Enatai is a nice neighborhood in Bellevue, WA which is one of suburbs of Seattle. Enatai is great because it is close to Lake Washington, Seattle, downtown Bellevue, and has pretty good schools. I affectionately refer to Enatai as the "slums of West Bellevue." The most desirable neighborhoods in the Bellevue area tend to be Medina (home to Bill Gates), Hunts Point (home to Craig McCaw), and Clyde Hill (home to those executives who can't afford Medina or Hunts Point). We stumbled into Bellevue 8 years ago when I literally saw a sign for a house that was being sold due to divorce. We had never really considered Enatai or Bellevue before. But we love it now and would not think of moving now.
The other day, our neighbor Chuck peeked through the dilapidated, old fence separating our properties telling us that his house is going under foreclosure.
"WHAT?" I thought. "Is there a foreclosure in my backyard?"
Chuck and Deanna moved from Texas to Seattle a couple of years ago. They have been renting the house behind us. Beautiful house in a great neighborhood (I am biased). When we first moved into the house, the founder of BitTorrent Bram Cohen lived in the house (BitTorrent is a peer to peer file sharing service which is said to drive 50% of upstream Internet traffic in North America in 2011.) Bram sold the house when he moved to the Bay Area to start a company around BitTorrent. Since then, it has been rented two or three times.
Chuck is a doctor working at a prestigious Seattle hospital. He has been renting while they figured out schools and neighborhoods in Bellevue. They pay a management company a reasonably large amount of money each month for rent. I am guessing $2500-$3000 amonth.
In September, random people started walking around the property taking pictures. Deanna called the management company. They had no idea what was going on. Then out of the blue, a notice of foreclosure was posted on their door.
It turns out that Chuck and Deanna have been paying their $2,500-$3,000 a month in rent to the management company. The management company would take their cut and then send the rest to the owner. The owner HAS NOT PAID their mortgage in TWO YEARS. Looks like the owner has been pocketing the rent and not paying the mortgage company. FOR TWO YEARS.
Call it a strategic default.
Looking at the county records, the house was purchased for $675,000 in 2005. I bet the value fell to something like $500,000 in the bottom of the real estate market. I estimate the house is probably worth $600-$650k now, so pretty close in value. I am sure the owners/investors decided that it would be a long time before they get their equity out of the house, so it is probably better just to keep the rent and go into foreclosure.
The management company had no idea. Supposedly. They have tried to contact them mutliple times for the renters, but were never responsive. As you can see, I have been trying to get this nasty fence fixed for years and have never heard back from the owners.
As for Chuck and Deanna, as soon as they got the foreclosure notice, they gave their notice to the management company that they were leaving at the end of the month. With kids, they wanted no hassle and no risk. They found another rental in Clyde Hill - same school district and less of a commute for Deanna. They paid their last month and packed up and left all within a week.
It was nice almost getting to know you Chuck and Deanna.
Now the house sits empty and dark with the dialpidated fence falling apart in the rain. This will be interesting. I think the auction is scheduled for January 2013.