Under rules adopted Tuesday by the state Supreme Court, homeowners facing foreclosure will have a chance to modify loan agreements with their mortage The court action put into effect a law passed by the 2009 Legislature.
Under the rules, lending companies that file notices of foreclosure must also provide to delinquent buyers applications to allow them to request mandatory mediation hearings.
The lender and homeowner must each submit $200 in these applications to trigger a hearing before Supreme Court-appointed mediators. Mediators will meet with both parties to see whether a mutually acceptable loan change can be reached.
The rules and the application can be found on the Supreme Court's Web site: www.nevadajudiciary.us. Under state law, the rules go into effect in 30 days.
Chief Justice James Hardesty predicted that 1,200 to 1,500 residents per month would file for foreclosure hearings. Hardesty said the hearings would start in August.
He said that more than 420 former judges, lawyers and trained mediators have filed applications to serve as mediators.
The rules adopted by the high court put into effect Assembly Speaker Barbara Buckley's Assembly Bill 149, which was overwhelmingly approved in the Legislature and signed into law by Gov. Jim Gibbons.
During legislative hearings, Buckley, D-Las Vegas, predicted the mediation program would prevent 17,700 residents from losing their homes. About 77,000 Nevadans lost their homes to foreclosure last year.
The program is designed to help homeowners who still have jobs and can make some kind of payments on a mortgage.
Lenders, however, are under no obligation to make loan modifications that keep homeowners from losing their homes. But the hope is that many lenders will agree to the changes because of factors such as the glut of foreclosed homes on the market and the 34 percent decline in Las Vegas home values in the last year.
Under the rules, the homeowner must submit copies of financial records and indicate the amount of a mortgage payment that he or she can make. The lender must submit to the mediator current appraisals of the value of the home and estimates of what the home could sell for in a "short sale."
Short sales occur when lenders sell foreclosed homes for less than the mortgage on the home.
In documents submitted to the mediators, both the lender and homeowner must propose ways to keep the owner from losing the home.
A homeowner's failure to act in "good faith" with the mediator could result in the home being lost to foreclosure. Lenders who fail to provide the necessary documents could prompt the mediator to ask the court to stop the foreclosure. Lenders must send someone to the mediation hearing who has the ability to modify the loan.
Requests for mediation can be filed only on owner-occupied homes, not vacation homes or second homes.
Court spokesman Bill Gang said the justices have been receiving calls from many people who have gotten notices of foreclosure from their lenders. The rules currently can do nothing to help them.
Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.
CARSON CITY -- A former casino executive will direct the new state program designed to reduce the number of home foreclosures. Verise Campbell, who administered the development of a resort casino in Macau, China, was appointed by Supreme Court Justice James Hardesty as the Nevada Foreclosure Mediation Program administrator.
She will oversee a program under which homeowners facing foreclosure can request a mandatory mediation hearing with their lender in an attempt to see whether they can be given more favorable loan terms that keep them from losing their homes.
The 2009 Legislature passed a bill to create the program and the Supreme Court agreed to find mediators and train them to preside at the hearings.
"We believe that Ms. Campbell's expertise and abilities will make this program one of the best of its type in the nation," Hardesty said. Campbell will begin work today and earn $81,140 a year. Mediation hearings are expected to begin in August.
Funds for her salary come from a filing fee on foreclosures, not the state general fund.
She will be based in Las Vegas, where previously she worked as director of administration for Cosmopolitan Resort and Casinos. Kathryn Ely has been hired for $61,950 a year to help coordinate the selection and training of mediators. She will be based in the Administrative Office of the Courts in Carson City.
Ely has 13 years of experience as a mediator. She is also a paralegal and certified civil litigation specialist.
Under the new law, a homeowner who receives a foreclosure notice on Wednesday or afterward can request an opportunity to sit down with the lender and a trained mediator and try to work out a mutually agreeable loan resolution.
By ED VOGEL/LAS VEGAS REVIEW-JOURNAL CAPITAL BUREAU
The new-home market remained dismal in May, and existing-home sales reached their highest level since September 2005 as prices fell more, according to statistics released June 23 by SalesTraq.
The research firm said home prices dropped in May to what was the smallest month-to-month decline in a year — from $125,000 in April to $122,000 in May.
Whether that is an indication that prices are stabilizing remains to be seen. An expected wave of foreclosures could depress prices more, analysts said.
Dennis Smith, president of Home Builders Research, reported a median price of $130,000 in May, the same price as April, and the first month he hasn’t reported a decline in more than a year.
The last time the median price was that low was in December 2000, Smith said.
Sixty-four percent of the existing homes sold in May were foreclosures with a median price of $106,000. Repossessed homes sold for $115,000 in April, according to SalesTraq.
The number of home repossessions picked up in May after dipping the previous two months because of a moratorium by lenders. In May, 1,769 homes were repossessed, 480 more than April. Through May, 9,465 homes have been repossessed, 14 percent more than the first five months of 2008.
Median existing-home prices have fallen 58 percent since the peak of $289,500 in June 2006. The price per square foot in April was $77.41, 41 percent below the price of $131.80 in May 2008.
In May, 4,476 existing homes sold, about 600 more than April and 66 percent more than May 2006. Sales of existing homes are up 75 percent compared with last year.
SalesTraq’s statistics differ from the Greater Las Vegas Association of Realtors because SalesTraq monitors all home sales. The Realtors’ group only tracks sales of homes on the Multiple Listing Service.
Steve Bottfeld, executive vice president of Marketing Solutions, said the latest data tell him the market has reached its bottom because May was the third consecutive month that the number of foreclosures purchased exceeded foreclosures created. May also marked the 17th consecutive month of increasing existing-home sales, and inventory is at its lowest level in three years, he said.
The inventory of existing homes is declining rapidly. SalesTraq reported 13,667 existing homes were on the market in May. There were 16,202 in April and 19,155 in March.
SalesTraq reports a 4.3-month supply with the current sales trend and inventory. During the slowdown in sales in 2007, a 20-month supply of homes existed.
In May, 383 new homes sold, 25 more than April, but 56 percent less than the 870 sales in May 2008.
Through May, 1,846 new homes have sold. It is unlikely Las Vegas will surpass 5,000 sales for the year. In 2008, 9,965 homes sold, a sharp decline from the 38,755 sold in 2005 at the height of the new-home market.
Even price cuts aren’t moving sales. The new-home median price, which includes condominiums, was $211,489 in May, a decline of about $5,100 from April. The price per square foot was $106.59, a $5 per square foot drop from April. The price per square foot was $141.26 in May 2008.
SalesTraq reported 1.28 sales per subdivision in May, an increase from 1.15 in April. The number of subdivisions declined to 300 in May from 312 in April.
There is no evidence that builders will start adding to their supply — 298 permits were issued in May, 39 fewer than April. There were 619 permits issued in May 2008, SalesTraq reported.
Home Builders Research stats
The Las Vegas research firm reported 378 new-home sales and 1,873 since Jan. 1, a 62 percent decline compared with 2008. In May, 360 single-family homes, eight condominiums and 10 apartment conversions sold.
The firm puts the number of new-home permits at 308, an annual decline of 51 percent. Smith said he doesn’t expect the number of permits to increase, but said the totals per builder should go up, because there are fewer builders and those that remain should be starting more homes, he said.
Smith reported the median price of new homes at $212,990 in May, a year-to-year decline of $65,255 or 23.5 percent. Despite the drop, it’s still 37 percent higher than the price in May 2000, he said.
In May, Smith said 3,714 existing homes sold to bring the yearly total to 15,728, a 61 percent increase compared with 2008.
“This is an amazing statistic when we consider all the negativity that bombards the public daily,” Smith said.
Even if many of the sales are to investors, it still reduces inventory, he said.
Smith said the median price of existing homes in May was $130,000, the same as April.
With mortgage interest rates creeping higher again (and yes, I realize by historical standards, they’re still low, but as a housing stimulus they would need to be below 4 percent), a new idea is floating around industry associations and Capitol Hill. It’s another home buyer tax credit. The current $8000 credit for first time home buyers only expires November 30th. The new proposal is for a $15,000 tax credit for all home buyers.
A new bill from Sen. Johnny Isakson (R-GA), who used to be in the real estate business, would not only offer a bigger credit to a wider swath of potential home buyers, it would also removed the income caps ($75,000) that kept a lot of buyers out of the current credit.
It’s debatable just how much the first time home buyer tax credit juiced the spring housing market. It certainly didn’t hurt, but some say it wasn’t nearly enough, given its limitations. Even allowing borrowers to monetize the credit up front, which HUD recently announced, left a lot of earlier potential buyers out.
“Stimulating the housing market is one of the best ways Congress can help accelerate the recovery of our national economy,” said David Kittle, Chairman of the Mortgage Bankers Association in a press release. Obviously everyone, from the builders to the Realtors support the proposal.
“Due to expire at the end of November, the current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results,” chimes NAHB Chairman Joe Robson. “Enhancing this credit would help to stoke the economic engine at a key point in our recovery.”
The question is: At what cost? A letter to Sen. Isakson from the Joint Committee on Taxation provides a revenue estimate for Isakson’s bill, S.1230, the “Home Buyer Tax Credit Act of 2009.”
Assuming an enactment date of July 1, 2009, we estimate that your proposal would have the following effect on Federal fiscal year budget receipts:
I’m not arguing either way for the credit, I just think we should have our eyes wide open as this debate begins.
The recent rise in interest rates should not concern your clients that much...and here's why:
a. On a $125,000 loan amount, a 1/2 point increase in the rate, only amounts to a $38 increase in the payment, and since it's mostly tax deductible interest anyway, the effective increase is really much less than $38. With prices at rock bottom, buying is still most definitely the way to go, especially considering the interest tax deduction, and the $8000 tax credit. I will be glad to create a personalized Rent vs. Own comparison for your clients, which will prove that buying is still the best option.
b. On FHA loans, "streamline" refi's are simple and do not require an appraisal. If rates drop enough to warrant a refi, I will do the refi for 1/2 OFF my fee, as long as I do the original loan. Think of this as a little insurance/incentive.
***Are your offers being rejected? A strategy employed by many agents whose offers ARE being accepted is to bid high, then, when the appraisal comes in lower, renegotiate the sales price. Obviously, lenders will only loan on the appraised value, unless the buyer wants to make-up the difference. Before you write an offer, I'll have my appraiser do some research, so you'll have an idea what the appraisal will come in at. Another way to make your offers more attractive is with a strong pre-approval letter. My pre-approval letters actually "sell" the client. Ask me for one of my letters and you'll see a big difference. Having me in your corner will help you close more deals. I guarantee it!
***$100 Down HUD Homes: The $8000 tax credit CAN be used for closing costs, so, if you have clients with very little money, they can buy a HUD home with $100 down, and use the tax credit proceeds for closings costs. The tax credit proceeds can also be used on a regular 3.5% down FHA loan, NOT as a down payment, but for closing costs OR to buy the interest rate down. Ask me how to get the proceeds quickly!
***Alarm System Super Duper Deal for agents: A very good friend of mine owns a top notch Vegas alarm company and he is offering a sweet deal to my friends/clients.
If you already have an alarm system in your home, the monthly rate is only $29.99 per month, for 24/7 monitoring. If you don't have an alarm system, he will provide one for free, with a monthly rate of only $32.99 for 24/7 monitoring.
With all the riff-raff that's moving into Vegas, I wouldn't be without a monitored alarm system, which is a nice addition to the time tested double barrel shotgun! Let me know if you are interested and I'll make the introduction.
The free alarm consists of: 1 Control Panel, 1 Keypad, 2 Door Contacts, 1 Motion Detector, 1 Internal Siren, 1 AC Battery back-up, 1 Phone connection, 1 Yard Warning sign, 5 window warning decals. *one-time activation of $99
AND If you have any leads that you haven't had time to follow-up on please send them to me and I'll follow-up immediately and get them approved...
Can I give you a call and go over some of my programs?
Thank You,
Dan Sherbondy"Dan The Loan Man"Senior Mortgage BankerDan@TheDreamLoan.comDirect Access Lending702.326.7469 Direct Las Vegas707.280.2534 Direct Northern California
I have 10 proud years in the industry and primarily focus on NEVADA and CALIFORNIA but can also loan in Idaho, Utah, Florida, New Mexico, Missouri and South Carolina.
All Types of Loans for All Types of People....FHA, VA, 10% down investor loans, First-Time Buyers, HomePath, $100 down HUD, Conventional, Refi, 105% LTV Refi, FHA Streamline Refi, Short Sale, 1/2 off for teachers, cops and firefighters and More.
Dan Sherbondy @ Direct Access Lending 650 White Dr., ste 200 Las Vegas, NV. 89119 MLD license #405 702.326.7469 (Direct) 702.617-9900 (main) Dan@TheDreamLoan.com
Three new waves of defaults seen breaking By HUBBLE SMITH LAS VEGAS REVIEW-JOURNAL
The first two waves of mortgage losses are mostly behind us but three more waves are coming, two of them in the housing market and one in commercial real estate, an executive for a New York investment firm said Friday.
There's more pain to come, said Whitney Tilson, principal of T2 Partners and publisher of a June report on the housing and credit crisis.
While the majority of mortgage defaults so far have been subprime borrowers, more middle- and upper-income homeowners are starting to walk away from their mortgages, he said from New York.
Roughly one-fourth of homeowners with a mortgage owe more than the home is worth, making them much more likely to default. Among those who purchased in the past five years, 30 percent are underwater. The figures are worse in bubble markets such as Las Vegas, where 61.4 percent of buyers in the last five years are underwater, according to Moody's Economy.com.
The early wave of defaults came from fraud and speculation, starting in late 2006 when home prices started to fall, Tilson said.
The next wave was borrowers who went into "payment shock" when their adjustable mortgage rates reset. Two-year teaser subprime loans written in early 2005 started to reset in early 2007, though those defaults are tapering off as low interest rates mitigate the shock.
Tilson, author of "More Mortgage Meltdown," is now seeing the third wave of prime loans defaulting due to job losses and home price declines. Prime loan default rates have jumped from 0.5 percent to 4.5 percent in the last year, he said.
In California, the average mortgage owed on homes in foreclosure is $412,000, while the average appraised value of those homes is only $235,000. That's going to cause a lot of people to walk away from their obligation, Tilson said.
"The average person in foreclosure in California is 43 percent underwater, so it's not like these people are close to the edge and you can save them with a loan modification," he said. "These people are deep, deep underwater. Are you going to keep paying when you're that far underwater?"
A fourth wave of prime jumbo loans, second liens and home equity lines of credit started to swell in early 2008, again created by job losses and home price declines.
When both the husband and wife were working, they could afford a big mortgage, Tilson said. Now, with 10 percent unemployment and some 3.5 million job losses, they're tightening their belts.
"It's not just unemployment, it's underemployment, people taking cuts in pay and working fewer hours. So what you're seeing is the middle and high end start to tip over," he said.
Wave No. 5 involves losses among loans outside the housing sector, the largest being $3.5 trillion in commercial real estate. Commercial mortgage delinquency rates have doubled since early 2008.
Tilson thinks housing prices will reach the fair market value trend line when they fall 40 percent from their peak based on the S&P Case-Shiller index, which implies a further decline of 5 percent to 10 percent from the first quarter.
"It's almost certain that prices will reach these levels," Tilson said. "The key question is whether housing prices will go crashing through the trend line and fall well below fair value. Unfortunately, this is very likely."
By HUBBLE SMITH LAS VEGAS REVIEW-JOURNAL
The average listed home price was reduced 10.6 percent nationwide, with larger drops coming in areas hardest hit by foreclosures such as Detroit, Las Vegas and Miami, a San Francisco-based real estate search firm reported Friday.
That's encouraging news for prospective buyers as $27.4 billion was slashed from the price of homes for sale across America, including $156 million in Las Vegas, said Ken Shuman, spokesman for Trulia Inc., a San Francisco-based real estate search engine company. Las Vegas ranks second to Detroit with a 16 percent listing price reduction, from an average of $330,870 to $276,780. List prices in Detroit were cut 23 percent to $62,110, Trulia reported.
Thirty percent of all property listings in Las Vegas have experienced at least one price reduction in the past 12 months, well above the national average of 23.6 percent.
"One of the interesting things about the Las Vegas data is people were talking about an inflated condo boom that created too much inventory," Shuman said, "yet only 22 percent of condos had at least one price reduction versus 32 percent of single-family homes."
Thirty-five percent of homes listed at more than $150,000 dropped their prices at least once, compared with 23 percent of homes priced under $150,000.
Trulia's data did not include foreclosure listings on the market because banks are setting the price and they seldom have any price reductions, Shuman said.
Sellers in Las Vegas realize the market is in the toilet and have been steadily reducing prices, said Sue Naumann, president of Greater Las Vegas Association of Realtors.
"The most important thing in marketing a property is price it well," she said. "I counsel my sellers to look at what percentage prices are declining at and you either price it to sell today or you'll hold on to it for a while."
Naumann said she evaluates the market regularly during the listing and adjusts prices accordingly. Sometimes she adjusts the price upward.
"You never know. Everybody wants to get some kind of deal," she said. "The seller wants to maximize what he's getting for the property. Sometimes a deal is not just monetary. There could be some concessions. The seller pays closing costs or a portion of closing costs or offers an appliance package."
Trulia obtained its listing information from real estate brokers, agents, third-party individuals and Multiple Listing Services. The percentage of listings with price reductions includes any property on Trulia not in foreclosure that experienced at least one price reduction since it was first posted on the site.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
June 5 (Bloomberg) -- Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.
Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.
“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.
The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.
The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.
‘Bogus’ Profit
Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”
Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.
The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.
Debt Valuation
Along with that change, FASB also let companies recognize losses on the value of some debt securities on their balance sheets without counting the writedowns against earnings. If banks plan to hold the debt until maturity, they can avoid hurting the bottom line.
At Citigroup, the recipient of $346 billion in fresh capital and asset guarantees from the government, about 25 percent of the quarterly net income came thanks to the debt securities rule change, the bank said.
Another $2.7 billion before taxes came from an accounting rule that lets a company record income when the value of its own debt falls. That reflects the possibility a company could buy back bonds at a discount, generating a profit. In reality, when a bank can’t fund such a transaction, the gain is an accounting quirk, Weiss says.
Citigroup also increased its loan loss reserves more slowly in the first quarter, adding $10 billion compared with $12 billion in the fourth quarter, even as more loans were going bad. Provisions for loan losses cut profits, so adding more to this reserve could have wiped out the quarterly earnings.
Wells Fargo
Without those accounting benefits, Citigroup would probably have posted a net loss of $2.5 billion in the quarter, Weiss estimates. In the five previous quarters, Citigroup lost more than $37 billion.
Wells Fargo also took advantage of the change in the mark- to-market rules. The new standards let Wells Fargo boost its capital $2.8 billion by reassessing the value of some $40 billion of bonds, the bank said in May. And the bank augmented net income by $334 million because of the effect of the rule on the value of debts held to maturity.
Wells Fargo spokeswoman Julia Tunis Bernard declined to comment, as did Citigroup’s Jon Diat.
The higher valuations Wells Fargo put on its securities probably won’t last, as defaults increase on home mortgages, credit cards and other consumer and corporate lending, Northeastern’s Sherman says.
Fed’s Optimism
“These changes will help the banks hide their losses or push them off to the future,” says Sherman, a former Securities and Exchange Commission researcher.
The Federal Reserve, which designed the stress tests, used a 21 percent to 28 percent loss rate for subprime mortgages as a worst-case assumption. Already, almost 40 percent of such loans are 30 days or more overdue, according to Tavakoli, who is the author of three primers on structured debt. Defaults might reach 55 percent, she predicts.
At the same time, the assumptions on how much banks can earn to offset their losses are inflated, partly because of the same accounting gimmicks employed in first-quarter profit reports, Weiss says.
“There’s a chance that it might work,” Columbia’s Stiglitz says of the government’s attempt to boost confidence. “If it does, then they’ll look like the brilliant general. But all these efforts also bank on the economy recovering and housing prices not falling too much further. Those are not safe assumptions.”
Indeed, while the government and accounting rule makers try to help the banks look their best, they may make the U.S. economy worse. As long as lenders are stuck with bad loans, they can’t provide new money to consumers or corporations to fuel a potential recovery. The banks may look pretty, but they’ll be zombies until they clean up their books.
(Published in the July issue of Bloomberg Markets magazine.)
By Chris Morris (contact), Alex Richards (contact)
Mon, Jun 1, 2009 (2 a.m.)
Although most sales in the local real estate market in 2009 have been short sales or foreclosure properties, movement in the market isn't being propelled solely by bargain-hunting investors. A majority of the homes sold this year are likely to be occupied by the their owners. But for about 40 percent of the homes sold, annual tax bills will be sent to a different address. The map shows how many tax bills for homes bought in 2009 will be sent to each state other than Nevada.
| RealEstateHomeSale.com | | 123ExchangeLinks.com Land for Sale | Changing LINKS RealEstateRegional.com | Las Vegas Real Estate Group | LinkRE.com: Links and Information for Real Estate RealEstateBig.com - The Real Estate Directory | Nevada real estate agents on ActiveRain
Why Choose Me | About Steve Harless | Contact Us | Loan-Related Closing Costs | Your FICO Score | Hot Deals!!! | First Time Home Buyers | Las Vegas Investor Info | Our Preferred Lenders | Las Vegas High Rise Condos | For Sale By Owners | Link Exchange | Las Vegas Foreclosures | Apply For A Loan | Condo Conversions | Latest Real Estate Reports | Can I Afford It? | Homes For Sale | Las Vegas Relocation | Free Home Search | Follow Steve On Twitter | Looking to Buy? | Tell a Friend | Real Estate News | Real Estate Glossary | New Homes & Resales | Looking to Sell? | Our Featured Homes | Home | Loan Application Checklist | Your Buying Power | Free Las Vegas Search | Site Map | Mortgage Calculators | How to Sell Your Home | Buying Foreclosures/REO's | Gated Communities | Fixer Uppers | My Blog | Las Vegas Buyers | Las Vegas Sellers
Copyright © 2009 Realty World Luxury HomesPortions Copyright © 2009 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site MapAll rate, payment, and area information are estimates and approximations only.
