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Sep. 07, 2007
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MORTGAGE MAYHEM: Study shows foreclosures rising

Nevada one of states pushing up national totals

By JOHN G. EDWARDS
REVIEW-JOURNAL
NEVADA STATISTICS AT A GLANCE

Delinquency rate for mortgage loans: 4.41 percent, up 0.68 percent.

Percentage of loans being foreclosed: 0.89 percent, up 0.13 percent.

Percentage of loans in foreclosure: 1.57 percent, up 0.41 percent.


Click image for enlargement.

The drumbeat of bad news on residential mortgages continued Thursday as the Mortgage Bankers Association reported that new foreclosures and past-due loan numbers increased in Nevada during the quarter ending June 30.

Nevada is faring better than many states in some ways and worse in others, the association reported.

The Silver State ranked 25th in delinquencies and 13th in foreclosure inventory on June 30, the association said.

Yet Nevada is among five states with new foreclosures representing more than 0.78 percent of the total. In Nevada, 0.89 percent of all mortgage loans are going into foreclosure. Other states with large increases in new foreclosure starts were Ohio, Michigan, Indiana and Rhode Island.

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    • Association chief economist Doug Duncan also lists Nevada among states with mortgage loan problems so onerous they are driving up numbers nationally.

    "What continues to drive the national numbers," Duncan said, "is what is happening in the states of California, Florida, Nevada and Arizona. Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings."

    Duncan counted 34 states with declining rates of foreclosure.

    The same four states have more than 19 percent of the nation's subprime adjustable-rate mortgages. Subprime loans are those made to borrowers with below standard credit ratings. Adjustable-rate mortgages adjust their interest rates periodically to reflect changes in market rates, as contrasted to fixed-rate mortgages that remain unchanged for the life of the loan.

    More than 2 million families are facing the prospect of seeing their adjustable mortgage payments rise sharply over the next two years, possibly to levels that many will be unable to pay.

    Mark Zandi, chief economist at Moody's Economy.com, said defaults will not peak until next year, reflecting a wave of introductory mortgages that are just now resetting from low "teaser" rates. Those resets can in many cases mean an extra $250 to $300 in higher monthly payments on the typical $1,200 monthly mortgage.

    Bill Ochs Jr., owner of Nevada Mortgage, blames a large portion of the problem loans on investors.

    "Speculators and investors came from anywhere and everywhere just to see if they could make a fast buck (in Nevada)," Ochs said.

    Now, speculators are defaulting on mortgage loans, he said, mentioning one investor who allowed 40 single-family homes to go into foreclosure.

    As investor-owned mortgages are foreclosed, their houses are being dumped on the market, driving down the appraised value of other houses in the neighborhood and making it difficult for homeowners to refinance, Ochs said.

    The association report showed the number of homeowners who got foreclosure notices in the April-June quarter hit an all-time high of 0.65 percent, up from 0.58 percent in the first three months of the year. It was the third consecutive quarter that a record has been set.

    In Nevada, 4.41 percent of residential mortgages were past due as of June 30. That's an additional 0.82 of a percentage point more than at the end of March, according to association.

    Delinquency rates usually decline in the first quarter and rise in the second quarter, because of seasonal factors, the association said.

    The percentage of mortgages going into foreclosure during the second quarter rose 0.13 of a percentage point to 0.89 percent, according to the association. The number of loans in the foreclosure process at the end of the quarter climbed 0.41 of percentage point to 1.57, according to the association's survey.

    Nationally, foreclosure was started on 0.65 percent of loans during the months ending June 30, the highest in the history of the association survey. That's up 0.07 of a percentage point from the first quarter The percentage of loans in the foreclosure process was 1.4 percent, up 0.12 of a percentage point.

    The delinquency rate for mortgage loans nationally hit 5.12 percent after seasonal adjustments, up 0.28 of a percent from the first quarter.

    The Associated Press contributed to this report.



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    Shawn Shepherd wrote on October 05, 2007 09:00 AM: Often overlooked in this foreclosure meltdown are the tenants of landlords that are being foreclosed on. Many time renters are given little or no notice to vacate foreclosed properties. This can be devistating for most families.
    Services like RentalForeclosure.com can help renters by giving them some advance notice of pending foreclosures.


    Anthony wrote on September 08, 2007 12:18 AM: I was given a loan by Oakhill Mortgage with stated income and at a fixed rate, however at COE(time of signing documents) my loan officer showed up with a totally different loan in hand and had a "teaser rate" (I was a first time buyer...) not understanding the loan, and needed this home... I signed the damn papers!!!!!( all the while he was fast talking and hovering over me as I signed!" It was a legal and binding robbery!
    So yeah... I am to blame, but I know that I was snookered by the loan officer so he could get his commission!
    So if there is a hanging... lets all hang together!!!
    signed,
    someone who trusted the robber!


    vegasdude wrote on September 07, 2007 11:15 PM: most people knew that they could not afford the payments when rate was to adjust..however...the option to refi again and take cash out later was there before the actual adjustment takes place. That is why many people chose the adjustable option..because they were planning to sell by the date of first adjustment or refi out of it while taking money out into a fixed rate.

    Who knew that the market was going to turn this way...not borrowers faults really. The lenders should not have offered adjustable rate mortgages..period!


    Patrick wrote on September 07, 2007 08:53 PM: I use to sell real estate in Las Vegas for a company that also owned a mortgage company. The mortgage company had a call center that would cold call people and asked if they want to buy a home. Then the realtors were to follow-up. A lot of hype to get people to buy, but everything was so overpriced no one could afford to buy. Remember the gov. back in the 90's decided to turn renters into owners to stablize neighborhoods.


    Hahnz wrote on September 07, 2007 06:16 PM: People, people people!!! Put the bloddy blame where it truly belongs - who signed those papers knowing that they barely qualify to begin with?? And you people want to blame the Feds, the market, whatever....wake up!


    snowflake wrote on September 07, 2007 05:35 PM: While it is true that predatory lenders targeted sub prime borrowers, it is the borrowers who knew they could not afford the payments. The borrowers knew that they would not be able to make the ARM payments unless they hit the lottery.



    Whatever happened to taking responsibility for one's actions? The borrowers were happy enough to engage in wrongful loans with the predatory lenders. It takes two to tango.



    Of course if the fed doesn't bail out the borrowers, a recession, dare we say depression, would ensue. So, even though it is the fault of the sub prime borrowers and predatory lenders, the fed almost has to bail out this situation to forestall an economic disaster from occuring.


    Don wrote on September 07, 2007 04:10 PM: this was all rigged by the Fed


    race card wrote on September 07, 2007 02:31 PM: oldlawdog, I agree. Also, the responsible people who avoid default and foreclosure should not be punished by being denied any financial benefits that may come from Govt-backed (funded) loan modifications and debt relief. And, some irresponsible borrowers will say they were scammed because they are minority to get an edge to any benefits :) The responsible will pay for the irresponsible in the end?


    race card wrote on September 07, 2007 02:20 PM: Yeah and another Scam is how some troubled borrowers use their "race" as a lame excuse for what they claim is a bad loan. They play "victim" and presto a cute bailout Program. Bush's vision of increasing home "ownership" flopped. Face it, there should be more renters and less owners, because ownership has significant responsibilities that some cannot manage (obviously)!


    oldlawdawg wrote on September 07, 2007 01:49 PM: A government bailout or subsidy to those who cannot meet their mortgages once their ARM kicks in is absolutely offensive to anybody struggling to pay their bills but who has fallen behind. Unless there was demonstrable fraud in the loan process, the deal was the deal just as it is for anybody who lost heir job but still either struggles to make their credit card payments or rent, and may have to file bankruptcy. Unless the government is going to grant some form of debt relief to everybody who faces some form of serious loss or hardship because they cannot pay the bills tbey have incurred, a bail out of the subprime mortgage holders is outright BS that all voters should remember at the polls. These people knew they faced an ARM in 2-5 years but just kept paying interst only while running up more debt (probabaly to furnish the house they could not afford in the first place), rather than paying down debt in order to improve their credit so they could refinance to avoid the ARM. Everybody is aving troubles, so if these people get bailed out then we should all get "bailed out." This BS stinks to high heaven but the average Joe is saying nothing! The market ios reacting to tyhemortgage situation because of institutional and large-money investors, so this is just another big-money bail out clothed as "saving the little guy." It makes me sick.


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