How Subprime Lending Shot Their Own Foot

graphrix_IHB

graphrix_IHB

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<p>One area of OC I love is old town Orange. I love the older homes and the big front porches they have. I love the circle where Gabbi's restaurant can be found for the best Latin and South American food. I love how Hot Skates is still there and how that is where I got my first skateboard as a kid. I would love to buy a property there some day too. </p>

<p>Ok onto the subprime story. I looked to see what is up for auction on 6/18 and noticed 446 E. Palm 92866 with a notice of sale amount of $785k. OMG WTF? The only way it could possibly be that high is if it were multiple units, right? Wrong! This is the perfect example of why subprime lenders committed suicide and committed financial homicide on their borrowers.</p>

<p>From what I can tell Mr. Z was added on title 3/03 with Ms. F by an IntraFamily transfer even if they don't share the same name.</p>

<p>In 7/04 Mr. and Mrs. Z get a loan of $291k from Aegis Lending without Ms. F.</p>

<p>In 3/05 Mr. and Mrs. Z are granted the home from Ms. F and get a loan of $333k from First United Home Loans.</p>

<p>In 9/05 Mr. and Mrs. Z get a loan from Daniel Sadek's company Quick Loan Funding for $441k at a rate of 10.55%.</p>

<p>In 1/06 Mr. and Mrs. Z get a loan from Master Financial for $572k at a rate of 9.55%. Hey why not you can get some cash and your rate is lower right?</p>

<p>In 5/06 Mr. and Mrs. Z get a loan from Homefield Financial for $731k at a rate of 8.95%. For those who don't know the mortgage biz Mark Mahfoud is one of the original people who started New Century. There was an article in the OC Register interviewing him with a picture of him next to the Ferrrari he drives to work. Of course I can't find it but you can't make these things up.</p>

<p>In less than two years we have five loans grossing $731k. They probably netted about $650k with all the fees and prepayment penalties these lender hose people with. But how in the bleeping world could this home appraise at $731k let alone higher to get 80% loan to value. Nothing and I mean nothing has sold in that area for $731k when it is only 1200 sqft 3 bed 1 bath old town home. Zillow which is not the best but somewhat close has the value at $609k. Gee let me guess what are the chances the bank will be taking this one back.</p>

<p>When I see things like this is there any wonder why I left the business? This is repulsive and I hope that Mr. Mahfoud had to buy the loan back since his company had the appraiser bump the value way beyond any reasonable amount. </p>

<p>And this is how subprime lending shot themselves in their own foot. If they played by the rules we wouldn't have half the mess we are going to be in. </p>
 
FYI the bank took it back with no one bidding for the opening amount of $522k. Look for Ferraris selling for cheap soon. I know Range Rovers and SLs are the most hated trade in at the dealerships right now with some refusing to take them.
 
Is an SL a Mercedes? Do you ever wonder how many of the Merdedes in OC are leased? Why would the dealerships be hesitant to trade in a Range Rover or SL?
 
I'm guessing because the people doing the trade ins, are downsizing to cheaper cars. Then the dealership gets stuck with a lot of high end, expensive cars that no one is buying due to the economy. Too much inventory that won't be selling. IMO.
 
<p>Yes. An SL is a Mercedes Roadster. I bought my 2005 SL55 from a dealer a year ago.</p>

<p style="MARGIN: 0pt">Real Estate lady bailed out of her lease a year early and leased an Audi. I paid cash for the car. </p>

<p style="MARGIN: 0pt">Houses are depreciating as fast as SL`s. Ouch. Cant buy a house so I have a nice car.</p>

<p style="MARGIN: 0pt">Love Gabbi`s in the circle. Great food and drinks.</p>

<p style="MARGIN: 0pt">Cant believe all the for sale signs around Old Orange. 1200 Sq Feet. 700K Yikes. </p>

<p style="MARGIN: 0pt">Must be 20 homes like that around the circle for sale these days. </p>

<p style="MARGIN: 0pt">Just renting in Irvine till all this falls out. My business is in Orange. </p>

<p style="MARGIN: 0pt">Still paying .50 a foot for rent on my commercial space !</p>

<p style="MARGIN: 0pt"> </p>
 
Have anyone seen the site for the new condos by the Olson Co.? The surrounding neighborhood is very bad. But guess how much a 1300 condo goes for?.....starting at 700k!! I just don't get it.
 
<p>In 5/06 Mr. and Mrs. Z get a loan from Homefield Financial for $731k at a rate of 8.95%. For those who don't know the mortgage biz Mark Mahfoud is one of the original people who started New Century. There was an article in the OC Register interviewing him with a picture of him next to the Ferrrari he drives to work. Of course I can't find it but you can't make these things up.</p>

<p>Mahfoud didn't start New Century and had nothing to do with it at all. He also never had a Ferrari!</p>

<p> </p>
 
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