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Nov. 25, 2008
Copyright © Las Vegas Review-Journal

Home revamp topic of meeting

Finance exec, others offer conflicting views

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL

Housing in Southern Nevada

Jim Gibbons
Governor met with banking officials Monday to discuss the Neighborhood Stabilization Program

A program to buy and renovate foreclosed and deteriorated homes and sell them to middle-income residents drew the attention of Gov. Jim Gibbons and banking officials who met Monday at the Sawyer Building in Las Vegas.

"It is our effort to address the foreclosure problems that the state of Nevada has been having," Gibbons said in his Las Vegas office.

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One observer applauded the effort, called the Neighborhood Stabilization Program, to deal with the collapse of the Southern Nevada housing sector, but described it as only a partial solution.

"In and of itself, it is not a (total) panacea, but it's one more tool," said Brock Davis, president of US Express Mortgage Corp.

The program could promote the sales of less attractive homes and homes that are worth far less than what is owed on them, he said. Lenders without deep pockets seem unable to sell some houses and take a big write-off on the underwater loans, he said.

Attractive foreclosed homes already are selling fast although often for less than the cost of the land and construction, Davis said. Sometimes, lenders take only one round of bids for a home, get 20 offers and sell foreclosed homes without even making a counter offer, Davis said.

The Neighborhood Stabilization Program could boost consumer confidence and reduce the inventory of foreclosed homes, Davis said.

Another official also praised the program.

"This is a positive step in the economic recovery of Southern Nevada," said Kipp Cooper, director of government affairs for the Greater Las Vegas Association of Realtors.

The program is designed "to create opportunity for working families in Southern Nevada," Cooper said.

To qualify, a family of four must make less than $76,000 in annual income. About one-quarter of the homes must be sold to people in a much lower income bracket, for example a family of four making less than $31,900.

The money will go to areas with the largest percentages of foreclosures, the highest percentage of homes previously financed with subprime loans and neighborhoods that local government officials determine are most likely to have high levels of future foreclosures, Cooper said.

The program is designed to provide about $64 million to Southern Nevada, enough money for the purchase, renovation and sale of about 1,000 homes in Southern Nevada for prices less than $220,000, he said.

One analyst, however, believes the governor and other officials have waited too long to act.

The president of Home Builders Research said local and state politicians waited two years before doing something to address the growing deterioration of neighborhoods from vacant foreclosed homes.

"Where were they? Why have they waited until now?" asked Dennis Smith.

"It's a shame local politicians have let these neighborhoods deteriorate to where some of them are going to take years to recover," he added.

Smith said local government officials should have acted a lot sooner and now must spend multiples of the dollars that would have been needed to alleviate the problem earlier.

"This housing crisis is different than anything we've ever seen," Smith said.

He suggested that Southern Nevada should have followed the examples set by Palmdale and Lancaster, Calif. The two California cities started their own programs to buy, rehabilitate and sell foreclosed homes before the federal government established the Neighborhood Stabilization Program.

Cooper, however, said he was impressed by the quick response of local officials to prepare grant applications.

This is how the program will work: Nonprofit organizations in Southern Nevada will get $9 million to purchase and renovate foreclosed or abandoned properties. The city of Henderson will kick in another $1 million for its neighborhoods.

Residents buying the homes will be required to complete a housing counseling program that will be funded through the program as well.

A qualified homebuyer will receive a federal loan of $25,000 to $50,000 that must be repaid if the home is sold within five years. After that, the amount that must be repaid gradually declines to zero after 15 years of home ownership.

The city of Las Vegas is proposing a lease-to-buy program that may benefit families who cannot afford to buy a home immediately.

Gibbons predicted the housing crisis will worsen, but a banker took a more upbeat tone.

"I'm hoping we've seen the worst of it," said Kirk Clausen, regional president of Wells Fargo Bank.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Patrick wrote on November 25, 2008 06:21 PM: Like LittleBird, I also have been in a lot of these distressed homes. Take my advice if the electrical meter box was still attached to the house, it was a luxury feature. What is it about kitchen cabinet doors? I swear every distress house I have ever been in is missing kitchen cabinet doors. Also the plumbing are always pipes jetting out of the floor or wall. I do remember one home having a new hot water tank sitting on concrete blocks, otherwise do not remember seeing sinks, bathtubs, etc.. In most cases these properties needed full gut jobs, and in a few cases tearing down and starting over was the only option. I think the govenment want to spread out the poor and NOT have them concentrated in specific areas, and have their communities assist them as needed. Good intentions, but that was the purpose behind sub-prime loans. Mark wrote on November 25, 2008 04:43 PM: The average salary in Vegas wasn't 75,000 during the days of $300,000.00+ houses. Since the Govt allowed the housing companies to rob the public, Now they step in 5 years late and try to do something. Should have kept prices under control long ago. LittleBird wrote on November 25, 2008 04:26 PM: Evidently the people that are talking about refurbishing these vacated homes have not been in them to see what condiction they were left in.I have seen several that the wiring was even pulled out of the walls,cabinets missing,interior trim gone,and on and on.The cost of fixing these places up to make them livable would almost equal the cost of building a new one.The state should not go there,you think they're broke now,you haven't seen anything yet.The crunch is not over yet,why get into the water,when you don't know the water temperature? thinking out of the box wrote on November 25, 2008 02:16 PM: Dear Mr. Gibbons and Mr. Cooper, Can these so called lower income families live in your neighborhood... if you are feeling so generous, why don't you buy a couple of houses on your block and move them in rent free.... Now, that would be doing some good. Why do the taxpaying citizen have to brunt the inconvenience... WALK THE TALK! aaron wrote on November 25, 2008 02:02 PM: If you guys are as fired up about this as I am, please email Jim Gibbons and express your concern: http://gov.state.nv.us/Contact_Us_NORTHX.htm Though it might just go over his head, at least you did your part to speak your mind. Todd wrote on November 25, 2008 11:47 AM: I'd rather live next to an empty home. Than live next to people with questionable backgrounds most of whom come from the "Ghetto". Fortunately for us the mortgage/bill/tax payers, the way our local government runs things around here they will spend half the money on kickbacks an admin expenses and over pay for the homes that they do buy.... I figure 75 million will probably buy about 100 properties in Las Vegas. LOL wonder wrote on November 25, 2008 09:20 AM: Is this what the city wants, a population of low income families? Think of how this is going to kill property values for all the other homes in the areas. Lee is right, ghetto is what this coity will become. Maybe the local government should have stepped in 5 years ago when property values were jumping on a daily basis and asked then what the heck is going on? This manuever does nothing to restore property values, you officials better be prepapred for the next wave of foreclosures...underwater owners who decide waling away is the best option. I despise these self serving comments from realtors and other so-called professionals. Anything that helps sell properties and put mney in their pockets is good for them...but how does it help us? Lee Yarbrough wrote on November 25, 2008 08:33 AM: Any time you mix government and homes you end up with Ghetto. Vegas and every other city in the country has proven that for years. Home ownership is a privilege that is earned, not a government given right. If you can not afford a home, you rent and take care of the property you rent. This will end up worse then the sub prime loan business within a few years. Be careful what you ask for, you will have to pay for it it in the long term. ths wrote on November 25, 2008 07:45 AM: Please explain how a family of four making $31,000 will help improve the neighborhood? That is barely enough to live on for transportation, food, clothing and other basic services to live. How are they going to maintain the outside of a house and improve the neighborhood that will bring value back? Please think before you act on this one. Todd wrote on November 25, 2008 05:36 AM: So, let me get this straight. The local government is going to sell homes to people who make $31,000 a year, who otherwise cant afford the mortgage and this will rehabilitate the neighborhood? I can't believe the times we are living in! Unbelievable...