Well, today is the big day for the auction, or is it? For those of you who really care, Jackson has worked out an arrangement with BofA to bump the foreclosure sale to May 14th. From what I understand, he owes $24Mil in arrears on a $273Mil note for the place. Either some rich psycho-fan will pony up the money, or he’ll end up losing it to the foreclosure sale. I just want to see what BofA ends up doing with the place. I mean really, what is Bank of America going to do with Neverland Ranch? How much are they going to sell it for as an REO?
I’m sure that’s some valuable land it’s sitting on- maybe a commercial developer will come along and do something with it. We’ll see.  Here’s a great clip from TMZ on the thing- it’s the most entertaining clip I could find.

http://link.brightcove.com/services/link/bcpid353549946/bctid1460812952

I heard about this a few days ago, but now the media has picked up on it. Randall Martin Homes, a smaller sized builder has announced that it is letting the lender take back the remaining of their vacant lots in certain communities. Surprise’s Marley Park, Avondale’s Roosevelt Park, Chandler’s Dobson Crossing and Gilbert’s Higley Park are the communities effected by this decision. Obviously, they couldn’t make their payments in the Valley’s Housing Market downturn.

Existing homeowners will not be affected, other than having a number of vacant lots throughout their neighborhoods. Randall Martin has committed to finishing any existing contracts with homes under construction, but will not be starting any new ones in those areas.

Two other builders, Turner-Dunn in Pinal County and Trend Homes Inc. in Gilbert, have had similar problems in the past two years. A private equity company purchased Trend last month and is sending it through bankruptcy reorganization. Turner-Dunn walked away from 200 unfinished homes in 2006.

- Cathryn Creno, azcentral.com

My take on this? I’m sure another builder is already in negotiations with the lender to purchase the lots at an AMAZING price. This happened out in Queen Creek a year or two ago. A number of lots we sold at pennies on the dollar from a builder who just couldn’t financially compete with the market. The result was 3,000-4,000 sq ft homes, fully loaded with every upgrade you can imagine, being offered at $250,000 starting price. Yeah, I wish I would’ve jumped on THAT opportunity! It’ll be interesting to see over the next year who capitalizes on the situation, and at what price they release the new homes. I also anticipate at minimum of 2 other builders doing the same thing this year.

Here’s another article on it.

Breaking news from TMZ.com reports that Michael Jackson has found himself in the same situation as the rest of the country- in foreclosure. According to the article, Financial Title Company filed a Notice of Trustee’s sale on Neverland Ranch. We’ve been hearing for a while now that he’s in financial trouble- and that’s backed up by the sudden re-release of his ‘Greatest Hits’ on a new album only found on late night television commercials. The report says that he owes $24,525,906.61, but I have a feeling that figure is the original principle balance of the note, not his back payments owed. They also gave a sale date of March 19th. It’ll be interesting to see how this one turns out in the end. I could see some foreign ‘collector’ buying the thing and setting up shop as a museum of sorts. I wonder where MJ will move to? Do you think the bank will issue some ‘Cash for Keys’? Anyone want to buy this thing? I’m sure we could pick it up at about 40% and then flip it for 60%- not a bad pay day…

There’s soo many plans out there right now, I just don’t have the time to give them attention. Honestly, every day I read the news there’s a new plan being proposed to help ‘cure’ this mortgage crisis. There’s a new plan to help homeowners avoid foreclosure, and walk from the debts they owe, unharmed. It’s getting ridiculous. The media is eating it up. What it’s really doing is destroying any credibility of a REAL plan actually going through. At this point, until I see it about to be voted on, I won’t give it the time of day. Most of them are great ideas for selling advertising space and commercial air time, but will never fly in actuality.

For example- I just read 2 plans out today. One will allow State and Federal Judges to reduce the principle balance (as well as reorganize the terms in the Mortgage Note) in order to reduce the payments for homeowners. This is great for homeowners, as they can keep their home, reduce their payments, and wallk from what they owe (and spent!). My reaction? No way in hell will the lending institutions allow a State judge to dip into their lending portfolios and completely take money out of their pockets. It just won’t happen, politicians will be thrown out of office if it even got close to passing.

The other ‘plan’ would allow borrowers to reduce their principle balance on their loans, but give the lenders the ability to recapture that loss if the home is sold for a gain later. The example in the article was that if a homeowner owes $100k on their home, but the home is now only worth $80k, they can reorganize their payment (or refinance their loan all together) based off of the $80k amount. However, much like a Negative Amortization, if the homeowner ever sells the home for a profit (up to $100k), the lender would have the ability to reclaim that $20k they walked from earlier. Now let’s think about this… if I owe $350k on my home, but it’s only worth $300k now, I could walk from the $50k difference all together. I would just sell my home for $300k, and go buy a different home at rock bottom prices. The lender would never have the opportunity to recapture their $50k loss. I’m sure the lenders are lining up to support this one.

I could go on and on about the stupidity of these plans, but it’s pointless. Most of them require the lenders to take a huge loss, and would ENCOURAGE non-distressed homeowners to take advantage of it, instead of help to ease the ‘foreclosure crisis’ going on right now. The more plans I see, the more I think the plans are made up by the media in order to spur more attention. It’s just ridiculous. You hear about this huge plan, but then it slowly disappears under the wraps of another huge plan. This is why I won’t be reporting on these things- just a waste of time. Until I see something officially getting voted on, I won’t worry about it. I suggest you follow the same thought process. And no, I’m not going to post a link to the articles on the 2 plans mentioned above- it’s not worth the click.

If you aren’t familiar with a seller leaseback, let me explain. Investor Bob approaches Homeowner Holly after finding out she’s in foreclosure. Being the caring and sensitive guy he is, Investor Bob proposes to Homeowner Holly to sign over the deed to her home, and he’ll ‘lease it back’ to her for a year until she can get back on her feet. In doing so, he’ll bring her mortgage current, and she’ll act as a tenant/renter of the property during that time. Once she’s back on her feet, she can ‘purchase’ her home back from Investor Bob and they both go their merry ways. Homeowner Holly is ecstatic at this option as she gets to stay in her home, repair her credit, avoid the embarrassment of having to move, and retain ownership once she’s back on her feet again. Homeowner Holly owes $160k, with an additional $10k in arrears on her mortgages. Investor Bob knows her home is worth $250k, and sees potential to make some serious profits.

Homeowner Holly signs over the deed to the property, as well as a rental lease agreement to Investor Bob. Investor Bob brings her mortgage current, and starts making her monthly payments on the mortgages. Homeowner Holly is happy that all this mess has gone away. Three months go by, and Homeowner Holly loses her job. She can’t make her ‘rent’ payment to Investor Bob. Investor Bob, a wise opportunist, quickly files an eviction notice and kicks her out of the home. He quickly wholesales the property out to Landlord Larry for $200k. Landlord Larry fixes up the home, throws a new tenant in there and chalks it up to another great portfolio purchase.

Investor Bob takes his $30k profit he made on the transaction and heads off to the Caribbean for a week. After all the hard work, he’s earned a great vacation. Upon arriving back home, he is welcomed by a court order to appear in front of Judge Jerry. Homeowner Holly is suing him for stealing her home and equity. Investor Bob takes some of the money he made from another Seller Leaseback and hires a fancy $400/hr attorney to represent him. He gathers all his paperwork, throws on his nicest suit and heads down to the courthouse for victory.

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