San Diego Foreclosures For Sale

Las Vegas has some of the worst real estate/mortgage/foreclosure statistics in the country. It is estimated that 70% of homeowners are underwater and nearly 12% are delinquent on their mortgage payments. The city is considered to be the epicenter of the sub-prime mortgage meltdown. Homeowners attempting to do their own negotiations with their lenders have been sharing their stories. The themes and mishaps have a common thread. Nobody knows what’s going on.

After months of chasing Washington Mutual to work with him on a loan modification or some type of relief until business picks up again, one Las Vegas resident simply stopped making payments. This was after visiting the home loan modification center recently opened in Las Vegas by JP Morgan Chase, which received $25 billion in federal money and acquired Washington Mutual. His loan wasn’t in the Las Vegas office any more. It had been moved to the REO (real estate-owned) department in Dallas, Texas. He left several messages for someone at a number in Dallas, none of which was returned. In limbo, he said, “I’m so stressed. I’m losing sleep at night because of this. I don’t know where we’re going to be.” Since then, the trustee sale date has come and gone, his property has not been sold and Gomez has been living in his home for six months without making a mortgage payment. The knock on the door can come at any time but it hasn’t yet. Every day is spent on pins and needles.

Las Vegas, partially due to the sheer volume of properties that are upside down, has seen little in the way of government programs that lend a hand with foreclosures. Compounding the problem is the fact that scammers have descended on the city to take advantage of the desperate populace. Because negotiating with a bank on a loan modification requires expertise and knowledge typically beyond the average homeowner’s level of knowledge, it’s important to work with law firms that can prove that they have executed hundreds of modifications. That’s the way to guarantee that you’ll get the best shot at a successful modification and that you won’t get taken advantage of by a company that has just rolled into town and set up shop.

The problem in Vegas is that the prices have dropped so precipitously that there is virtually no chance of prices getting back to where people purchased their homes. Prices have fallen about 80% in some condominium developments, cutting prices from $250,000 to $50,000. With drops like that, getting back to even is like waiting for NASDAQ to get back above 5,000. A growing school of thought counsels that walking away, despite all the negative ramifications, is the best option for many homeowners. “My opinion is yes, most people who are upside down and underwater should walk away from their home,” Tom Love of Realty Executives said. “If you are negative hundreds of thousands of dollars, it’s a hole that you will never dig yourself out of. You may be better served to walk away and start the healing process.” Others are saying the same thing. “The emotional aspect of knowing you’re so far underwater is a real challenge for people,” said Chris Biaggi of All Western Mortgage. “Will I ever get my head above water? Knowing it will take years to get above water, if ever, some people recognize it’s better to cut their losses now and get on with life.”

One of the little known aspects of the “Making Home Affordable” plan is the net present value test. The calculation basically looks at the options of home loan modification versus foreclosure in terms of which one provides the best return for investors. In Vegas, the returns off of a foreclosure are so bad that that home loan modifications look like big winners for the lenders, even with massive concessions. JP Morgan Chase, one of the largest lenders in the area is becoming a big fan of modifications, if only to keep some cash flow coming out of the properties in their portfolio. The bank’s primary goal is to keep people in their home, but everything is based on ability to pay, Chase Bank spokesman Gary Kishner said. He added, “We’ve taken various tacks to try to reach as many people as we can and modify loans that can be modified,” he said. “If someone’s about to start a new job, maybe we’ll do a temporary forbearance. If there’s no light at the end of the tunnel, maybe their option is a short sale. Our goal is to take necessary steps to make this a one-time fix for the customer.”

The problems in Las Vegas are so deep, with so many homeowners upside down and home prices plummeting, the city is in a unique situation with a problem that government programs are not going to be able to fix, said Robert Gnaizda, counsel for San Diego-based Mabuhay Alliance. “At a certain point, when people are under water, you can’t rescue them by conventional means because home values keep going down,” Gnaizda said. He met with representatives from Sen. Harry Reid’s office in May to propose a $200 million pilot program for Las Vegas in which homeowners would become tenants, renting their homes back from the bank. Twenty percent of their rent would be applied to a down payment should they exercise an option to buy the house back within five years at 90 percent of its market value.

Desperate situations call for creative solutions and Las Vegas is in a desperate situation. Some analysts estimate there are more than 25,000 real estate-owned homes in Las Vegas waiting to be released by the banks, so the foreclosure and property value problems look like they will get worse before they get better. The pilot programs being proposed deserve a look simply because Las Vegas isn’t the only city in complete disarray. Something that works in Las Vegas may have applications Detroit or other cities with similar statistics. If the problem continues to worsen, homeowners, lenders, servicers, and investors will be looking for out of the box answers to problems that have no precedent. A successful pilot program, should it happen in Vegas, shouldn’t stay in Vegas.

Visit www.loanmodificationhelpcenter.org for more information on loan modifications.