Luxury Condos Riddled With Foreclosures

July 1st, 2008 | Tags: Foreclosures

Dozens of luxury condos is riddled with foreclosures in Scottsdale during the past eighteen months. Since the beginning of 2007, 33 out of 84 units in Third Avenue Lofts in downtown region has been foreclosed upon. Information Market, a firm based in Glendale, has compiled the data. Amongst the condos this is the highest figure coming in from East Valley during this time. It is part of the epidemic that has gripped the entire Valley. Thousands of houses have been listed for foreclosure. Till June 3,000 have completed going through all the foreclosure legal steps.

John Wake, a realtor of Scottsdale comments that the people went “over their heads.” Experts opine that although the location of the condos is satisfactory being near the eateries and shopping joints, nevertheless it is suffering from foreclosures today because the timing of contracting the loan was erroneous. Most of the foreclosures came from those loans that were purchased or refinanced from the middle of 2005 to 2007 when the prices were artificially swollen said Tom Ruff of Information Market. But when the balloon burst the owners lost thousands of dollars by way of equity. The loan amount became more than the worth of the house.

Third Avenue opened its doors just when the price had started to escalate. This was the first among the strings of luxury condo projects that were taken up in the valley. Many others did not take off and remained unfinished. The price tumble has badly affected the condos. For instance one 905 square foot unit that had been bought for $369,277 in 2005 was sold for $950,00 in the following year according to Arizona Regional Multiple Listing Service. That unit ultimately came to be foreclosed and sold in April this year for $289,900.

Another reason for this debacle is the play of mortgage fraud. In the previous week the feds brought criminal charges against 36 persons for a foreclosure loan fraud worth $100 million in Arizona. In another instance the price of houses was falsely hiked so as to avail of higher loan sanctions. In this matter 8 persons were indicted relating to one unit in this Third Avenue condo complex. This comes against the background of a nationwide action against “cash back” schemes in which the investor and evaluator worked hand in hand for nefarious purposes. The seller gets less than the amount written on paper and the crooks share this balance.