Inland Empire real estate anecdote

Real estate in the Inland Empire market (west of Los Angeles) appears to bouncing, after taking a severe beating. Saturday night I spoke with my nephew who does mortgages there. He told me about the recent foreclosure sale of a 2700 sq. ft. house, on a huge lot with a swimming pool, in Rancho Cucamonga. It was last bought in 2007 for $750K, and the owner upgraded all sorts of things. The bank foreclosed on the house and put it up for auction a week ago with a minimum bid of $385K. In five days the bank received almost 20 bids. The high bid was $450K, just ahead of a bid of $445K bid that included a $200K cash down payment. (He says there are lots of Orientals who are flooding the area with big cash bids.) The winning bidder plans to finance the purchase with an FHA loan: 30 years fixed at 5%, with a 3.5% down payment. He says the vast majority of loans he's making are FHA loans like this. About the only catch is that you have to have a clean credit record and a job. The program allows borrowers to have monthly payment obligations (auto, car, insurance, etc.) of up to 52% of gross income.