Wow. This is insane. I wonder how much of this was actually going on, or if this is one of the few extreme cases.
They spent the whole house... and then some. The owners of today's featured property purchased back in 1995, and by the time of their last refinance ten years later in 2005, they had already pulled out nearly half a million dollars -- a number that exceeds the resale price of that house today.
Back on 5/13/1995, the owners of today's featured property paid $180,000. They used a $171,000 first mortgage and a $9,000 down payment. Nine thousand got them five hundred thousand. Not bad.
On 5/15/1998 they refinanced for $193,000. Almost three years to the day later, and they have withdrawn their down payment, and they picked up another $13,000 for Ponzi money.
On 10/29/1998 they refinanced for $192,500.
On 7/2/1999 they needed another $15,000, so the got a HELOC.
On 6/26/2000 the obtained a stand-alone second for $65,000.
On 7/12/2002 they obtained a $134,475 stand-alone second.
On 9/24/2003 they refinanced with a $356,000 first mortgage.
On 8/11/2004 the got a $140,000 HELOC.
On 8/18/2005 they refinanced the first mortgage for $540,000
Finally, on 6/20/2006 in a last gasp of desperation, these owners refinanced with a $548,000 Option ARM and took out a $68,500 HELOC.
Total property debt is $616,500 plus negative amortization.
Total mortgage equity withdrawal is $445,500.
They quit paying last year.
Foreclosure Record
Recording Date: 11/30/2010
Document Type: Notice of Default
It shouldn't be surprising that so many think California real estate is a pot of gold. It certainly was for this couple. They put down less than $10,000 and nearly pulled out half a million. That is living the California dream.
Source (about 1/3 of the way down):