a lot like this recent post on the blog, about fraud:
http://latimesblogs.latimes.com/laland/2008/05/
wondering-about.html

If you look this house up on Property Shark, you find that the sellers and buyers have similar-sounding last names, which makes it more suspicious.

[scott]

The amazing thing is that this was sold 11 times in 19 years. What's wrong with this property?

[peter m]

Look at all those sales? It seems like every 8 months to 2 years it was sold and resold with gains of from $110,000 to $300,000. Is this a classic ponzi scheme? Fake sales to relatives, straw buyers, or seller kickback schemes, each time running up the price and extracting more cash- out equity from the duped lenders. After it hit peak sales price of 1,150,000, I bet the new or sham buyers really milked the lenders up to the max, then just let this crap go into foreclosure, the lenders taken to the cleaners for close to $600,000 in losses.
You can just walk out with the extracted equity proceeds or heloc toys, then after two years requalify to get another homes using a relatives clean credit.
Isn't American a great country. Commit mort fraud and simpy walk out with less chance of getting snagged than an IRS audit.

[Laker]

Wilson:: "...We are at Summer 2003 prices now. How long before we are at 1999 prices?...."

Wilson, What areas of LA are now at Summer 2003 price levels?
It is not that I'm surprised by this, but, other then IE, high desert areas, most of LA is at 2004 prices still.
If you look at the price runups from 2001-2007, you will see a huge jump in 2003-2004. That is because Option ARMS usage increased from 1-2% to 50% or so....
I think it would require some time to remove that 20-30% price "appreciation" that occurred that year. There will be a lot of pain when the market will drop to 2003 prices from the current 2004 prices.
Also, it will put a huge number of "loan owners" in upside down" position, and right now, they are still not there...I repeat STILL not there.

My $0.02 guess is that this will occur after summer of 2008.

[tarbubble]

be sure to bring your own dishwasher, cooktop, and probably oven as well - looks like those all got stripped.

[Roger Moore]

The really ridiculous thing is the rate of sales. If it sells today, it will have averaged less than 12 months per owner for 9 years. With all that flipping going on, has anybody actually lived in this house, of have the just remodeled it?

[Craig]

It has .41 acres, but it's almost all vertical (low maintenance yard, hah). You barely have room for a barbecue grill on the concrete out back. If that hill falls, it clobbers your house, and it is all your land. No heating and no AC. Orange paint inside and out. Yikes. Who in the world would pay 1 million for that?

[Tim]

If you look really carefully at the pictures you can see the missing cooktop and dish washer etc. This has got to be a case of fraud. If you know the area where this house is there is no way you would pay that much for that bad of a house. There is much better property in the same area. Also if I am not mistaken that home sits in a very high fire danger area.

This type of fraud and the general greed that has taken over the housing market in LA and beyond has made it very hard for honest people making good money to buy a house with a conventional mortgage without 300K down or without settling on a bad neighborhood.

This kind of situation reassures my feelings that we must not bailout homeowners who have used their home as an ATM.

[JK]

Let's see... no back yard, (unless you count the hill that will fall down on top of the house during a bad rain), the orange paint throughout would make me puke, no appliances, the wood floors look like they need work, the bathroom tiles all around the pot belly stove, power lines that go right across the wood shake roof... all for the low price of $659,900. Ummm... no thanks!

[peter m]

Regarding that $1,150,000 price for a burbank-area home swifting becoming an REO listing for $658,000:

Burbank is not really a high end area at all. 90% of all Burbank SFH's are standard boxy stuccoed 3/2 1100-1600 sq fts on 5-6000 lots, most homes built around or right after WWII. Burbank was at the height of its emminence a working class industrial city back in the 50's to 70's with manufacturing and aeropace but that started dissappearing in the late 70's and 80's. There has been an attempt to build up entertainment industries to replace that lost manufacturing base but results mixed.
Burbank area reflects its working class roots everywhere, as there are few hi-end cul de sacs anywhere except in extreme southwest corner adjacent to the major studios. Especially the northern half of burbank( north of magnolia/burbank blvd) and even around the airport are in decline and reflect the general decay and descent of the east / northeast SFV into a marginal slumburg region.
Even Old Dwtn Burbank, centered off the 5 fwy around mangolia and olive, is simply a scattered collection of retail malls with a few gov't hi-rises and office blgd.
Burbank average SFH prices should be down to under $400,000 in last half of 2008.

[puckhead]

OK, I'm going to bite. I sometimes ride my bike in this area. Very nice area, up in the hills, 2k sq ft house, 18K sq ft lot for $660K? Is the houset sliding off the foundation? Did the former owners strip the house of all of the pipes, air conditioning etc? Is the house full of mold? I'm sensing we're not getting the full story.

[anonymous]

Cal, very well done.

Also, not an area where someone who say bought now could be underwater in 2 years. No way. Not here.

[save your ammo]

"Also, not an area (Burbank) where someone who say bought now could be underwater in 2 years. No way. Not here." Posted by: anonymous |

Yeah, and the San Andres Fault doesn't run through
California... and the check is in the mail... and the
pope's a pagan...

[somedude]

I live within walking distance from this address but can't say I know the exact house.

Peter M. correctly describes alot of Burbank, but not this part. There are some very nices homes nearby -above $1 million easy, especially the further you get to the hills.

Because of the work I do (govt. auditor) I know that tax evasion and other types of fraud are rampant in the glendale/burbank area so my guess is that real estate fraud is also.

[Laker]

If you look at the lot size and shape, it looks like the usable lot is about 3000 sf, and the other 20,000 is pure mountain that the owner has to pray every day not to collapse on him.
Then, with the busy sales activity for this house, it is easy to find its actual value of about $430,000.
What i find to be extremely stupid and cheap is for the bank (Washington Mutual) to not put some cheap appliances just to make the house look like livable. I know appliances are cheap and for about $2000, they could make the kitchen look much better.
Since we are on that topic, i happen to know another house in Encino that "belongs" now to Washington Mutual. This house is yet another great example of FRAUD (yes shockg and sfvrealestate)
It is 17144 Addison St.
http://www.redfin.com/CA/ENCINO/
17144-ADDISON-ST-91316/home/4781758

Sold? Jun 29, 2004 $1,400,000
Foreclosure on 2nd mortgage May 04, 2006 $179,655
Sold? Sep 28, 2006 $3,200,000
Foreclosure Nov 26, 2007 $2,600,651
Now, who is going to tell me that place "appreciated" $1,800,000 or 128% in 2 years ????

If you pay attention to all these foreclosures, it is so obvious that the people that committed the fraud AND walked away with HUGE cash are the sellers that in every case "magically" find a buyer that buys the house from them, and "surprisingly" enough is losing the house to foreclosure couple of months after....
Hey Dodd and Frank, YOU GOT TO BAILOUT THESE POOR PEOPLE....
What a f** ** is that?

[jb]

somewhat OT - I saw this from Ben...

"In the past, said Bernanke, lenders and companies that service loans were "used to dealing with mortgage delinquencies related to life events such as unemployment or illness. . . . A widespread decline in home prices, by contrast, is a relatively novel phenomenon, and lenders and servicers will have to develop new and flexible strategies to deal with this issue."

Ben knows damn well that the term "jingle mail" is NOT new. Banks damn well knew the risk and ignored it. Now they have their little bitch Bernanke out claiming that they didnt know - Bernanke should be removed - he is nothing but a high paid whore.

[E]

Hey Pete...

can we do a post on overly greedy flippers?

3787 Prestwick Dr.
Los Angeles, CA 90027

MLS# F1764758

[autobody boy]

"Because of the work I do (govt. auditor) I know that tax evasion and other types of fraud are rampant in the glendale/burbank area so my guess is that real estate fraud is also."

Posted by: somedude

Care to mention an ethnic group? Can't blame this one
on hispanics.

[dilbert dogbert]

I flew down on Google Maps airline to take a look at this place. The neighborhood looks good. A really big house across the street. My estimate is that this is a "teardown". I will have to fly down on Google Earth, or TOPO! GPS, to get a 3D of the contours of the ground.
The feature I found interesting is the debris dam just up the street. Notice that long funnel looking thingy that points down the street. That says to me that the spillway of the dam goes underground just at this property. It would be interesting to see how effective the dam would be after a big fire season followed by a monsoon. Read "The Control of Nature" by John McPhee to learn about the LA flood control system.
LA is much more interesting with respect to fire, flood and earthquake than NorCali.
Enjoy!

[Rich]

This is a clear case where the lender and appraiser should have put on the brakes even if the mortgage broker was in on the scheme. The federal task forces are being marshalled all across the country and these people will be looking at a timeshare in Sing-Sing when the recovery comes...