Wednesday, September 19, 2007
Wachovia puts pricey foreclosure on market
An $870,000 house is the highest-priced regional foreclosure in at least five years.
The latest from The Ticker blog
Jeanna Duerscherl | The Roanoke Times
Before its foreclosure, this 6,000-square-foot house in the Hunting Hills section of Roanoke County was owned by William Crick.
Jeanna Duerscherl | The Roanoke Times
The light fixture in the entry way of the Hunting Hills home that was foreclosed on.
A lender has taken possession of a spacious $870,000 home in Hunting Hills in what real estate agents believe to be the largest residential foreclosure action taken in at least five years in the Roanoke region.
The loan default by the owner of the home at 5251 Falcon Ridge Road in Roanoke County is one example of how the current spike in foreclosures is arcing across all income brackets.
Bob Rouse of Young Realty Co. in Salem, who lists 60 foreclosed properties a year, said the typical value of a home in foreclosure in the Roanoke Valley falls between $60,000 to $100,000. Rouse is the listing agent for the Hunting Hills house, which is on the market for $872,550.
He said he handles about one foreclosed property a year in Hunting Hills and this latest is by far the highest-priced. The loan defaulted on was for $882,650, according to a legal notice published in this newspaper by Glasser and Glasser PLC.
Foreclosures have skyrocketed nationally and in Virginia. Foreclosures in Virginia were up 300 percent in July and up 900 percent in August from the same months of 2006, according to RealtyTrac, an Irvine, Calif., foreclosure-tracking company. Last month's picture was not quite as bleak as the data make it look, however, because RealtyTrac included results from additional jurisdictions that began reporting in August.
Nationwide data for August showed a 115-percent gain from a year ago.
When a mortgage isn't paid, the lender can foreclose to repossess the home, direct the occupants to leave and resell the property. Job loss is one trigger. Unexpected health care expenses can also send a homeowner's finances into a downward spiral.
But the current high rate of foreclosures is blamed by experts in part on subprime lending to borrowers with too little income, a track record of being irresponsible with credit or other history of debt nonpayment. A loan type that got many into trouble is the adjustable-rate mortgage, in which low, teaser rates increase dramatically after an introductory period, boosting the monthly mortgage payment significantly. Another option allowed borrowers to pay only the interest and postpone repaying the principle until later.
"Loans with adjustable rates, payment choices and loose requirements have trapped borrowers in too-high payments with few options for escape," The Associated Press reported. Mortgage companies nationwide have withdrawn such easy credit terms because of a rash of borrowers getting in over their heads.
Still, foreclosures on high-end homes are rare in this state. Only 3 percent of all Virginia homes in foreclosure in August were worth $750,000 or more, according to RealtyTrac.
William Crick, the former owner of the Hunting Hills home, could not be reached regarding the circumstances of his loan default. Crick's lawyer, Steven Lefkovitz in Nashville, Tenn., declined to comment and said he would attempt to reach Crick last week.
Crick is by no means the only one to lose an expensive dwelling. One of the next largest foreclosures that area real estate agents can remember is a $418,000 default earlier this year that led to the repossession of a home at 1607 Wimbledon Court in Southwest Roanoke County.
In Crick's case, he and Wachovia Bank agreed to an interest-only, adjustable-rate mortgage of $882,650 to purchase the Falcon Ridge address in June 2005, according to documents filed with the Roanoke County Circuit Court. Crick paid $909,950 for the property, which was newly built at nearly 6,000 square feet. It has a movie room, a large master chamber and upper and lower garages.
Crick's monthly payment of $4,597.14 might seem large, but he oversaw daily operations at one of the area's best known auto chains, Berglund Chevrolet, where he was general manager from 2004 until spring or summer 2006. His income was set at 10 percent of Berglund's net, pretax profits, or at least $20,000 a month during his first three months on the job, according to documents filed by Berglund Chevrolet in a dispute pending in Roanoke Circuit Court. That would work out to $240,000 a year.
Crick left the dealership in the spring of 2006. The circumstances of his departure aren't known; the dealership declined to comment.
About the same time, Crick listed the Falcon Ridge address for sale at $1.15 million. The real estate market was peaking in mid-summer 2006, giving sellers the opportunity for the highest prices for their property of the market cycle.
In December, Crick filed a Chapter 7 bankruptcy action in the Middle District of Tennessee listing debts of $1.3 million, exceeding his assets of $973,600.
Under a common banking procedure, Wachovia analysts who note the timeliness of mortgage payments would have flagged the Crick loan for special attention when the payments did not come in on time. Bank spokeswoman Christine Shaw said the same foreclosure-triggering parameters apply on nearly $1 million homes as on properties worth one-tenth that amount. Payment plans and other special consideration are tried first, she said.
But the plug is pulled "if there's just no hope they're going to be able to pay it," she said. "The price of the home does not matter."
Wachovia foreclosed and the bank put the Hunting Hills home on the market in its name Aug. 28.
Rouse, the real estate broker specializing in foreclosures, found the grass 2 feet high when he visited the former Crick home to begin the process of making it over for resale. He said he braced for what might be inside. He said he frequently finds trash and abandoned personal effects -- and sometimes people -- in foreclosed-upon properties. But when a locksmith let him in, Rouse was glad to see that Crick had left the place in mint, move-in condition. After a clipping of the lawn, the home was ready for resale and scores have visited in recent weeks.
"Every house has a story," Rouse said.
