$1.7 Million Home Sells for $725,000 – Washington Mutual's Loss Estimated at $1 Million
This home sold brand new for $1.7 million in December 2006. It has a current tax assessed value of $1,360,000 and an annual property tax bill of $16,098. Apparently it was part of some mortgage fraud that occurred in the Twin Cities. Washington Mutual Bank held the notes on this property.
Clients of mine just purchased this home for $725,000! It’s in a very desirable location in the Twin Cities by Gray’s Bay – Lake Minnetonka. At it’s peak, the home might have sold for $1.15 – $1.2 million if it had not been for the inflated price because of the mortgage fraud. The home will require some expenses and work by my clients, but it was in good condition. (Zillow’s Zestimate – for what it’s worth – has this home at $1,068,500).
It’s unknown whether or not the bank had insurance to cover the loss on this jumbo loan and smaller second loan. According to the Hennepin County Recorders Office, the first loan was for $1,190,000 and the second was $339,830 for a total of $1,529,830.
In Minnesota, it takes a year to fully go through the foreclosure process. The Sheriff’s sale took place November 1, 2007 and the redemption period ended May 1, 2008.
It’s likely there were a minimum of 15 months of no payments being made – 12 for the foreclosure and redemption periods and then another 3 months until the bank was able to get the property sold and closed. If the mortgage interest rate was 6% then the monthly P+I would have been $9,172 or $137,580 for 15 months. Now add some salt to the wound as the bank had to pay an additional $20,000 for property taxes during this period.
Loans: $1,529,830
No payments: $137,580
Taxes: $20,122
Total: $1,687,532
Sales Price: $725,000
Selling Expense: $47,125
Net to Bank: $677,875
Loss: $1,009,657
Note: these are my approximations to try to piece this information together. I do not have confirmation on these numbers from the bank or the listing broker. Whether it was the bank or a mortgage insurance company that was ultimately on the hook for this home, the combined losses were about $1,000,000 however you slice it.
The information is provided so people can see the extraordinary hits banks are taking because of some of the earlier fraud that took place. It also shows some of the unbelievable opportunities that exist in the market for savvy buyers who are willing to step up to the plate.
