[fintstone]

Two data points

1) I recently made a full price offer for a local short sale home listed at $498K. The house had been vacant for a couple of years, was a bit run down and the lot was grown up. The banks (it had a first and second) refused to accept the offer, made no counter other than to say that they would just forclose. A few months later, they have forclosed and somone else owns the house. My realtor called last week and told me that he was in touch with the new owner who was willing to sell me the house for my previous offer. The new owner is a builder who is planning to fix a few things and flip it. He has already cleaned up the acre lot and it looks much better. Obviously, he must have bought the house for much less than my offer...if he can purchase and fix up the home, then sell it to me for the same price and still make a profit. WTF?

2) I have a vacation home that appraises for $320K. It appraised for $680K in 2006. I believe the actual value to be about $450K...but the appraiser are very cautious in the area now. I owe about $630K (1st and 2nd, both with Wells Fargo). It is an adjustable, conventional, interest-only loan.

I tried to refinance since rates are low and the home has an adjustable rate...I had about $320K to bring to the table...but the lender...would not refinance it because the appraisal came in so low and I would not have 20% equity. I would have 80% equity if they just let me finance the 1st mortgage...but they required that I have 80% of both and refinance both at once. It seems odd that they would rather I be so far under water...and risk my walking away from the home (which would be like saving $350K over keeping it). I have plenty of income and a credit rating of well over 800. Are they that sure about pusuing me for the difference if I stop paying? I will not do this, but they surely do not know that. It seems that they would have plenty of incentive to get as much cash from me as possible. It seems odd that they would prefer that I owe them $630K on a home worth $320K as opposed to owing $310K on the same home.