For several months now, I've been fascinated by the posts at the Irvine Housing Blog, even though I don't live in southern California nor own a house. It's really interesting watching a housing bubble burst as it's happening. But today's post is a truly outrageous example of what the blogger calls "HELOC abuse" (that's home equity line of credit):
On 11/23/1994 this property was purchased for $292,500. The owners used a $263,200 first mortgage and a $29,300 downpayment. Keep in mind as you read the rest of this section that they only put $29,300 of their own money into the transaction.
On 7/16/1998 they refinanced with a $266,300 first mortgage.
On 11/12/1998 they opened a HELOC for $30,000.
On 11/4/2002 they opened a HELOC for $172,000.
On 11/4/2002 they refinanced with a $300,000 first mortgage.
By 2002 they had already doubled their debt.
On 8/25/2004 they refinanced with a $630,000 first mortgage.
On 7/6/2005 they opened a HELOC for $250,000.
On 10/27/2005 they refinanced with a $900,000 first mortgage.
On 12/14/2005 they opened a HELOC for $155,000.
On 5/28/2008 they opened a HELOC for $250,000.
Total property debt is $1,150,000.
Total mortgage equity withdrawal is $886,800.
They're now asking $1,629,000 for their 4BR/4BA house. Amazing--they think that they can get an additional $479K to walk away with!
