Are Lenders Redlining Entire Cities?

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by Roberta Murphy

Redining in San Diego
Redlining San Diego Real Estate?

Redlining is a term that describes the unethical if not illegal practice where lenders red line a neighborhood or community, making it very difficult for buyers to purchase in these afflicted areas.

I have recently heard from a couple of direct lenders, Countrywide Home Loans and Bank of America, that most if not all of San Diego County real estate is in the red zone.

Qualifying for current red zone status simply means that the subject property is located in a declining market area. The impact of this colorization is significant to both the San Diego real estate market as a whole and to first time home buyers in particular.

How this version of redlining works creates a no-win situation for buyers putting down less than 5 percent.

Even if a buyer has negotiated a bargain purchase price, say 10 percent under market value, the appraiser will automatically deduct another 5 percent from the contract price to determine a value. In other words, a borrower cannot get away with putting less than 5 percent down.

I spoke with Brian Brady a couple of weeks ago about this matter. I had been told by a representative from a large direct lender that San Marcos, CA was in a red zone, and would be subject to different lending standards. Brian bristled at the thought of redlining, declaring it an illegal practice unless an entire region were painted red.

Well, it seems that most, if not all of San Diego County real estate, is swimming in blood.

One of our agents is struggling with a couple seeking to buy their first home in the Shadowridge area of Vista, CA. The buyer is an automobile service manager in nearby Carlsbad and his wife is an attorney. They are conservative in lifestyle, and can afford payments on a $417,000 home. However, they are short on down payment. And with current lending guidelines and the unavoidable prospect of buying in a red zone, they can no longer qualify for the 100 percent loan Countrywide Home Loans had promised.

And what makes this particular case so interesting is that the home is a foreclosure held by Countrywide as an REO (real estate owned). Any reasonable person would think that Countrywide Home Loans would jump through hoops to get this liability off their books especially with buyers like these.

Wouldn’t reasonable minds agree?

Listed below are all current listings of homes for sale in Shadowridge area of Vista:

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1679 Sunset Dr Vista, CA 92081

$2,000,000
5 Beds
4 Baths
1,918 SqFt
Status Active
MLS # 180042029
Property Type Single Family Residence
WOW, JUST WOW! This property is special from the moment you walk on the premises. If you are looking for horse ranch property with plenty of space around you this is it. There are 2 houses on the property, one is not permitted but in use by family members (3 Bed,2 baths). The other is permitted (2 Bed,2 baths). The horse stable holds approx. 20 horses, all in separate stalls. The office and tack rooms are also part of the stable. There is one HUGE riding arena, and more. Call Mia Worley 760.688.9077 Neighborhoods: Rancho Mar Vista Equipment: Shed(s) Other Fees: 0 Sewer: Septic Installed Topography: LL, Guest House Est. SQFT: 1800

1425 Genoa Drive Vista, CA 92081

$530,000
4 Beds
2.5 Baths
2,230 SqFt
Status Active Under Contract
MLS # 180047441
Property Type Single Family Residence
Beautiful community in Shadowridge neighborhood, 4 bedrooms 2.5 baths, private patio, sliding glass doors, vaulted ceilings. Swimming pool and spa, close to shopping centers, schools, churches, golf course and easy access to Hwy 78

1102 Hacienda Drive Vista, CA 92081

$850,000
2 Beds
1 Bath
656 SqFt
Status Active
MLS # 180053042
Property Type Single Family Residence
Up and coming town of Vista just S of the 78 on corner lot. The property consists of a 2bd, 1 bth detached home built in 1950 with a total square footage of 656 sq ft. The lot contains two APN #s totaling to just over 2 Acres. Are you looking for the convenience close to freeway access & shops? Calling all developers/investors this property is zoned C-2. Visit city website to verify property use, zoning, and characteristics.

2130 Sunset Dr Unit 77 Vista, CA 92081

$115,000
2 Beds
2 Baths
1,440 SqFt
Status Active
MLS # 190007999
Property Type Manufactured On Land
Great location with no rear neighbors. Separate Living & Family rooms! The Kitchen was previously updated. Wet bar. Most walls have been painted white. New carpet in Living & Master Bedroom. Double sinks, tub, & step in shower in Master. Two outdoor porches (Front & Back) + enclosed porch. The Back porch is shaded by an avocado tree & feels very peaceful & private. Extra wide carport w/ curved supports. Convenient location close to Costco, TriCity Medical, Carlsbad Mall & movie theater, Beaches, & more!

1095 Shadowridge Dr Unit 127 Vista, CA 92081

$287,500
1 Bed
1 Bath
689 SqFt
Status Active
MLS # 190009783
Property Type Condominium
Don’t miss this move in ready ground floor unit in the highly desired Shadowridge Aspens Community! This recently painted 1-bedroom, 1-bath spacious unit features laminate flooring, updated bathroom, in-unit laundry, private patio and 1 car detached garage. The complex is well maintained and offers a pool, spa and clubhouse. Great location in Shadowridge near parks, walking trails, shopping & easy access to HWY 78.

1937 Casablanca Court Vista, CA 92081

$659,000
4 Beds
2.5 Baths
2,297 SqFt
Status Active
MLS # 190012028
Property Type Single Family Residence
Recently remodeled kitchen. New interior paint.

2130 Sunset Dr Unit 35 Vista, CA 92081

$120,000
2 Beds
2 Baths
1,152 SqFt
Status Active
MLS # 190013584
Property Type Manufactured On Land
Beautifully maintained 1973 Cascade with 2 beds/2 baths and approx. 1152' sqft. Roomy living room plus den/office area. Bright kitchen with range top and separate wall oven, & laminate flooring. Laundry area with washer/dryer. Great corner lot with low-maintenance landscaping & large covered patio. Green Valley is close to highways & shopping yet maintains a quiet & peaceful atmosphere. Regular events at the clubhouse such as social events, BBQ's etc., heated pool, spa, billiards, library and more!

718 Sycamore Ave. Unit 123 Vista, CA 92083

$87,950
2 Beds
2 Baths
1,136 SqFt
Status Active
MLS # 190015127
Property Type Manufactured On Land
Generous Lot size! 2 Bedroom 2 Bath Mobile Home built in 1970 that has had the interior walls completely redone.New Roof, New insulation throughout, drywall throughout the home. Laminate flooring throughout. Newer Slider added to second bedroom leading out to deck which takes you to backyard. Master Bedroom Has a remodeled shower which is handicapped accessible. Newer vanity, toilet & window added to Master. French doors from Master Bedroom lead out to California Room which has been insulated & permitted.

2130 Sunset Dr. Unit 62 Vista, CA 92081

$165,000
3 Beds
2 Baths
1,440 SqFt
Status Active
MLS # 190016251
Property Type Manufactured On Land
Well maintained home in Green Valley 55+ community! Space Rent $815.50/mo includes trash, sewer & water. Beautiful community with pool, spa & more, close to 78 & shopping! Clean carpet, large living room and family room. Trex porch off the master bedroom. Vinyl fence enclosed part of yard, great for one small pet under 20lbs. Spouse must be 45 or older. Park does not allow rentals. This home feels clean and comes with stacked washer/dryer, refrigerator and microwave. Lots of light! Great lot in the park!

750 Breeze Hill Road Unit 84 Vista, CA 92081

$446,900 - 3Br/3Ba -  for Sale in Vista, Vista
Open House
$446,900
3 Beds
3 Baths
1,336 SqFt
Status Active
MLS # 190016561
Property Type Townhouse
Charming townhome in Charlemont features a bedroom and full bathroom on the first floor. Granite kitchen counters, tile and laminate throughout. Master and 3rd bedroom upstairs with their own bathrooms. Large private courtyard leads to the two car garage. Community club house, two pools, two spas recently refinished and new lounge chairs. HOA covers water, sewer, and trash. Minutes from Calavera Lake and nature preserve. Conveniently located off Melrose, just south of Hwy 78.

633 Via Bolivia Vista, CA 92081

$395,000
2 Beds
2 Baths
1,140 SqFt
Status Active
MLS # 190017026
Property Type Manufactured On Land
Welcome to Vista Del Mar a Senior Community with low fees of $70.00 month. This lovely home is upgraded and boasts a two car garage new paint flooring fixtures appliances & new foundation. Nice patio and yard with roses an orange apple trees and a little view. You own the land in this community and you pay your utilities as well.

901 Wentworth Cir. Vista, CA 92081

$469,000
2 Beds
2 Baths
1,231 SqFt
Status Active
MLS # 190018342
Property Type Townhouse
Wonderful neighborhood in Shadowridge. Backs to Shadowridge golf course & end of cul-de-sac location. Large spacious patio. Home has been refurbished with new kitchen, granite counters, new appliances & new cabinets, fresh paint & wide base, new electrical & ceiling fans. Spacious kitchen with breakfast area. Recessed lighting in kitchen & baths. Mirror closet doors in both bedrooms. Centrally located to shopping, walking trails & golf course. Wonderful place to call home.

 

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13 responses to “Are Lenders Redlining Entire Cities?

  1. Pingback: Real Estate/Buisness News » Blog Archive » Are Lenders Redlining Entire Cities?
  2. If you were in business of lending money……Would you lend money at prevailing rates to buyers today with less than 20% down?
    Yes, lenders are in the business of lending money but at what point do they insist on having some legitimate cushion against people walking away from their homes when times get a little tough.
    It may not be legal to “redline” but if I’m in business and want to stay in business, I’d find ways to do just that.
    Your clients are successful dual income consumers that sound like they may have to learn the lesson of their parents….save, live within their means , sacrifice, and the big lesson for us all….no one owes us anything.
    Your client may be different, each has a different story, but many need the lesson that we all are learning the hard way.

  3. Billy:

    We and our San Diego real estate buyers are negotiating terrific deals on very desirable real estate. Lenders should take this into account instead of subtracting an arbitrary 5 percent off the appraised value.

    The San Diego real estate market has enough problems without lenders adding unnecessary fuel to the fire.

  4. Susan: We were told by two direct lenders that the red lines have been drawn all around San Diego County and its real estate.

  5. Paul,

    I don’t think there is a particular red zone map for San Diego real estate; rather, the lenders painted the entire county a bright shade of red.

    To do otherwise would be a federal violation.

    Hope it’s removed soon.

  6. Wow…After reading the article as well as some of the comments…that is amazing to hear. I have heard about this before and also read some articles myself. Luckily we have never had any of this pop up in the Santa Barbara areas.

    Hopefully this is not the real case.

  7. Kevin:

    Redlining is a reality with San Diego real estate lending. Santa Barbara, because of prior limitations on building, may not be suffering the same fate.

  8. Well what more can we expect Because of continuous economic downturn, many realtors and business establishment were engaged in financial issues, they tend to get big loans in order for their business to survive in this time of depression.

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