SANTA CRUZ -- The new townhome,
one of four, is an upscale development with Silestone counters,
stainless steel appliances and radiant floor heating keeping electric
bills low. It's just across the street from Whole Foods Market.
In
2005, when the project was on the drawing board, the housing market was
hot. A 3-bedroom 2 1/2-bath townhome might have fetched $700,000 then
but now asking prices for two of the units are $430,000 and $450,000.
The
downturn has created upheaval for everyone involved in the Doyle Street
project, from the developers to the tenants, the lenders and the
tradespeople who worked on the project.
"I would love to stay
here," said Aimee Thayer-Garcia, 24, a real estate agent who has lived
there since March with her husband Angel, 31.
They have a
2-year-old and a 2-month-old baby, and Angel's daughter, 10, is a
regular visitor. But the family may have to move if the townhome is
sold at a foreclosure auction today at the office of First American
Title on Soquel Avenue.
The couple talked about buying but the
timing wasn't right with the pullback on credit and Angel's changing
fields to work in real estate.
Rent is $2,100 a month.
Thayer-Garcia
said she and her husband asked before signing the lease if the
homeowners were financially stable and discovered their predicament
when the default notices appeared in the county records and "for sale"
signs were posted on the property in October.
"We are frustrated with the foreclosure process," she said, noting real estate agents are "bringing in potential buyers all the time."
Randy Goldstein of Pacific Sun Properties said the company is managing the property, but declined to say more.
"I
was so proud of that project," said Judith Miller, a Corralitos real
estate broker who built the development with her husband, Wayne, an
architect. "It's a horrible situation. The value is gone. You can't get
a non-owner-occupied loan without equity."
World Savings and Santa Cruz County Bank provided construction loans.
Wachovia, which took over World Savings, agreed to refinance.
Santa
Cruz County Bank, which had loaned $1.8 million for construction in
June 2006, does not do residential mortgages. When the couple fell
behind on payments this year, the bank foreclosed. Bank officials
declined to comment, citing the privacy of their clients.
Local
companies like JJM Painting, Floors Etc. and Duncan Plumbing have filed
mechanic's liens claiming they were not paid for their work.
John Pancallo, a broker with Harbor Home Loans in Santa Cruz, is trying to arrange a short sale.
"This is unusual," he said. "The timing was bad. The sellers were unable to refinance and they had no income."
In a short sale, the lender accepts less than what is owed to settle a debt.
Pancallo said the lender could
avoid legal fees, an estimated $30,000, the borrowers could improve
credit faster than with a foreclosure sale, and the buyers would get
the property at a discount. He has three offers.
Asked how many short sales he's arranged, he said, "A couple. Some lenders are easier than others."
TIPS FOR TENANTS
Tenants
Together, a statewide organization, encourages California tenants in
foreclosure situations go to www.tenantstogther.org/hotlineintake to receive a call from a counselor. The group will help tenants:
Find out if their rental is in foreclosure
Identify the new owner after a foreclosure sale
Learn what to expect during foreclosure
Learn their rights as tenants in a foreclosed home
Keep utilities on
Recover security deposits
Stand up to abusive conduct during foreclosure
Report illegal conduct to law enforcement and regulatory agencies