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Apr. 16, 2009
Copyright © Las Vegas Review-Journal

Clark County foreclosures skyrocket

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Lenders opened the floodgates by lifting a moratorium on foreclosures in March, resulting in a record number both in Clark County and nationally, a foreclosure expert said today.

Clark County saw 7,747 homes taken by banks during the month, more than double February's 3,286 foreclosures and four times the 1,937 in March 2008. The first-quarter total of 13,642 is on pace to shatter last year's record 31,416 foreclosures in Clark County, Sacramento, Calif.-based Foreclosures.com reported.

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    • The U.S. Foreclosure Index rose 44 percent in March as 175,199 homes were lost to foreclosure, up dramatically from 121,756 in February, Foreclosures.com reported.

    Clark County preforeclosure filings, or the foreclosure process that starts with a notice of default, jumped to 11,593 in March, compared with 7,635 the previous month.

    Nevada ranks No. 8 in foreclosures nationwide with 26,760 real estate-owned, or bank-owned, properties over the last six months. California is first with 130,855 REOs, followed by Florida (77,542) and Arizona (53,928).

    "Hopefully, this is a short-term surge caused by months of delayed foreclosures," said Alexis McGee, president of Foreclosures.com. "This is a very troubling turn after seeing some bright spots earlier this year."

    A number of banks had agreed to suspend foreclosures while the Obama administration crafted a plan to modify home mortgages for troubled borrowers. They included Citigroup, JPMorgan Chase, Bank of America, Morgan Stanley and Wells Fargo & Co.

    Government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended all foreclosure sales involving occupied single-family homes and two- to four-unit properties through March 6 to give troubled borrowers more time to negotiate with their loan servicers.

    McGee said there's a backlog of properties in the system and it's going to take a couple months to work their way through the process. With President Obama's loan modification plan now in effect, the hope is that preforeclosure filings will decline, which will help stabilize the housing market, she said.

    "I really think at some point that will take hold," she said. "In the beginning, lenders are having trouble keeping up with demand. If a homeowner was denied (modification) in the past, they need to go back and ask for it again."

    Foreclosures account for roughly 80 percent of homes sales in Las Vegas as investors have returned to the market to snap up deals.

    Home financing expert Fred Claridge sees both good and bad in "vulture funds" that he's been hearing about to purchase foreclosed homes.

    The good news would be professional, for-profit ownership of property that could be sold over the years while being maintained and upgraded, he said. The bad news would be turning housing back to speculators.

    "The main difference would be these speculators would not be leveraged, we hope," Claridge said. "Freddie Mac and Fannie Mae used to have rules that each would not buy more than eight properties for the same borrower. FHA (Federal Housing Administration financing) was always designated for owner-occupied, though that slipped while FHA allowed assumptions.

    "I believe Freddie and Fannie will pull back on speculators, and FHA should tighten up their underwriting. FHA underwriting criteria are similar to subprime but at near prime rates. As an aside, if one were to look at the dark side, should housing decline and the foreclosure rate continue at current levels or increase, FHA could be the next major bailout and could be the mental straw that drives the taxpayer nuts," he said.

    Las Vegas business advisory firm Applied Analysis reported that new foreclosures, or homes that transferred title back to banks, remained elevated at 2,381 in March, a 70.8 percent increase from a year ago. That's about 77 home take-backs every day.

    Current foreclosure levels reflect the latest market dynamics, Applied Analysis principal Jeremy Aguero said. Pricing in the residential sector has continued to erode, placing an increasing number of homeowners in a situation where they owe more on their mortgage than their home is worth.

    "While a portion of foreclosures are the result of borrowers' inability to make necessary payments due to job loss or other factors, many are facing the psychological dilemma of servicing an obligation with a cavernous disconnect between debt and equity," Aguero said.

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

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    johnmayer76 wrote on April 23, 2009 02:32 AM: It is estimated that Obama's plan could benefit 8 to 9 million homeowners from the new modification procedures. So how do you know you qualify for the Mortgage Modification? Check the website http://obamamortgage2009.blogspot.com/
    to see if you qualify. I was also in trouble and I am glad I did check it before I talk to my mortgage company and it helped - John Mayer, California


    John Mayer76 wrote on April 22, 2009 11:20 PM: It is estimated that Obama's plan could benefit 8 to 9 million homeowners from the new modification procedures. So how do you know you qualify for the Mortgage Modification? Check the website http://obamamortgage2009.blogspot.com/
    to see if you qualify. I was also in trouble and I am glad I did check it before I talk to my mortgage company and it helped - John Mayer, California


    Joe wrote on April 21, 2009 04:13 PM: Heather:

    Don't pay your mortgage for a couple of months. You will get a letter from your mortgage company saying they want to work with you. With Freddie Mac, they pretty much back-load your loan. The first 5 years they will drop your interest rate and make your mortgage payment small. Then year 6 they increase it and so on. Then at maturity of your mortgage you are responsible for a "balloon payment" which is a significant cost. Pretty much they don't do anything to reduce your prinicple therefore making the payments easier, they just give you a temporary break on the interest. This whole thing makes me upset.


    El wrote on April 17, 2009 01:18 PM: Obama is fixing nothing. The mortgage programs he has developed do nothing for the states that need it the most. Instead we are keeping nonprofitable businesses afloat for another year and raising our future taxes.


    Personal Responsibility is Dead wrote on April 17, 2009 01:13 AM: Axman, you are absolutely right. The 100%-financing crowd is entirely to blame. They had nothing to lose and played the system like a game. The real losers were the honest shmucks who put a 20%+ deposit on the home. If you bought between 2004 and 2007 and put down 40%, then your equity has been wiped out in less than 2 years. Those people have no leverage with the bank because their mortgage is probably equal to the value of the home, and if they stop paying their mortgage the bank will happily foreclose and take possession of the property. I just pray that the banks seek a deficiency judgment against anyone who volutarily walks away from a mortgage that they are still capable of paying.


    Axman wrote on April 16, 2009 11:59 PM: I blame BANKS and GOVERNMENT for Lending while Intoxicated (LWI) or "drunk lending" such as 100% financing. This hurt those who put money down or obtained 70-80% financing. The 100%-financing crowd had no incentive to keep paying on an unside-down home, so they stopped paying, lived for Free for months until the foreclosure/eviction, which then drove prices down. They might have even said "predatory" lending just to squat longer. Some still squat to this day... Any Government help should just go to those who received 70-80% financing.


    WOWW wrote on April 16, 2009 11:17 PM: I thought Obama had fixed all of this.Hope and Change.I know. He inherited this economy.From himself and the rest of the Democrat controlled congress.How was the economy in 2006?


    transplanted wrote on April 16, 2009 09:24 PM: just TRY to buy! it's a nightmare. The listing agents have control of the market, more so than the banks! They lie, cheat, and are not playing by the rules. It is impossible to try to legitimately buy a bank-owned home.

    The Asset Manager assigned by the bank is ONLY KNOWN to the listing agent! The listing agent controls what offers get submitted and WHEN to the Asset Manager! The listing agents are the ones clogging up the system because of their own greed. Get a clue!

    There are no regulations to control them and they are not even honoring the code of ethics to which they are bound! They are the new greed-mongers! Even their brokers are lying for them. Talk about being crooked!

    I have been trying to buy a house for weeks and you would not believe the stories I could tell you about this industry - yet they are all true. Just ask some buyers' agents what they are going through too. They are having to work 3x as hard and still find closings few and far between!

    disgusting all the way around


    snackler wrote on April 16, 2009 09:01 PM: According to Yahoo real estate there are 42,323 properties in some form of foreclosure in Las Vegas and within 25 miles of the city. The number gets bigger all the time. Those who claim things are getting better kinda forget to look at these numbers.


    What about taxes and Ins wrote on April 16, 2009 08:43 PM: scott

    $650.00 huh, seems you forgot about the taxes and insurance. However it should still be less than rent but that $30,000 up front takes a lot of wind out of that sail.


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