Coto Housing Blog

30751 Fox Run

Do you ever watch the virtual open houses on Channel 3 on Cox cable on Sunday morning?  30751 Fox Run in San Juan Capistrano is a consistent featured property on one of the segments.  It looks quite nice on the television, so one Sunday we stopped by for the open house.  It is a nice property.  It is big.  And it appears to be a spec home; a real big spec home.  And at least it is not situated backwards on the lot and is not ugly.  But, 30751 Fox Run has something going against it that Palma Valley and Via Colinas do not.  It is in foreclosure.  Yup, 5 or 6 million dollars worth of spec house in foreclosure.  (Sister Maria Joseph would be giving me such a stern look right now for using an incomplete sentence.)   So which is worse?  Using your own money to build spec homes like Via Colinas and Palma Valley and trying to wait out the market, all the while watching your equity dissappear, or borrowing the great majority of construction funds from a lender so when the market turns south the lender loses and the builder just says, “See ya.”

The notice of default recorded on 2/06/09 with a default amount of $4,981,336.  It seems that non-payment on a construction loan initiates a notice of default which calls for the entire amount, unlike a NOD on a residential mortgage loan which calls for the amount in arrears plus fees and penalties.  The notice of trustee sale recorded on 5/20/09 with an auction date scheduled for 6/18/09.  The auction has been postponed multiple times, (surprise, surprise), and the next scheduled trustee sale is 12/10/09.  My guess is that this property will end up going back to the bank at an eventual trustee sale.  The owner is a limited liability corporation so it would seem the general partners would have little or no motivation to short sell.  What do they care if the LLC gets a “foreclosure” on its credit record?