April 25, 2012

Will Wells Profit From This Noe Valley Foreclosure?

1164%20Church%20Foreclosure.jpg

With a 2008 era mortgage for $910,000 long past due, last year Wells Fargo foreclosed upon the Noe Valley home of Kathryn Galves at 1164 Church Street. From "Occupy the Auctions" which unsuccessfully lobbied to keep Ms. Galves in the home:

Kathryn Galves purchased her lovely home at 1164 Church Street in 1972 and the home increased in value considerably over the years. She is a military widow who banked on the increased value of her property to invest in an out-of-state property with a Section 8 (affordable public housing) tenant. The investment did not go well and she lost more to book sales customers who didn’t pay for their orders.
Kathryn lives on a fixed annuity income and her live-in sister earns a meager living as a caretaker. When her financial situation went sour, Kathryn filed a Chapter 13 bankruptcy, but Wells Fargo Bank successfully challenged the bankruptcy, then foreclosed on her home and it went to foreclosure auction. No one bid for the property at auction [at which the opening bid was $1,081,123], so it became “bank-owned”, that is, owned by Wells Fargo. Wells Fargo has filed for the San Francisco Sheriff to evict Kathryn, her sister, and their dog from her home of 40 years.
Kathryn has found a long-term neighbor who is willing to purchase her home and let her, her sister, and their dog remain in the home. Despite many requests by Kathryn and the prospective buyer, Wells Fargo has refused to come to the bargaining table regarding selling the home.

Ms. Galves ended up accepting $7,500 to voluntarily leave the property prior to eviction by the Sheriff and not sue Wells Fargo, she has since vacated the property.

Yesterday, 1164 Church Street hit the MLS listed for $849,000 and touting "Great price, won't last!" with "offers due 5/1 by noon." And yes, priced at $494 per square foot, we’d be willing to bet the sale will be "over asking!" (and perhaps even more than was owed).

∙ Listing: 1164 Church Street (2/2) 1,722 sqft - $849,900 [Pacific Union]
Stop the Eviction of Kathryn Galves, Her Sister, and Their Dog [occupytheauctions.org]
It's Not This Mid-Century Modern Noe Valley Home That Was Flawed [SocketSite]

First Published: April 25, 2012 3:00 PM

Comments from "Plugged In" Readers

cry me a f**king river... she tried to get rich with investment properties, used her house as an atm and it didn't work out. time to move

Posted by: occupy deez nutz at April 25, 2012 3:01 PM

Agree completely. I kept waiting for the part that was supposed to make me feel sympathetic. I guess it was the part about the bank not agreeing to sell it at a cut rate to the neighbor and instead putting it out on the open market? (Note to neighbor: you're still free to buy the house and install Ms. Galves as your ward.)

Posted by: shza at April 25, 2012 3:11 PM

I don't really understand the end game of the protestors here.. Folks refi'd, took out giant piles of cash, lost all that, and then stopped paying the mortgage. What's the bank supposed to do?

Posted by: R at April 25, 2012 3:19 PM

Yes the Occupy protesters would do better by finding a victim of predatory lending circa 2005-8 who used the funds to buy a home at bubble peak prices. There should be plenty to choose from.

Posted by: The Milkshake of Despair at April 25, 2012 3:41 PM

yes, the socketsite editor has a real knack for finding these unsympathetic mortgage borrowers. Fox Business should give him a regular segment on a show to counterprogram Rick Santelli.

Close to four years to foreclose, wow.

Posted by: Brahma (incensed renter) at April 25, 2012 3:42 PM

What are they talking about when they say "she lost more to book sales customers who didn’t pay for their orders"... What book? did they mention a book and i missed it? I thought she invested in property? This is a confusing article. And agreed with above... little sympathy here. If she had just stayed and lived in her home and didnt try and play the America Get Rich Quick game, she probably would still own her house. Let it be a lesson to us all!

Posted by: Emelie at April 25, 2012 3:49 PM

@Emelie: Apparently former owner had some type of small publishing outfit who was very successful at avoiding any web presence.. as far as I can tell.

http://books.google.com/books/about/The_way_we_were.html?id=xDQ0MwAACAAJ

Posted by: R at April 25, 2012 4:12 PM

Tough crowd.

Posted by: 94114 at April 25, 2012 4:14 PM

She was probably selling books out of her home.

People buy for 25 cents the ones donated to libraries and then sell them online for a penny. They make it up by charging $3.25 for shipping and handling but paying the post office $.90 and using free UPS mailers turned inside out. The joke was likely on her, as it looks like, while she was taking the banks' money and not paying, her customers took her books and didn't pay.

It's hard to tell but it looks like there was more than just a first mortgage. Looks to be a lot of them, including "Ultimate Funding Corp". Have to figure that's some sort of lender of last resort. The foreclosure wiped some or all of the others out I assume.

Are there any honest people left or is everyone just ripping everyone else off?

Posted by: tipster at April 25, 2012 4:17 PM

I agree with everyone else. I, too, kept waiting for the part of the story that was supposed to make me feel sympathy for the owner.

Posted by: NoeNut at April 25, 2012 4:29 PM

The house's tax value is $56,000, and the mortgage debt was $1,081,123. That's a lot of money to take out of a house. Plus she got $7500 to move! She did all right-- she certainly was no victim.

Posted by: Dan at April 25, 2012 4:32 PM

"Are there any honest people left or is everyone just ripping everyone else off?"

This, this, a thousand times THIS.

Posted by: Dont get it at April 25, 2012 5:18 PM

Absolutely ZERO Sympathy for this woman. She rolled the dice and lost, she could have lived well and within her means. This mirrors so many stories and speaks to our self-serving "they owe us" attitude and these people get angry when the law comes to reign them in.

News flash: Home ownership is NOT A RIGHT... it is a priviledge.

Posted by: SFLooking at April 25, 2012 7:24 PM

1% of me feels sorry for her.

Posted by: Stucco_Sux at April 25, 2012 7:45 PM

A man goes broke slowly, then all at once.

Posted by: rabbits at April 26, 2012 8:47 AM

"Are there any honest people left or is everyone just ripping everyone else off?"

Pretty much, everyone is either ripping someone off or getting ripped off. So if you aren't actively ripping someone else off right now, watch your pocket!

Posted by: Rillion at April 26, 2012 9:24 AM

Reminds me of Frank Sobotka's great line from The Wire:

"You know what the trouble is, Brucey? We used to make shit in this country, build shit. Now we just put our hand in the next guy's pocket."

Posted by: Fishchum at April 26, 2012 9:34 AM

Some of the energy used by these folks should be reallocated to teaching people the basics of responsible personal finance.

Posted by: Joshua at April 26, 2012 10:40 AM

Looking at the tax records; she refi'd more than once.

Why am I supposed to feel sorry for her? She (like many, many others) cashed in her retirement on an investment scheme that went sour. Yes, it's to bad, but I had to short my home and I NEVER did a cash out re-fi; so no sympathy here.

M.R.

Posted by: MysteryRealtor at April 26, 2012 10:45 AM

Joshua, I'm with you, to a point. When I read that first sentence, Kathryn Galves purchased her lovely home at 1164 Church Street in 1972 and the home increased in value considerably over the years, the first thought that came to me was "Oh, boy; there is no way this story can be about anything other than the owner using cash-out refinancing to do something stupid, because she should have had the home paid off by now and owned it free and clear."

But, on the other hand, one of the paradoxes of living in a capitalist economy is that it isn't possible for everyone, or even a very large majority, to be financially responsible and still save adequately for retirement. That doesn't excuse Ms. Galves or make me feel sympathy for her, however.

Posted by: Brahma (incensed renter) at April 26, 2012 11:40 AM

Taking up space since 1972 does not entitle someone to an unending free ride. This foreclosure is actually a plus for society because now the tax assessor (i.e.: the people) will get their fair share of public chip-in out of this property's occupants. Boo-yah prop 13!

Posted by: jarvisgone at April 26, 2012 11:46 AM

@ Brahma

It seems Ms. Galves had plenty of equity in the house. Don't know what she did over the course of her life for education and work, or how much she saved along the way. But society has scarce resources. Not everyone is guaranteed a retirement in lovely, expensive San Francisco. It's neither good nor bad, it's just how the world works. And again, selling cheap books and taking equity out of your house don't sound like the best choices -- hence the need for better personal finance education for people -- at least give them a fighting chance.

Posted by: Joshua at April 26, 2012 12:10 PM

It's hard to resist the call of cash-outs. Even Bush was pushing for cash-out refis when he said it was "the homeowners money" and they should have access to it.

It was not money, it was equity. And having access to it meant borrowing from "yourself" (or more precisely borrowing against your own paper money that could vanish) and paying a bank interest on "your" money.

Cash out refis are a very very dangerous tool. You must really know what you are doing before considering it.

Posted by: lol at April 26, 2012 12:54 PM

lol, that's an insightful point and part of what I was trying to get at. And George W. Bush had an MBA from Harvard Business School. Did he need "better personal finance education"?

Posted by: Brahma (incensed renter) at April 26, 2012 1:16 PM

Clearly Bush was not qualified to offer personal financial advice :-)

Posted by: Joshua at April 26, 2012 1:16 PM

Last I heard Bush hadn't been foreclosed on, so I think his personal finance education is ok.

Posted by: R at April 26, 2012 1:57 PM

Last I heard GWB was living in a mansion...

Posted by: Joshua at April 26, 2012 2:10 PM

you should be able to borrow against your house; I'm sure she was ecstatic to do it the first time; it's always the after that's not so great;

alternatively, we can say that some folks are really wards of the state but then should they be allowed to vote?

You know, in the past this was dealt with by debtors' prisons.

Posted by: wrath at April 27, 2012 1:07 PM

Sure wish I could refi my rental.

Posted by: 1sfrenter at April 27, 2012 1:30 PM

very few people are wards of the state, especially now that the State of California can't even afford to keep felons behind bars. Certainly this individual isn't a good candidate.

In fact, bankruptcy was and is the alternative to debtor's prisons, and that's what happened here. In the case of a secured debt, the borrower gives up the security, which in this case was the house. The cash incentive to move out promptly was just gravy for the deadbeat borrower.

The problem with viewing situations like this one through a moral lens (even one as twisted as the objectivist moral lens) is that in practice it's one-sided. We're supposed to excuse the loan officer who approved the mortgage and the mortgage broker(s) who got a commission by selling the borrower a loan (and as folks upthread have said, looks like there was more than one). Of the people involved, the mortgage broker, the loan officer at the bank, and the borrower, who among them had the "better personal finance education"?

Posted by: Brahma (incensed renter) at April 27, 2012 1:46 PM

all true - but they're not the ones who are backtracking on a contract.

Posted by: wrath at April 27, 2012 2:28 PM

The loan officers, mortgage brokers and the banks involved all must have recognized that Galvez didn't have a large income and that bankruptcy was likely. In fact, they gave her loans knowing that she - an uneducated, unwise and not well off woman - would be the only loser.

This is exactly the kind of situation where the false dichotomy between business ethics and personal responsibility is shown to be a convenient excuse for cruelty. I'm finding it hard to see how the people who and the institutions which took advantage of ignorance should be allowed to continue predatory lending. Yes, she should have known better, but she didn't which made it easy for people who did know better to take advantage of her to make money for themselves.

I find it more appalling that several posters imagine that there's anything fair about the situation and that they would somehow be immune from some version of this predation. By abstracting Galves' life people get to spout junk like, "not everyone gets to live in San Francisco" or some other "neener, neener" dismissal. She's a person who is now going to sink into our dismal and expensive social welfare system.

Had any banker said no to loan applications, this woman might have been able to live in her own home and the house would have come on the market eventually. She isn't the greedy one; the people who see only a return on an investment are.

Posted by: MM2 at April 28, 2012 3:01 PM

Clearly no one on this site has been inside this house. It is not going to go "over asking". The place is essentially uninhabitable in its current state. Describing it as "lovely" is like describing Saddam Hussein as "humanitarian" or Dick Cheney as "honest". I can't imagine Ms. Galves has any plans to occupy it in its current state. The interior is in an indescribably bizarre state due to some horribly misguided remodel that was abandoned halfway thru. It would be worth much, much more as a vacant lot, because at least you wouldn't have to deal with thr existing structure.

Posted by: mike at April 29, 2012 1:49 PM

What Mike said. This place needs to be torn down. The stairs to the front door are so rotted out that you wonder if you are going to fall through. The rest of the house is just as bad.

Posted by: Marco at April 29, 2012 5:12 PM

MM2, that is an absolutely ridiculous post. The bank IS TAKING A LOSS here!!! But go on characterizing it as a deliberate and spiteful move intended to force this woman out of the house (so that they could get the home and incur a bunch of transaction costs in order to get less money back) if that's what you need to do in order to absolve this woman of any responsibility (and ignore the fact that she received and spent over a million dollars of someone else's money and will never have to pay it back).

Posted by: shza at April 30, 2012 12:08 PM

Pending.

Posted by: Sanfrantim at May 12, 2012 8:53 PM

1164 Church sold for 1.2 million.

[Editor's Note: A Foreclosed Upon Noe Home Sells For Over (What Wells Was Owed)]

Posted by: 94114 at May 17, 2012 5:52 PM

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