Monday Apr 18 2011
Financially stable owners foreclosing an issue?
By: Bridget Jones, Journal Staff Writer
Mayor says former home’s mortgage was almost twice value of house
Auburn banking and real estate officials have varying opinions about residents who are financially stable but choose to walk away from their homes. “The fact of the matter is it does negatively impact housing values in our area, and it certainly impacts that individual’s credit record. It stays with them for a long time,” said Jeff Moore, Chief Credit Officer for Community 1st Bank in Auburn. Auburn Mayor Bill Kirby recently defaulted on a home loan for his house located on Marcelais Court in Auburn. “The bottom line is it’s a business deal with a bank,” Kirby said. “The bank wouldn’t communicate with me or the lawyer I used at all. The interest rate raised to about 11 percent.” Kirby said no one would refinance the home two years after he bought it. “We attempted then to get a business deal with the bank where they would drop the rate,” he said. “It ended up being the mortgage was almost twice the value of the house, and I would never catch up to the value of the property. And after consulting with my accountant, my financial adviser and my real estate adviser, they thought the best thing to do … was walk away and start over, which I did. I bought a new property and pay much less a month.” Kirby said he had a real estate agent try to arrange a short sale for the home, but it didn’t work out. Kirby said his mortgage company, American Home Mortgage Servicing, Inc., also never communicated with him, and he found out it was gathering the money for a company that no longer existed. “They wouldn’t give us the documentation that showed that … they had a right to collect the money to begin with,” Kirby said. Kirby said after he found out the mortgage company was facing lawsuits by the Ohio and Texas attorney generals, as well as a homeowner in Texas, his lawyer advised him it would be better to walk away. Kirby said he is not the only one in Auburn to make this decision recently, but he declined to provide names of any other residents going through similar situations. “I know a lot of people in Auburn that have given back their investment properties to the bank, and I don’t consider this much different from that,” he said. “This was an investment property, and I don’t consider myself much different than them.” Former Sacramento Kings star Kevin Martin also recently defaulted on his home loan in Rocklin. Martin, who currently plays for the Houston Rockets and is scheduled to make $11 million this year, bought the home for $1.9 million in 2007, according to Realist.com. Aurora Loan Service Corporation foreclosed on the home on March 28 for $1.6 million, according to the website. Representatives for Kevin Martin and the Houston Rockets were unavailable at press time. Mitch Germann, vice president of marketing and communications for the Kings, declined to comment on how many Kings players currently own homes in Placer County. With the Kings most likely moving to Anaheim in the near future, it is not known how many players could walk away from Placer County homes. Auburn resident Bill Jansen, who retired from Placer Sierra Bank, now Wells Fargo, said he doesn’t think there is anybody who isn’t somehow aware of the foreclosure situation some citizens are facing. Jansen said the decision to walk away is ultimately up to the homeowner, but he knows there are people who don’t make much money but are still fighting to keep their homes. “I’ve got a lot more respect for those people than I do for the ones like Kevin Martin,” Jansen said. “I can’t say that I dislike or like somebody because of what they have done on this. They have to make their own decision.” Susan Cantrell, broker for Premier Foothill Properties in Cool, said she thinks the housing market will see more people who are financially able to make payments walk away from their homes. “I wouldn’t say I’m seeing a lot (currently), but I am seeing some,” Cantrell said. “Personally I think we’ll probably have more in the future, because of the property values. I have talked to people who purchased their home for $600,000 and it’s not worth $300,000 … and they just don’t ever see recovering from that.” Carolyn Metzker, a Lyon real estate agent in Auburn, said those who are thinking about foreclosing on their homes should consider the contract they entered into. “I think when somebody makes the conscious decision to foreclose, I think they really need to examine that accountability and responsibility they had when getting into contract … not only to purchase the property, but they signed a promissory note with the bank to pay the loan back,” Metzker said. “The other thing I think is an important message to get across is real estate is an investment … and when purchasing it no one ever promised appreciation.” Reach Bridget Jones at email@example.com ------------------------------------------------------- Current foreclosures and short sales in local residential property Auburn: 19 foreclosures, 37 short sales Placer County: 194 foreclosures, 446 short sales