Orange County Register

Remember that $9,495,000 short sale in Laguna Beach that I told you about?

It even dropped its price $500,000 at the end of April.

Many readers expressed their feelings about this beachfront home at 24 Lagunita, some even alleged that the buyers were in over their head.

Well thanks to a great post on the Irvine Housing Blog, it turns out these homeowners are HELOC abusers (home equity line of credit).

Here’s what the Irvine Housing Blog had to say about 24 Lagunita:

“After looking through several $1M to $2M HELOC abusers, I decided on one typical $1.6M abuser and a beachfront property where the owners took out $5M in just a few years…What happened near the water? An enormous amount of HELOC abuse is what happened. HELOC abuse knows no socioeconomic boundaries. The lowliest condo in Irvine managed to extract $100,000, and the poshest beachfront home in Laguna managed to extract $5,000,000…“

And apparently this kind of thing happens all over Laguna:

“This isn’t one of those deals where the owner put a huge amount down and might have taken the money out for other reasons. This was a highly leveraged transaction, and the HELOC abuse paralleled the increase in phantom equity. My brief search turned this up all over Laguna Beach. The high end is going to get flattened.

Markets like Laguna Beach where cash buyers are common show how a few cash buyers can create a windfall for an entire neighborhood.”

To read more, CLICK HERE!

To read about HELOC abuse impacting the market in general, CLICK HERE!

Follow Kelli Hart on Twitter at http://twitter.com/KelliHart

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