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, Bed 2 Dimension: 14x15 Bed 3 Dimension: 10x12 Dining Room Dimen: 10x10 Family Room Dim: 10x20 Kitchen Dim: 15x10 Living Room Dim: 10x20 Master Bedroom Dim: 15x15 Frontage Dim in Ft: 521 Guest House Est. SQFT: 1800

718 Sycamore Ave. Unit 110 Vista, CA 92083

$84,900
2 Beds
2 Baths
1,368 SqFt
Status Active
MLS # 180046849
Property Type Manufactured On Land
Home has been remodeled with drywall, baseboards, new carpet, newer laminate floors, upgraded appliances, updated Kitchen & Bathrooms. Master offers mirrored wardrobe doors, double sinks, & skylight in Bathroom. Separate Living & Family room, plus a California room! Wet bar. Wide hallways offer easy access to bedrooms & Baths. Private front porch & back decks w/ gas BBQ & 2 sheds. Convenient to clubhouse & amenities / pool & spa / guest parking! Walk to grocery store, CVS, Walmart, dining, Rx, & more! Neighborhoods: Grandview Terrace Complex Features: ,,, Equipment: Dryer, Range/Oven, Washer Other Fees: 0 Sewer: Sewer Connected Topography: LL Bed 2 Dimension: 11x10 Dining Room Dimen: 9x8 Extra Room 1 Dim: 6x5 Family Room Dim: 14x9 Kitchen Dim: 9x8 Living Room Dim: 21x13 Master Bedroom Dim: 14x11

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

1650 Wesley Way Vista, CA 92081

$498,000
3 Beds
2.5 Baths
1,523 SqFt
Status Active
MLS # 180047471
Property Type Single Family Residence
Updated & well maintained light filled home on a quiet cul-de-sac in sought after shadow ridge. This gorgeous home offers an open floor plan w/high ceilings featuring tile flooring throughout main floor, NEW central air,water heater and furnace, Upgraded kitchen w/stainless appliances & granite counter tops that opens to a large family room. Upstairs features 3 large bedrooms w/newly updated bathrooms. You will enjoy the Professionally Landscaped private yard. Low HOA & No Mello Roos. It's a must see!

1701 Hilo Vista, CA 92081

$839,000
3 Beds
2.5 Baths
2,500 SqFt
Status Active Under Contract
MLS # 180049702
Property Type Single Family Residence
Reduced Priced to Sell!Tropical Oasis on lush ½ lot with a wide variety of Palms. Stunning single level home built in 2002 home is one of 18 homes in the desirable community of Vista Del Oro. Corner lot with lots of privacy. Light & Bright open floor plan with high ceilings featuring a chef’s kitchen with center island, oak cabinets and granite counter tops. Neutral designer colors, 16” Italian Ceramic tile throughout, carpet in bedrooms. Beautiful home in the Shadow Ridge area of Vista. No Mello Roos.

1156 La Tortuga Dr Vista, CA 92081

$619,000 - 3Br/3Ba -  for Sale in Vista, Vista
Open House
$619,000
3 Beds
2.5 Baths
1,890 SqFt
Status Active
MLS # 180067573
Property Type Single Family Residence
This beautiful property has been customized with many features like stained glass found in entryway & kitchen and master bath cabinets & bathroom windows. Kitchen has newly refinished solid oak cabinets, tile backsplash, and stainless steel appliances. Custom tile throughout first floor & new walnut wood flooring hall & stairs.Bedrooms engineered wood floors.Insulated bamboo window treatments on 1st floor & bamboo blinds on 2nd floor. Designer lighting in every room,ceiling fans in bedrooms & master bath. Neighborhoods: Vista Point Equipment: Dryer,Garage Door Opener, Range/Oven, Washer Other Fees: 0 Sewer: Sewer Connected Topography: LL,SSLP Bed 2 Dimension: 11x9 Bed 3 Dimension: 11x9 Dining Room Dimen: 12x10 Family Room Dim: 17x15 Kitchen Dim: 11x10 Living Room Dim: 14x11 Master Bedroom Dim: 15x12

1607 Carriage Circle Vista, CA 92081

$560,000
4 Beds
2.5 Baths
2,150 SqFt
Status Active
MLS # AR18178234
Property Type Single Family Residence
Excellent opportunity to purchase two story home on premium lot in the coveted gated community of Moncado Springs! Pleasing floor plan with carpet throughout downstairs and up. Large kitchen with granite countertops, lots of cabinet space, center island with breakfast bar, and dining area opens up to family room with brick fireplace. Glass sliding doors off kitchen/family room area lead to the sunny backyard with a large concrete patio and grass area, great for entertaining. Seller to provide allowance fo

200 S Emerald Drive Unit 40 Vista, CA 92081

$155,000
3 Beds
2 Baths
1,440 SqFt
Status Active
MLS # 180055088
Property Type Manufactured On Land
Huge price reduction!! Motivated Seller....bring all offers! New luxury waterproof vinyl flooring throughout home, updated kitchen with new appliances quartz countertops, pantry, and breakfast nook/bar. New washer and dryer, both bathrooms have been updated. Walk in closet in master bedroom, vaulted ceilings, gas fireplace. This is a must see to appreciate all the upgrades. Community features pool, spa and clubhouse, close to Costco, 10 minute drive to the ocean and easy access to freeway 5, 78 and 15.

1579 Castillo Way Unit 2 Vista, CA 92081

$547,900
3 Beds
3.5 Baths
1,743 SqFt
Status Active
MLS # 180057660
Property Type Condominium
This tri-level contemporary home provides a smart layout with a convenient downstairs bedroom with walk-in closet and full-sized bathroom, along with the two-bay garage on the first floor. Upstairs is the main living area on the second level, which showcases an open layout among the gourmet kitchen and great room which leads onto a balcony. At the top level are two more bedrooms, including the spacious master suite, each of which enjoys an en-suite bathroom and walk-in closet.

1378 Andorra Ct Vista, CA 92081

$569,000
5 Beds
2.5 Baths
1,835 SqFt
Status Active
MLS # 180058774
Property Type Single Family Residence
One of the few 4Br PLUS, 2.5Ba, 1835 esf property in the golf course community of Lido at Shadowridge. Two community pools/spas w/no Mello-Roos fees on a quiet cul-de-sac. Gated courtyard entry, formal living & dining room w/dramatic ceilings in addition to family room w/fireplace. Kitchen w/nook, central AC, master w/roman style tub & separate shower. Enjoy back concrete patio with brick bands, concrete walkway on the side for trash bin storage & back yard access. HOA maintains front yard landscaping.

1071 Shadowridge Dr Unit 51 Vista, CA 92081

$304,500
1 Bed
1 Bath
689 SqFt
Status Active
MLS # 180062766
Property Type Condominium
Beautiful Shadowridge Aspens condo on the golf course! Adorable downstairs 1 bed/1 bath has beautiful, peaceful views of the lush green golf course & pond from the patio, bedroom & living room. One car parking garage. Comes fully furnished with appliances. HOA includes insurance on the building structure, common areas, pool, spa & club house, water/trash service. The perfect place to call home. Close to shopping & transportation. Set in the desirable Shadowridge community

1622 Promontory Ridge Way Vista, CA 92081

$540,000
3 Beds
2.5 Baths
1,386 SqFt
Status Active
MLS # 180063512
Property Type Single Family Residence
MOTIVATED SELLER! STUNNING HILL VIEWS. RESORT-STYLE LIVING IN THE HEART Of SHADOWRIDGE! NO HOMES BEHIND/IN FRONT. BRIGHT OPEN FLOOR PLAN W/ DRAMATIC VAULTED CEILINGS. WOOD FLOORING. STAINLESS STEEL APPLIANCES INCL BOSCH DISHWASHER. ENJOY LATEST TECH RING,NEST,RACHIO,KEYLESS ENTRY. WALK TO GROCERY, STARBUCKS, RESTAURANTS, HIKING. COMMUNITY POOL/SPA/TOT LOT & GOLF CLUB WITHIN 1MILE. LOW HOA/NO MELLO ROOS.

 

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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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