That's what happened to Perry Laspina and an investment property he owns in Jacksonville, Fla. He was facing foreclosure after the 9.5 percent adjustable rate mortgage spiked, sending his payments from $605 to $1,058 on the $72,000 mortgage, reported the Florida Times-Union.
Despite Laspina receiving an extremely high mortgage rate for the time period, he told the paper, it didn't matter. "I figured I'm going to flip this house within six months, maybe three months," he said about his 2006 purchase during the height of the housing boom. After tearing up carpet, refinishing hardwood floors and painting walls, he hoped he'd fetch about $120,000 for the 1,120-square-foot home he purchased for $80,000.
Although the former used car dealer had made several payments on the home he purchased with $8,000 down, the $72,000 principal had only been paid down about $1,000 before he stopped See photos of homes for sale in your area and across the country on AOL Real Estate making payments. The economy turned, housing prices slid, and he couldn't unload what he had hoped would be an easy flip.
The bubble burst. Laspina was unable to sell it or rent it out, reported the paper, so he chose to stop making payments on the 2-bedroom, 1-bath home, which last appraised for $46,000, according to the Duval County appraiser's office.
The mortgage was through EquiFirst, the nation's 12th-largest subprime lender at the time. In 2009 its corporate parent, Barclays plc, shut the doors of the Charlotte, NC-based mortgage origination business that operated in 47 states, reported the Charlotte Business Journal. America's Servicing Co., a subsidiary of Wells Fargo, was servicing the loan at the time of the default.
The attorney handling the foreclosure on behalf of the lender was foreclosure king David Stern, who went down with his law firm, as we previously reported in "Foreclosure King Falls from Grace." (Stern is in his own legal battle now, suing the lenders who once hired him, as we later reported.)
Through all the mess and the upside down mortgage, it seems Wells Fargo just wanted one less headache. A bank spokesperson apparently told the Florida Times-Union that the loan was written off and the house given to the owner "because of the significant decreased value of the property."
Sheree R. Curry, who has owned three homes and once had a Wells Fargo mortgage, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.
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