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May. 29, 2009
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REAL ESTATE: Loan delinquencies soar for Nevadans

Nevadans behind on mortgage payments push state to top of national list

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL
More Info

About one in eight Nevadans is now behind on their residential mortgage, new data from the Mortgage Bankers Association show.

It's probably an indication that more foreclosures are on the way for Nevada, which ranks first nationally in mortgage delinquencies and first in foreclosures started in the first quarter, according to the Washington, D.C.-based bankers group. The delinquency rate excludes loans in the process of foreclosure.

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    • The delinquency rate for residential mortgages in Nevada increased to 11.75 percent in the first quarter, compared with 11.12 percent in the previous quarter, the group said Thursday.

    The percentage of loans in Nevada that have started the foreclosure process rose 70 basis points during the quarter to 3.35 percent, while the percentage of loans in the foreclosure process rose 125 basis points to 7.83 percent.

    "What we saw from the MBA wasn't surprising," said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac. "We saw a spike in delinquency in the third quarter, but we didn't actually see a corresponding increase in foreclosure activity. Then the moratorium was lifted and it's pretty much like the dam burst."

    RealtyTrac showed Nevada foreclosure activity was down 18 percent in April from the previous month, but increased 111 percent from a year ago.

    Realtor Robyn Yates of Windermere Real Estate said she's seeing the "buy and bail" trend happening in Las Vegas as homeowners watch their home values decline.

    While a portion of foreclosures are coming from people who are unable to make mortgage payments because of job loss or market conditions, others are facing the gut-wrenching decision of making payments on a home that's no longer worth the original debt, she said.

    People who are "upside down" on their mortgage -- owing more than the home's value -- are buying cheaper homes and letting their original home go to foreclosure, she said.

    "It's much more difficult to do now because you have to prove that your other property is leased and then all the numbers have to work," Yates said. "Sometimes the lenders are asking if the property isn't leased, can you still afford to make both payments?"

    While buy-and-bail is an appealing alternative, there are consequences, Yates said. It will have a negative impact on the person's credit rating, affecting their ability to get a credit card or car loan in the future, she said.

    Real estate consultant Steve Bottfeld of Marketing Solutions said April housing data for Las Vegas showed improvement in foreclosure numbers.

    For the third consecutive month, the total number of foreclosures declined. Las Vegas-based SalesTraq reported 1,289 foreclosures in April, the lowest in the last 16 months. The number of foreclosure sales exceeded the number created by 139 percent in March and by 195 percent in April, another positive for the market.

    "Two months of data does not make a trend," Bottfeld admitted. "But the last two months of data appear to represent significant change and new hope for a shorter negative cycle in Las Vegas."

    It could also be the calm before another recessive storm, he said. The self-imposed bank moratorium on foreclosures was lifted in March, so it's likely that Las Vegas will see a significant "bump" in the number of actual foreclosures at the end of this quarter or the beginning of next quarter.

    At the same time, President Obama implemented a $350 billion federal program in March to rescue homes headed for foreclosure, which could ease the bump, Bottfeld said.

    But Rick Byrd of RB Realty in Las Vegas said not to count on it. The first 100 days have provided no traction or relief to homeowners in distress, he said.

    "There is no housing relief," he said. "The reality is that banks and mortgage servicers have multiple layers to obtain compensation when they foreclose on your home, but very few monetary avenues if they modify your loan. So expect foreclosures to escalate through the summer and next fall. Watch prices continue to fall."

    Sharga of RealtyTrac said Obama's plan will help certain parts of the country and homeowners with certain types of loans, but it's probably not going to help people in Las Vegas, where home values have dropped by nearly 40 percent.

    Lenders aren't required to do anything about principal mortgage balance, but Sharga expects them to come up with other solutions.

    "If they got as creative on this as they did on the subprime exotic loans that got us into this mess, they'd find a solution," he said.

    When the U.S. economy begins to recover, the four housing "bubble" states -- Nevada, California, Arizona and Florida -- will come out of it after the rest of the nation, said Keith Schwer, director of the Center for Business and Economic Research at University of Nevada, Las Vegas.

    Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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    Big Bill wrote on June 05, 2009 12:06 AM: ...and better yet, bought it from a spec buyer from LA (B list, loudmouth celeb) who thought he could turn a couple hundred thousand profit/year buying selling LV properties.

    Can't divulge name. Had to sign non-disclosure statement. But paid 40% less than purchase 2 years ago.

    May buy another! Gawd, I love gullible, hypocritical Lefty tools!

    Viva Capitalism, baby!


    Big Bill wrote on June 04, 2009 06:59 PM: More and more lenders are willing to go with the short sale as opposed to forclosure. It is getting to be a more popular trend. I just purchased a Vegas short sale in which the lender ate $200,000 in order to get the previous tenent out and save itself the hassle of evictions, time and court costs.

    Viva Vegas, baby.


    janejim wrote on June 03, 2009 01:36 AM: Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://obamadebthelp2009.blogspot.com
    to see if they can help. I am glad I did read it before I talk to my CC company and it helped - Jane Jim, California


    tweedledee wrote on May 29, 2009 09:13 PM: Many of the garbage loans like option arms and interest onlies never reset because interest rates fell. If the feds continue to lose the battle to keep mortgage rates low tons of these loans are going to reset upward. House prices look out below. I seriously doubt all those speculators buying up properties are the good kind. If things keep going down they are going to dump and run.

    Nevada is a recourse state. Within 6 months of the sale of a foreclosed property, the mortgage holder can apply for a petition of delinquincy. In other words, if you walk away the bank can come after you for the shortfall from the sale. There are many who claim the bank will never do this so walk. There is so much money to be made that collection agencies will be springing up like weeds after a rainstorm. The collection agencies will be begging the banks to sell them the debt for pennies on the dollar and you can bet the banks will sell. If your unable to make the payments and the house is ruining your life, do indeed walk away. A house isn't worth it. But if your one of those upside down cheapskates thinking your going to pull a fast one on the bank, and the taxpayer, get ready to swim with the worst kind of sharks on the planet.


    AngryBuddhist wrote on May 29, 2009 08:43 PM: guru,

    I got a problem with your self-rightousness.

    jk is not the licensed, certified professional present at the closing of a real estate sale. Those people would of course be the lending agent and the transfer agent. Relying upon an appraisal owned by one or all of the aforementioned.

    So they shafted jk for as much money as he was willing to let him "exaggerate his income" for so he could grab up 5 or whatever houses.

    I mean for the love of God, of all the people and companies in this transaction, how can you blame the "illiterate trailer park trash that was up late on meth one night and followed this goofballs advice and pretty soon I had all these houses guy" vs. the enablers who allowed this S%&t to happen!

    As far as I know, fools are not required to be licensed by any governing entities. Title companies, real estate agents, mortgage companies, etc... are required to be licensed.

    Too late for blame, because the fools and the licensed professionals are goddam indistinguishable!

    Mortgage companies better start to modify!

    Mortgagees should make there best offer then tell these parasites to "EAT DIRT".


    EvilBanker wrote on May 29, 2009 04:58 PM: I have all JK's properties now. The TARP money and the FDIC covered my losses on your 1.8 million. I will now sell these money pits for whatever I can get for them because it is all gravy to me.

    Praise be to TARP. Praise be to the Senator's who voted against the cram down provision because I bribed them with my left over TARP money.

    I'm a rich happy miser!


    warren jeff's bank of nevada wrote on May 29, 2009 04:49 PM: http://www.rickross.com/reference/polygamy/polygamy712.html


    guru wrote on May 29, 2009 04:47 PM: JK- You lied on Loan Apps? Right on!! The Drunk Lender was too drunk to verify. Society now pays for the "rehab" of drunk who overlooked the lie. Who wins?


    jk wrote on May 29, 2009 04:32 PM: Guru: I'm on my way out, counting down to June 27.


    guru wrote on May 29, 2009 04:24 PM: JK= loser, sociopath and should come with Warning Label. Have you left the "dump"?


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