Condo Calamity

[Liberal_in_LA]

http://www3.signonsandiego.com/stories/2008/dec/07/n9122694021-condo-calamity/?zIndex=20044

CONDO CALAMITY
By Mike Freeman
9:40 a.m. December 7, 2008

EARNIE GRAFTON / Union-Tribune
Speculators snapped up converted units at Cityscape in Normal Heights, but now most dwellings are bank-owned or in default

The housing bust has spawned thousands of tales of staggering declines in home values in San Diego's foreclosure-ravaged neighborhoods. But few local projects have suffered as much carnage as the Normal Hights condo conversion Cityscape.

-----------
All the original buyers in Cityscape were speculators, not residents. That was uncommon for a complex of its size, real estate experts said. And it wasn't supposed to be possible, since lenders frown on making loans to condo buyers if a majority of units are not owner-occupied.

------------------

Kendrick Green of Inglewood, who lost five two-bedroom units to foreclosure, said he was given false information by the loan officers selling the condos, though Green could not recall their names or the name of the company.

Green said Cityscape was sold to speculators as already-rented units, with the monthly rent “pretty much” covering the mortgage. He said he saw rental agreements.

“I was like, fine,” Green said. “They're covering the mortgage. That's fine.”

The monthly mortgage payments on his units ranged from $1,600 to $2,000 a month, he said. But once the sales closed, Green said he learned his tenants were paying substantially less in rent. Two elderly roommates in one of his units, for example, were paying about $300 a month.

“They were there since the '80s, and their rent never went up,” he said. “I went to them and said, 'Hey, I need more than $300 a month from you guys.' They said they couldn't pay any more.”

[Jack Sprat]

1. I bet the Gulf Coast is flooded with condos

purchased on speculation and now in default.