Sunday, July 24, 2011

Mortgage Miseducation

Many borrowers, plain and simple, don't understand how mortgages work. here's what they should know before they go shop for a loan

ERIK J. MARTIN You wouldn't buy a new car without knowing how to drive it first, but would you borrow money to buy a house without understanding how a mortgage loan works? Many people do, say the experts.

According to the results of a recent Zillow Mortgage Marketplace survey, 44 percent of prospective homebuyer respondents admitted they are not confident in their knowledge of mortgages or the mortgage process, overall. The 1,005 adult surveyed incorrectly answered basic questions about mortgage information nearly half of the time. The poll also revealed that 37 percent of respondents believe pre-qualifying for a loan means they have secured financing, and 57 percent don't know how adjustable rate mortgages work.
Why are borrowers so ill-prepared to enter into the mortgage process, and who is to blame? A number of factors have contributed to the problem in recent years, including new, more complex lending laws that have increased the paperwork involved; laziness on the part of an uneducated consumer; and unethical lenders who have put profit ahead of the responsibility to properly edify customers.

"One of the most common mistakes made is calling a bank and saying, 'This is my first home, and I don't know much about mortgages,'" says Carolyn Warren, author of "Mortgage Rip-Offs and Money Savers" (Wiley, 2007). "It's as if they're holding a sign on their foreheads that says, 'Please charge me more - I won't know the difference.'"

Tighter restrictions on lending haven't made things any easier. Recent changes to the Real Estate Settlement Procedures Act require that loan originators provide borrowers with a standardized Good Faith Estimate in an effort to improve disclosure of terms settlement costs and interest rate related terms. However, loan officers cannot give the GFE up front without first reviewing the borrower's income, assets and credit. Hence, once a borrower has submitted all the necessary financials and had a credit report pulled, they often feel obligated to go with that lender.

Consequently, Warren believes there is actually less loan shopping going on now than before the new RESPA law was passed, which she says implicates politicians as major culprits in today's mortgage miseducation problem.

In analyzing the Zillow survey data she and her team gathered, Erin Lantz, director of Zillow Mortgage Marketplace in Seattle, says it's apparent that the collective real estate industry has a lot of work to do.

"Our industry is not known for transparency. We're making great strides to improve, but ultimately it is the consumer's responsibility to get themselves better informed," Lantz says. "Borrowers need to take the time to do research, prepare early in the game, and think more broadly in the context of getting ready to purchase a home."

Steven T. Alexander, president of Private Mortgage Services with Private Bank of Buckhead in Atlanta, says it's vital to do your homework before you jump into the market. Seek the help of a seasoned mortgage loan officer who can help properly structure your transaction to reach your ultimate objectives, read informative books and articles and talk to others who have recently completed the process.

"It is up to the borrower to due their due diligence so they can obtain fair and decent financing," says Warren. "Recently, a buyer asked me to look at the GFE provided by his builder's preferred lender. This lender was charging a $9,558 origination fee for a 30-year fixed rate on a loan of $268,000, while other lenders are charging less than $1,500 for the same rate. Even now, in a post-subprime world, there are gross over-charges going on."

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Home-price drops said to reflect overcorrection

We're in another housing bubble in Las Vegas, but this time it's the flip side of the overvalued market that emerged from 2000 to 2006, a real estate economist said Wednesday.

Just as Las Vegas home prices were unsustainable when they hit a median of $285,000 in 2006, they're tremendously undervalued now at $106,000 and that, too, is unsustainable, said Mark Boud, principal of Irvine, Calif.-based Real Estate Economics.

"It collapsed so hard that it overcorrected," Boud told about 60 real estate professionals at the Las Vegas Midyear Builder Symposium at Alexis Park. "You pay 11 cents on the dollar in mortgage costs, which is incredible and, in fact, unsustainable. We'll never be able to see this affordability again."

By 2015, inventory will tighten, vacancy will drop below 2 percent and there will be a strong push in pricing into 2016, Boud predicted.

Median existing-home prices fell to less then $70 a square-foot in June, down 12 percent from a year ago and nearly $30 a foot less than the cost of a new home, Las Vegas-based SalesTraq reports.

Cheap housing prices combined with the lowest interest rates in 40 years give consumers the leverage they need to buy their dream home, said Anthony Grasst, regional sales manager for MetLife Home Loans in Kirkland, Wash.

Homebuilders need to do a better job telling buyers that it's a fantastic time to buy instead of rent, he said.

"People buy emotionally and justify logically," Grasst said. "How much of the buying decision is financing? About one-third. You have more to fear in rising interest rates than depreciation."

A one-point increase in mortgage interest rate erases 11 percent of household purchasing power, Grasst said.

For example, someone who buys a $250,000 home at 5.25 percent interest rate has a monthly principal and interest payment of $1,242. If the price is discounted 3 percent to $242,500, the payment drops to $1,205, a savings of $37 a month.

If that $7,500 discount is used to "buy down" the interest rate to 4.25 percent, the monthly payment is $1,107, a difference of $135 a month, Grasst calculated.

"Your monthly payment is 11 percent below market and you save $49,000 over the life of the loan," he said. "Explain that rents are susceptible to increasing. Buy now and you're guaranteed low payments for 30 years."

Geoff Gorman, vice president of sales for Harmony Homes in Las Vegas, said the 3-year-old company has grabbed the fifth-highest market share of new-home sales in Las Vegas, but the numbers aren't where he wanted to see them this year.

While new-home sales rose to their highest level of the year at 357 in June, they're only on pace for about 3,500 for the full year, compared with 5,438 in 2010, SalesTraq's monthly report showed.

It was inevitable that sales would be lower in 2011 with "no outside impetus and no manufactured urgency," Gorman said. Demand dried up after the federal tax credit expired in June 2010, though it was later extended to September.

"It's harder than ever to sell a home today," Gorman said. "It's not 2004, with lines out the door like the Matterhorn at Disneyland."

The No. 1 challenge for the homebuilding industry in Las Vegas today is appraisals, he said.

Just this week, Gorman said he had a willing buyer and the necessary comparable sales, but the appraisal came in $10,000 short, killing the deal. The home was appraised at $194,000, about $1,000 more than an appraisal for the same floor plan a month ago. However, this home had $10,000 worth of upgrade options, including stainless-steel General Electric appliances, a larger lot by 700 square feet and several thousand dollars in flooring upgrades.

"I don't think enough of us have said the appraisal situation in town is ridiculous," Gorman said. "I know appraisers have rules to follow, but what's missing is common sense. We all hear that a new car is worth more than a repossessed car. I understand diminishing returns, but seriously, $1,000 appraisal for $10,000 in upgrades? It's not right. I don't know what can be done."

Other challenges for homebuilders include buyers' poor credit ratings and debt-to-income ratios, along with competition from foreclosures and short sales, Gorman said. Those who could qualify to buy a home last year under the federal tax credit did, and those who didn't probably have issues relative to income and creditworthiness, he said.

Las Vegas has an excess supply of distressed properties with a "shadow inventory" pushing 30,000 homes still being held by lenders that has to be absorbed moving forward, economist Boud said.

"Supply will flatten, but probably won't go negative. Demand will go negative," he said. "Unfortunately, the housing market is going to lag economic growth by eight to 12 months."

Consultant Bob Mirman of Eliant Inc. said the nation's best production builders are selling 45 percent of their homes from referrals.

He warned about "consumer terrorism," or people who use the Internet as a weapon to spread the word about how unhappy they were with customer service from a particular homebuilder.

"It's not about the home you build, but the experience you deliver," Mirman said. "Your strongest sales force is an army of delighted homeowners who then tell their friends. Nobody can sell your home better. They're the most trustworthy sources."

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


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Loans with Little Down?

Loans with Little Down?

PETER G. MILLER QUESTION:
My broker says now is the time to buy real estate because prices are low, mortgage rates are down, and it will soon be difficult to finance a property with less than 20 percent down. Why will it become hard to get loans with little down?

ANSWER:


There's been considerable confusion about this, so let's try to straighten it out.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act lenders are allowed to make whatever mortgages they like. However, if they make mortgages with certain characteristics - say, with fully documented loan applications and points and fees equal to no more than 3 percent of the loan amount - they then get certain benefits such as less liability and no need to set aside 5 percent of the loan amount in a reserve fund.

Dodd-Frank also says that loans within the "safe harbor" created to protect lenders from liability must have 20 percent down. But - and here's the part you don't hear too much about - there are huge exceptions. For instance, the 20-percent rule does not apply to FHA or VA financing, conventional loans sold to Fannie Mae and Freddie Mac or loans that lenders keep in portfolio.

The question is this: Who would benefit if mortgages with little money down were increasingly unavailable? Not sellers. Fewer sales would mean lower prices. Not lenders. They would originate fewer loans and lose substantial business. Not servicers. They would have less to manage on behalf of mortgage investors. Not real estate brokers. They would have fewer homes to sell. Not states and local communities. With fewer real estate transactions their tax collections would plummet.

There's now an effort to raise the FHA down payment from 3.5 percent to 5 percent and exchange Fannie Mae and Freddie Mac for institutions from the private sector. But even if we make changes, borrowers will still want loans with little down, and, as a matter of self-interest lenders, brokers and government will still want to make sure that such financing is available with far less than 20 percent down.
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Tuesday, June 14, 2011

Class-action suit filed over HOA debt-collection practices

Legal headaches seem to be intensifying for Nevada homeowner associations and their collection agencies, with the filing Monday of another class-action lawsuit over HOA debt-collection practices.

Attorneys for Benita Jones Ebel filed suit in U.S. District Court in Las Vegas against Nevada Association Services Inc. (NAS), claiming it’s been violating the federal Fair Debt Collection Practices Act by sending "dunning letters" that are "unfair and unconscionable" and invaded her privacy.

Ebel in the lawsuit seeks to represent a class of people who received such letters over alleged debts resulting from unpaid HOA assessments.

The suit specifically charges that in a Dec. 17 collection letter regarding an alleged debt to the Rancho Viejo HOA, NAS threatened to file a lien against Ebel’s home if the debt wasn’t paid within 10 days.

This violated the law in that consumers have 30 days to dispute such debts, the lawsuit suggests.

"As a result of defendant’s threat to record a notice of delinquent assessment lien, defendant threatened to take non-judicial action to effect … disablement of plaintiff’s property without the present right to do so," charged the suit, which was filed by attorneys with Cogburn Law Offices.

David Stone, president of Nevada Association Services, said Monday his company complies with the debt collection law.

"We will file the appropriate responsive pleading, and if this is found to be a frivolous lawsuit we will be seeking attorney's fees. We expect this claim to be adjudicated in our favor, as similar claims have been. We have been sued before and I expect more lawsuits. Plaintiffs are looking for a quick payday and this is not going to happen," Stone said.

With the recession causing many homeowners to fall behind on paying HOA assessments, and vacant and foreclosed homes sometimes producing no revenue for HOAs, collection activity has picked up in recent years and controversies and lawsuits have followed.

Numerous collection lawsuits are pending in state and federal court in Las Vegas and a massive complaint was filed last month with the state Real Estate Division against more than 500 Nevada homeowner associations.

Yet another pending lawsuit, filed by a Bank of America subsidiary, claims HOAs have been trying to get the bank to pay for unauthorized attorney’s fees and collection costs related to assessments against foreclosed homes.

Real Estate in Crisis

The subprime mortgage crisis is hitting the Las Vegas metro area particularly hard. In fact, Nevada has the highest foreclosure rate in the country and the metro area is consistently one of the top five worse in the nation. The crisis jeopardizes further growth by creating an overflow of available homes, which in turn slows the construction of new homes and invariably effects property values. But at the same time it creates opportunities of more affordable housing for those who have been priced out of the market in recent years.

The crisis entails homeowners losing their houses after they are unable to afford their mortgage payment. It was brought about by lenders and banks giving risky loans, or subprime mortgages, to people with poor credit scores or finances. Low interest rates first attracted such homebuyers. However, as many loans were adjustable rate mortgages (ARMs), higher interest rates down the road made payments nearly impossible, ultimately leading to foreclosure. Furthermore, predatory lenders have been accused of perpetuating the situation by unfairly taking advantage of uninformed or new buyers. There were a large number of investors who bought homes at the height of the market and expected to flip them for a profit, only to see values decline.

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Thursday, May 26, 2011

Las Vegas valley new-home sales shrink

By Hubble Smith
LAS VEGAS REVIEW-JOURNAL
Posted: May 25, 2011 | 2:01 a.m.
New homes accounted for just 7 percent of total housing sales in April, a radical departure from past years when they were about 40 percent of the Las Vegas market, a local housing analyst said Tuesday.

Home Builders Research reported 258 new-home sales during the month, down from 293 the previous month and down from 471 in April 2010. For the first four months of the year, new-home sales declined 33 percent, to 1,020.

The new-home industry was once a huge contributor to the Las Vegas economy with as many as 30,829 closings in 2005. That number fell to 15,584 just two years later and then to 4,761 last year.

The reduction in new-home market share is an "unbelievable alteration" and sums up how the Las Vegas housing market has changed, Home Builders Research President Dennis Smith said.

"It's hard to compare to the way things used to be," he said. "This is what the market is resetting into, something it's never been before. I'm not saying it's bad. It's different."

Adapting to the changing market, homebuilders laid off most of their staffs and cut operations to the bone, Smith said. He counted 323 homebuilding permits in April, for a total of 1,130 for the year, down 45 percent from a year ago.

It's not a fair comparison because last year's numbers reflected increased demand from the government's homebuyer tax credit, he said.

"The numbers are sobering," the analyst said. "Closings are one thing, but I watch permits. I'd be really surprised if we don't see an increase (in permits) in the coming months."

Customer traffic at new-home subdivisions has slowly increased and net sales per subdivision have climbed to about 0.4 a week, about double from the beginning of the year, Smith said.

D.R. Horton pulled the most permits in April (182) followed by KB Home (157) and Lennar (133).

The median price of a new home in Las Vegas dropped 7.2 percent from a year ago, to $188,450 in April.

The resale segment ­continued to chug along, with 3,849 recorded closings in April, largely boosted by investor purchases. For the year, existing home sales increased 3.8 percent, to 14,375.

Median resale price was $112,000, a loss of $16,000, or 12.5 percent, from a year ago. Smith noted that 19 homes closed escrow for $1 million or more .

Smith said he's seeing signs that Las Vegas may be emerging from the recession, such as packed restaurants and an uptick in discretionary spending.

"There's some good news around the country and hopefully it'll filter down to us," Smith said.

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

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Tuesday, May 24, 2011

Rent here? Who can afford it?

By Jennifer Robison
LAS VEGAS REVIEW-JOURNAL
Posted: May 12, 2011 | 12:18 a.m.
Updated: May 12, 2011 | 8:53 a.m.
Las Vegas housing, unaffordable?

It's been a while since we've heard that one.

But an affordability problem is exactly what Las Vegas has, according to a new study. The National Low Income Housing Coalition's "Out of Reach 2011" report says the city's average apartment rent outstrips the average wage earner's income by a significant amount.

Local observers quibbled with the coalition's figures, saying their numbers show a substantially better balance between rents and wages.

Regardless of whose statistics you follow, one thing's for sure: A multitude of demographic and economic trends will shape the Las Vegas apartment market -- and the rents people pay -- in coming years.

To understand the rental market's dynamics, start with those disputed figures from the National Low Income Housing Coalition. Using data from the U.S. Department of Housing and Urban Development, the coalition, an advocacy group that says it wants to guarantee decent, affordable homes for low earners, pegged the average monthly rent for a two-bedroom apartment in Las Vegas at $1,067. That means a local earning the city's average hourly wage of $14.52 would need to work 57 hours a week to swing the rent, utilities and other essentials. A renter earning the state's minimum wage of $8.25 would have to work 99 hours a week to afford the typical two-bedroom rent.

Danilo Pelletiere, research director and chief economist for the coalition, said the disparity between rents and incomes matters because pricey apartments mean unstable communities, as renters move from complex to complex looking for more affordable places. Expensive housing also drains discretionary income.

"We need to focus on these issues to keep neighborhoods alive, keep stores in business and keep that vibrancy that communities need to survive," Pelletiere said.

Housing and Urban Development officials said they obtain their rent information from a combination of sources, including 2008 Census data, 2009 phone surveys and adjustments for inflation.

But local experts said the report's average rents seem high.

Brian Gordon, a principal in Las Vegas consulting and research firm Applied Analysis, said his company's first-quarter numbers show an average local two-bedroom rental rate of $668 to $825 a month, depending on the number of bathrooms. The market's average overall monthly rent for apartments of all sizes was $761 in the period. Applied Analysis gets its statistics through landlord surveys, conducted most recently in March.

Spencer Ballif, a senior vice president with the Las Vegas office of commercial real estate brokerage CB Richard Ellis, came up with a similar result. Ballif's numbers, which also come from landlord surveys, show an average monthly rent of $867 for two-bedroom apartments in Class A communities, which consist of newer properties with more features and upgrades. A typical two-bedroom Class B unit came in at $717 a month, while two-bedroom Class C units averaged $643 a month.

What's more, average rents are down substantially. Gordon's numbers show the average asking rent on a two-bedroom, two-bath apartment in Las Vegas falling 14.5 percent in the last three years, from $959 in the first quarter of 2008 to $825 in the same period of 2011. Ballif said the average monthly lease rate for all types of units fell from $932 in the fourth quarter of 2007 to $780 in the first quarter of 2011, a 16.3 percent drop.

And that's before you count the concessions landlords offer to lure residents. A standard concession is one month's free rent -- a sweet deal that didn't exist during the market's heyday three to four years ago. Factor in those giveaways, and rents have probably dropped in the 20 percent-plus range, Ballif said.

In fact, rents continue to drop for Camden Property Trust, the Texas-based owner of 29 Las Vegas Valley apartment complexes. Camden's monthly rents range from $399 to $1,300, are still trending negative and dropped 7 percent in 2010, said Myra Rega, the company's regional manager.

"We have a few communities with rents that have turned upward, but for the majority of our communities here, we haven't hit bottom yet. We're still seeing year-over-year decreases," Rega said.

Those drops could stabilize and reverse soon, though.

For starters, apartment occupancies are increasing. Local rental communities posted an occupancy rate of 92 percent in the first quarter, up from 90.1 percent in the fourth quarter of 2009, Gordon said, and the number of concessions is dropping.

Credit the rise in occupancy to the jump in home foreclosures. As homeowners surrender their properties, they move into rental communities, Pelletiere said. The burst housing bubble has increased the number of single-family homes for rent by underwater families looking to cover mortgages on homes they can't sell. But those rental homes haven't proven major competition for apartments because homeowners borrowed at the market's apex, so they have to charge significant rents to pay the mortgage.

Ballif said it's difficult to determine how many distressed single-family homes might end up in the city's rental pool.

What is clear: Few new apartment communities are planned or under construction, and that could constrain apartment supply in coming years. Las Vegas averaged 5,100 new apartment units annually during its prerecession boom; expect 1,200 units a year in the future, Ballif said.

That flat supply could run head-on into a growing demand for rental units, depending on the economy and demographics.

Incomes are stabilizing as average hours worked per week begin to bounce back from recession-era lows, Gordon said. There's also stabilization in the job market. Job creation jumped in March and unemployment fell to 13.3 percent, down from 14.9 percent in December.

Those trends will likely mean more renters in coming years, Pelletiere said, as roommates and extended families who doubled up to survive hard times can afford to strike back out on their own.

Rega said Camden officials expect occupancies and rents to stay steady through 2011, and move upward in 2012.

Marketwide, annual rent increases of 2 percent to 3 percent could return beginning in 2012 if local employers create more jobs, Ballif added.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512
.

Nevada bucks trend in home repos

By ALEX VEIGA
THE ASSOCIATED PRESS
Posted: May 12, 2011 | 12:18 a.m.
LOS ANGELES -- Nevada again had the highest foreclosure rate in the nation, with one in every 97 households receiving a foreclosure notice in April, according to a report being released today.

The Silver State also bucked the overall national trend, as bank repossessions jumped 23 percent from March and climbed 12 percent from April of last year, RealtyTrac said in its report.

Lenders may have elected to pick up the pace of foreclosures in Nevada to take advantage of brisk foreclosure sales in Las Vegas. In March, sales of previously occupied homes in Las Vegas hit a five-year high, with distressed properties accounting for 69 percent of sales, according to DataQuick.

However, the Greater Las Vegas Association of Realtors reported that real-estate owned, or bank-owned, homes accounted for roughly 47 percent of sales, while short sales, or homes sold for less than the mortgage owed, accounted for 23 percent of sales.

Across the nation, fewer Americans had their homes repossessed by banks or were put on notice for being behind on their mortgage payments in April compared to a year ago.

That would ordinarily suggest improving fortunes for U.S. homeowners, but the decline had less to do with any turnaround in the housing market than with foreclosure processing delays that appear to be getting worse. That is threatening to drag out a housing recovery, foreclosure listing firm RealtyTrac Inc. said in its report.

It's taking longer for lenders to move against homeowners who have stopped paying their mortgage and to take back homes already in some stage of the foreclosure process. In states like New York, for example, it now takes an average of more than two years for a home to go from the initial stage of foreclosure to being repossessed by a bank, the firm said.

Those delays, partly due to banks working through foreclosure documentation problems that came to light last fall, means it could take many more years for lenders to deal with a backlog of seriously delinquent properties, which numbers up to 3.7 million, by some estimates.

"It's going to take between three to four years just to get those loans into foreclosure at our current pace," said Rick Sharga, a senior vice president at RealtyTrac. "And that doesn't spell good news for the housing market."

Nevada has led the nation in foreclosures for several years since the housing market collapsed. Across the U.S., banks repossessed 69,532 homes last month, down 5 percent from March and down 25 percent compared with April of last year, according to RealtyTrac, which tracks warnings sent to homeowners throughout the foreclosure process.

The number of properties receiving an initial notice of default fell to 63,422, down 14 percent from March and down 39 percent from April 2010, RealtyTrac reported.

Homes scheduled for auction for the first time also declined in April, falling to 86,304. That's down 7 percent from March and 37 percent below April of last year.

Las Vegas-based SalesTraq showed 2,099 bank repossessions in March, compared with 943 in February and 1,520 in January. They're up 68 percent from the same month a year ago.

Banks sold off 2,131 homes in March, leaving the bank-owned inventory in Las Vegas at 11,684, according to SalesTraq.

A weak housing market, sliding home prices and pressure on lenders to give troubled homeowners more time to work out new payment arrangements or loan terms have all contributed to the longer time frame for foreclosures.

Many banks also have taken steps to revisit thousands of foreclosure cases since last fall, delaying the processing of new foreclosures. The logjam has been compounded by court delays in states like Florida, New York and New Jersey, where foreclosures must be approved by a judge.

In the first three months of this year, it took an average of 400 days for a U.S. home to go from receiving an initial notice of default to being foreclosed on, RealtyTrac said.

That's up from an average of 340 days in the same period last year and more than double the 151-day average in the first quarter of 2007.

The delays are even lengthier at the state level. In New York and New Jersey, the foreclosure process took more than 900 days, on average, to run its course in the first quarter -- more than three times the average length of time in the first quarter of 2007 for both states.

In Florida, one of the states hardest hit by the foreclosure crisis, the process took an average of 619 days in the first quarter, up from 470 days a year earlier. In the first quarter of 2007, it took an average of 169 days for the process to play out, RealtyTrac said.

Barring a pickup in the pace of foreclosures, it is likely fewer homes will be repossessed this year than in 2010, when lenders took back more than a million, Sharga said.

Despite the drop in foreclosure activity last month, several states continue to have outsized foreclosure rates.

Review-Journal writer Hubble Smith contributed to this report

When troops get orders to move, some risk losing houses

By Keith Rogers
LAS VEGAS REVIEW-JOURNAL
Posted: May 22, 2011 | 7:37 a.m.
Updated: May 22, 2011 | 2:18 p.m.
These soldiers and airmen have dropped bombs or have seen them explode in Iraq and Afghanistan, so they know firsthand the stress of fighting the nation's wars.

Now they are battling a different kind of stress at home in the Las Vegas Valley -- the chronic stress that weighs on them from being at ground zero of the mortgage crisis.

When they get orders to move somewhere else, they have no choice but to go. In many cases, they face six-figure losses on their homes through short sales or foreclosure.

They also risk losing their security clearances, which could prevent them from flying warplanes and leading troops after they arrive at their new assignments.

"This has been more stressful than my deployment," said Lt. Col. Eric Wishart, who is trying to sell a home worth 60 percent less than he paid for it. "And going to Afghanistan is no picnic."

Wishart is not alone.

More than a thousand airmen at Nellis Air Force Base have been trapped in the mortgage crisis and are unable to refinance, according to a survey by Rep. Joe Heck, R-Nev.

The survey found 740 airmen upside down on their mortgages don't qualify for the Pentagon aid program, another 263 can't sell their homes at a break-even price and some are renting them at a monthly loss.

Of the base's 8,932 personnel, 32 are in foreclosure and 98 have completed short sales or are in the process of completing one.

After seeing this snapshot of what is happening at Nellis, Heck proposed an amendment to a defense bill to shed more light on the problem.

While the bill doesn't provide funding for an assistance program, it would study the problem nationwide across all branches of the services.

"Service members become distracted by personal and financial issues, rather than focusing on their mission," Heck said earlier this month , noting that a soldier's ruined credit makes it difficult for them to maintain their security clearances.

ONE SOLDIER'S STORY

Wishart, a full-time Nevada National Guard soldier and military science professor who chairs the Army ROTC program at the University of Nevada, Las Vegas, is trying to pay off a 1,550-square-foot house in northwest Las Vegas, where he lives with his wife and two daughters.

They bought the house in 2006 for $327,000, but it is only worth $132,000 based upon its current appraisal and a cash offer in a short sale.

His permanent-change-of-station, or PCS, orders will soon send him to Carson City to work as a battalion commander at Guard headquarters.

He might have been able to avoid a loss through the Defense Department's Home­owners' Assistance Program, but he isn't eligible even though it was expanded in the 2009 economic stimulus bill.

The assistance program through the Army Corps of Engineers is limited to personnel who bought their homes before July 1, 2006, but who sold them because of permanent relocations between Feb. 1, 2006, and Sept. 30.

"What I'm asking for is some protection from deficiency judgments," said Wishart, who served as a combat adviser in Afghanistan during a year's tour that ended in 2009.

"Thank God, no one on our team was killed or injured, but we saw our share of rockets and IEDs," he said, referring to improvised explosive devices, or roadside bombs.

'UPSIDE DOWN A BUNCH'

Three pilots who fly fighter jets at Nellis Air Force Base told similar tales after being reassigned out of state.

Lt. Col. Mike Ballek, an F-15 pilot, said he, too, has been enduring financial stress since he learned in October that he would be moving his wife and son to Washington, D.C., this summer.

They bought a new two-story home in June 2007 in a gated North Las Vegas community. The value of the 2,800-square-foot home is "upside down a bunch, over $200,000," he said Friday.

Like Wishart, he isn't eligible for assistance under the Defense Department program and is losing money every month.

"What people would like to see is maybe expand the window or get rid of the eligibility date. Let people apply and let the folks who run the program make the decision on who's deserving," said Ballek, who, like the other pilots, spoke as a private citizen and not on behalf of the armed forces.

Stress from the mortgage crisis centers on that nagging thought "that potentially all your life savings could be gone. There are a lot of unknowns," Ballek said.

"It's a different kind of stress but still stressful," he said. "In combat your primary concern is not getting shot or making sure that you bomb the right target not the wrong target. This is a different kind of stress, the kind that weighs on you over time ... knowing that you have to figure out how to get out from under the house and what's going to happen in terms of security clearances."

'DO THE BEST FOR MY FAMILY'

Marine Corps Lt. Col. David Berke flies F-22 Raptor jets out of Nellis under a pilot exchange program with the Air Force. He moved here in 2008 and bought a home in North Las Vegas with his wife to start their family. They now have a 2-year-old daughter and a newborn.

"I don't have a waterfall and a helicopter pad, just a reasonably priced home in a reasonable neighborhood. The goal was not being greedy or lavish but to do the best for my family."

With orders to relocate next month to Eglin Air Force Base, Fla., to fly the new F-35 joint strike fighter jets, Berke said he will have to find a place to rent there while continuing to make payments on his North Las Vegas home that he bought for about $250,000 but is now worth approximately $120,000.

He expects to lose between $125,000 and $150,000 on his investment, which has brought on "a significant amount of personal stress."

"It undermines the barrier between your professional life and personal life," said Berke, who has been a Marine pilot for 17 years with multiple deployments to Iraq and Afghanistan.

Berke said when he bought the house in 2008 he thought the home market had hit bottom and the market would return. Now he thinks "there's a distinct possibility that home values will decrease in the future."

LOSING SECURITY CLEARANCE

Air Force Lt. Col. Zac Wood closed on his North Las Vegas house in 2009 thinking the market would recover in the three or four years he would be stationed at Nellis flying F-16s.

"I really never thought I'd find myself in this situation," Wood said.

He and his wife have three children.

"We have it on the market and we're trying to hold on to it and sell for at least what we owe the bank."

While he is not as upside down on his North Las Vegas home as some of the other pilots, his situation is compounded by having his savings tied up in a previous residence in Newport News, Va., that he must rent out at a loss.

He also is worried about losing his security clearance after he moves to his new assignment in Fort Drum, N.Y., his 11th move in 17 years.

"Up until last year my understanding was you could let security know you might have to file bankruptcy and go into fore­closure, and they would kind of understand that. But in the last six months to nine months or so, they've come about and said they're not going to be quite so understanding," he said.

"So I could lose my security clearance. And if I lose my security clearance, I'm kind of useless to the Air Force. Pretty much every job that I could do requires a security clearance."

Wood, an Iraq War veteran, said he loses sleep trying to grapple with the mortgage crisis.

"It's a horribly stressful situation," he said, adding that he tries to find peace of mind through running. "I ran six miles today to get rid of it."

In interviews last week, the three pilots emphasized that they need to protect the integrity of their security clearances. They said they also risk depleting their savings to stay afloat while they try to sell their homes at a loss, or rent them out with a negative cash flow. Additionally, they will be strapped to buy or rent at their new locations that, like Nellis, have either no or limited on-base housing.

THROUGH AN AGENT'S EYES

Real estate agent Aldo Martinez, who retired from the military in 2005, is handling the Wishart family's short sale and has worked with many active duty soldiers and airmen in the Las Vegas area.

He said Congress needs legislation to help what he called "the most underpaid profession in the United States for the amount of sacrifices."

He said even USAA, a lender that "is supposed to be a service member organization," has been no help in resolving the Wisharts' case. He charged the USAA with intentionally interfering with a contract to sell the property.

"It's like lose-lose instead of creating a win-win," Martinez said, describing "the humiliation a person goes through losing their home."

Nicole Alley, a corporate spokeswoman for USAA in San Antonio, said Friday that she didn't have all the details to comment on the Wisharts' case.

Nevertheless, she said, "We're dedicated to those serving the nation and we are sensitive to members having financial hardships in today's economy. That's why USAA goes above the Service Members Relief Act. We go above those requirements on many products including credit cards, personal loans, auto loans and home equity."

Stephens Washington Bureau Chief Steve Tetreault contributed to this report. Contact reporter Keith Rogers at krogers @reviewjournal.com or 702-383-0308.

Multifamily housing lures buyers

By Hubble Smith
LAS VEGAS REVIEW-JOURNAL
Posted: May 20, 2011 | 2:16 a.m.
Updated: May 20, 2011 | 8:57 a.m.
Multifamily housing was the hot investment on the final day of an auction of foreclosed Las Vegas commercial real estate properties and delinquent commercial loans valued at $1 billion, a broker for Colliers International said Thursday.

The Fountains at Flamingo, a 524-unit gated apartment complex east of the Strip, went for $32.5 million, or $61,832 a unit, said Gary Banner, who brought several clients to the auction table.

That's more than double the $15 million starting bid on a $50 million note balance. Banner gave a broker's price opinion, or estimated value, of $76,000 a unit at The Fountains.

"I think it's the better deal out of all the properties," Banner said on the final day of the auction. "They may be walking into a profit of $15,000 a unit."

The 272-unit Augusta Apartments in Henderson opened at $10 million and was bid up to $20.4 million, or $75,000 a unit, by early Thursday morning. Montego Bay Apartments, 420 units in Henderson, had a starting bid of $12 million on a non-performing note of $38 million and sold for more than $28 million.

Investors were "pretty aggressive" on the notes, with multifamily being the most sought-after, Banner said. At least four of the nine apartment complexes met their reserve, or the lender's minimum bid, he said.

Some 65 delinquent loans on office, retail, industrial and multifamily properties were offered during the three-day online auction, with a live bidding room at Cashman Center on the final day. About 500 bidders registered for the auction handled by Irvine, Calif.-based Auction.com.

While some properties sold well, not all moved. Advertised as a $1 billion sale, the auction resulted in sale of just over $330 million in notes, said Todd Gladis, senior vice president for the company.

Nine of 10 bank-owned properties were sold with a 66,000-square-foot retail center on St. Rose Parkway going for the highest price of $6.25 million.

The largest property on the auction block was the 29-acre Sahara Pavilion North retail center on the northeast corner of Sahara Avenue and Decatur Boulevard. It had a starting bid of $12 million on a $56 million nonperforming note. The property did not "trade," Gladis said.

Auction.com chairman Rob Friedman said he's seeing a lot of cash buyers.

"Bottom line, these buyers are getting great deals because the sellers are so motivated," Friedman said as he watched properties pop up on a screen at Cashman as bids came in. Each new bid reset the clock for three minutes.

"The underbidder has a chance to think, confer with his partners and potentially make a bid," he said. "It's exciting if you're online and in the game."

An investor who drove to the auction from Los Angeles said he was looking at a shopping center at 7865 W. Sahara Ave. with a starting bid of $600,000, but his partners told him they were hearing about better deals from other people.

Jeremy Foley, investment broker and leasing agent for Gatski Commercial in Las Vegas, said some investors shy away from auctions, while others see opportunity.

"The REO (real estate-owned) assets have enough due diligence material for investors to make intelligent decisions and accurately price the properties," Foley said of bank-owned properties. "In most cases, they've been given enough lead time to speak with the leasing and property management companies, walk the site, potentially talk to tenants -- although this is typically frowned upon -- and review the due diligence material."

Buying notes is on the opposite side of the spectrum, he said. Due diligence is just the beginning.

"Without being able to interview the tenants or leasing agents, it's nearly impossible to gauge the validity of the rent rolls," the broker said. "Any income information provided could potentially be flawed because the rent roll itself is incomplete. At the end of the day, the value of the majority of these properties is based upon income."

Note assets could potentially take a large and possibly needless discount without that information, plus there are legal concerns about the borrower throwing the property into bankruptcy, Foley said.

Banner of Colliers said that's often an owner's delay tactic, and that lenders and investors have been successful in recouping their costs in 90 percent of those cases.

"Where I see the positive side of this process, if it's successful, is basically unfreezing all the assets here in Vegas that we can't trade," Banner said. "We need that inventory movement and that velocity in the market. The noteholders want to recapitalize their investment and get it back to the market. Now we have assets in stronger hands to reposition the properties to resell them."

Commercial mortgage defaults in Las Vegas began increasing in late 2007, part of the $3.5 trillion wave of commercial real estate losses nationwide that some analysts predicted would be the "next shoe to fall."

Las Vegas real estate expert Richard Lee said he was surprised at how many properties were selling at the auction. Reserve prices were low enough to close the gap between ask and bid, he said.

"It looks like stuff is selling -- more than I expected. Now, selling and closing (escrow) are two different things," said Lee, marketing director of First American Title Co. of Nevada.

Buyers have 10 days to close on the notes and 30 days to close on REO properties, Friedman said.

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

Report puts Las Vegas new-home sales at three-decade low

By Hubble Smith
LAS VEGAS REVIEW-JOURNAL
Posted: May 17, 2011 | 2:18 a.m.
Updated: May 17, 2011 | 10:55 a.m.
New-home sales declined 44 percent from a year ago to just 267 in April and are on pace to barely break 3,000 for the year, research firm SalesTraq reported Monday.

It would be the lowest number that SalesTraq President Larry Murphy said he could remember in more than 30 years.

Last year's total was 5,438, down from a peak of 38,705 in 2005.

The new-home median price dropped to $189,099, a 7.5 percent decrease from a year ago. The average price per square foot of $91.17 is down 12.4 percent.

Murphy said he found 14 new homes in one subdivision sold to a single investor for cash at $140,000 each.

In looking at all 267 sales during the month, he also found that some of the homes were built from 2006 to 2009 and never sold.

"After three years, builders are saying, 'Let's drop the prices and get them off the books.' New-home sales are few and far between right now," Murphy said.

The resale market is taking off with 4,970 sales in April, a 13.8 percent increase from the same month a year ago. That's on the heels of more than 5,000 sales in March.

Median resale price, however, continued to drop to $106,900 in April, down 14.5 percent from a year ago and a step closer to the $100,000 mark that Murphy predicted as a possibility earlier this year.

About 50 percent of homes were purchased with cash and 78 percent were vacant, SalesTraq reported.

"We've been saying that for 18 months and it's still true and prices are still dropping," Murphy said.

SalesTraq showed 822 short sales, or lender-approved sales for less than the mortgage owed, at an average price of $120,000; 785 trustee auction sales at an average of $90,000; 1,973 bank-owned sales at an average of $105,000; and 1,390 nondistressed home sales at an average of $110,000.

Builders pulled 313 permits during the month, a 34 percent decrease from April 2010.

Small drop in Nevada rate for troubled mortgages

By John G. Edwards
LAS VEGAS REVIEW-JOURNAL
Posted: May 19, 2011 | 11:06 a.m.
The percentage of residential mortgage loans that are delinquent in Nevada dropped a percentage point during the first quarter, but Nevada remains one of the country's most troubled states for past-due mortgage loans and foreclosures, the Mortgage Bankers Association reported Thursday.

The delinquency rate fell 1.08 percentage points, to 10.6 percent, at the end of March, the association said.

However, the association said mortgage delinquency rates normally decline between the fourth and first quarters because of seasonal factors.

The percentage of loans on which foreclosure was started during the quarter plunged by 0.66 percentage points to 2.3 percent, the association said. Meanwhile, the percentage of loans in the foreclosure process dipped 0.8 percent to 9.32 percent.

Nevada ranks third in delinquencies and first in foreclosures started among all states and the District of Columbia, the trade group reported.

Many individuals with home mortgages are "financially and psychologically exhausted," said Tisha Black Chernine, founding partner of law firm Black & LoBello.

They have tired of waiting for a government program or law to deal with the residential foreclosures, she said.

"I think it's going to take another 12 to 18 months to get where we are secure in our property values," Black Chernine said. "As soon as we have real property stability, we'll start recovering as a state."

She observed a temporary reduction of housing supply as lenders slow down foreclosures, because of government pressure to correct past foreclosure- processing problems. Nevertheless, she said the overhang of foreclosed but vacant houses depresses home prices.

But the number of Clark County homeowners receiving foreclosure notices fell dramatically in April, reflecting a regional decline in foreclosure activity at every level, ForeclosureRadar reported.

Notices of default filings in the county fell 18.1 percent from March and 36.24 percent compared with April 2010. Canceled foreclosures were up 69.54 percent over 2010.

The slowdown in foreclosure activity has also slowed the time properties spend in the foreclosure pipeline. The time to foreclose in Clark County now averages 348 days, 56 percent longer than a year ago. Bank-owned properties are taking 183 days to sell, nearly 20 percent longer than in April 2010.

For all of Nevada, notices of default decreased 17.8 percent in April from the prior month, falling to the lowest point seen since ForeclosureRadar began tracking Nevada foreclosure filings in August 2009.

Notice of trustee sale filings fell 23.7 percent month over month. Activity on the courthouse steps was mixed, with sales back to banks down by 2.7 percent. Sales to third parties, typically investors, were up 6.9 percent from March, and up 81 percent from April 2010. Cancellations were 14 percent higher month over month and 69.5 percent year over year.

Wells Fargo to hold workshop on mortgage-loan modification

By John G. Edwards
LAS VEGAS REVIEW-JOURNAL
Posted: May 20, 2011 | 2:16 a.m.
Updated: May 20, 2011 | 11:55 p.m.
Wells Fargo Bank will hold its second workshop for homeowners seeking home-loan modifications, and Nevada President Kirk Clausen said the odds of getting help are good.

Last year, 53 percent of the 800 homeowners attending the workshop in Las Vegas were approved for a mortgage workout option, he said. Of those approved, 18 percent received help through the federal government's Home Affordable Modification Program but 70 percent benefited from the Wells Fargo mortgage modification program.

The program is for homeowners who make mortgage payments to Wells Fargo Home Mortgage, Wells Fargo Financial, Wachovia Mortgage and Wells Fargo Home Equity.

The workshops will be conducted from 9 a.m. to 7 p.m. Wednesday and Thursday at the Tropicana conference center, 3801 Las Vegas Blvd. South. Reservations are recommended but not required. Visit wfhmevents.com/leadingthewayhome to register. Call 800-405-8067 for information.

Sunday, February 6, 2011

Pardee Homes highlights Solamar in northwest

Pardee Homes' Solamar neighborhood in northwestern Las Vegas features several homes that are ready for move in, according to Pardee Homes' Regional Sales Director Rob Tuvell.

He said the market continues to favor new-home buyers in Southern Nevada, including at the builder's eight valley neighborhoods.

"In our buyer's market, there are many terrific opportunities to own a brand-new, energy-efficient home with many upgraded amenities and that includes a select number of move-in ready homes at our Solamar neighborhood," Tuvell said.

Situated on a pool-size corner home site that measures 6,430 square feet, a Solamar Plan 4A at home site No. 143 measures 3,084 square feet with four bedrooms, three baths, three-car garage, playroom and loft.

Priced at $293,500, the home includes granite countertops, stainless-steel appliances including a side-by-side refrigerator and upgraded flooring.

A Solamar Plan 2C at home site 264 measures about 3,000 square feet with three bedrooms, 2½ baths, three-car garage, den and playroom.

Priced at $290,750, the home includes a stainless-steel appliances including side-by-side refrigerator, granite countertops, upgraded flooring and rear yard landscaping.

A Solamar Plan 5B at home site No. 117 measures 3,959 square feet with six bedrooms, four baths, three-car garage, library and loft.

Priced at $336,100 the home includes stainless steel appliances, granite countertops and buyer's selection of flooring.

For additional information on these homes or others, visit the sales office; call 702-645-3666 or visit www.pardeehomes.com/solamar.

All of Pardee's newly designed homes, including those at Solamar, are part of the builder's LivingSmart brand, a program with standard and optional measures that boost energy efficiency, save water, improve indoor air quality and encourage material conservation and the use of recycled or sustainable resources in new homes.

Home prices start from $270,450 at Solamar and the one- and two-story floor plans range from 2,491 to 3,959 square feet with up to six bedrooms.

Solamar's northwestern Las Vegas location is near new retail, services, schools and major transportation links including the recently opened Centennial Hills Transit Center. Also nearby are Silver Stone Golf Club, Mountain Ridge Park, Las Vegas' Extreme Sports Park and Centennial Hills Hospital.

To visit Solamar from U.S. Highway 95 North, exit to the 215 Beltway west. Exit on Durango Drive and turn right. Turn left on Deer Springs Road, right on Grand Canyon Way, then right on Bay Ledge Street to the models.

Visitors are welcome from 10 a.m. to 5 p.m. Tuesday through Sunday, and from 11 a.m. to 5 p.m. Monday.

For the second consecutive year the Southern Nevada Division of Pardee Homes has received the highest rankings from J.D. Power and Associates for overall customer satisfaction and new home quality in the Las Vegas Market.

One of the West's largest and longest-established home builders, Pardee has built homes for more than 40,000 families in Southern Nevada since 1952.


Median asking price for Las Vegas businesses drops

The median asking price for 313 businesses listed for sale in Las Vegas in the fourth quarter was $190,000, down from $240,000 or nearly 21 percent in the year-ago period, BizBuySell.com online listing service reported.

The businesses had median revenue of $350,000 and median cash flow -- or money that comes out of the business over the course of a year -- of $84,360, compared with $409,351 and $101,408, respectively, in the previous year.

Business owners in the Las Vegas area will typically ask for an average revenue multiple of 0.72 and a cash flow multiple of 2.91, down from 0.74 and 3.11, respectively.

The number of closed business-for-sale transactions in the United States, as reported by business brokers, rose by 3 percent in 2010. BizBuySell.com statistics include listings from local business brokers as well as "for sale by owner" listings.

"Spurred on by a strong showing in the fourth quarter, the business-for-sale market showed some promising signs of recovery heading into the New Year," said Mike Handelsman, general manager of BizBuySell.com and BizQuest.com. "In 2010, we saw more deals getting done. One of the key drivers for that growth was that business sellers were more realistic about their business valuations."

The increased business-for-sale market activity came at the expense of a decline in business valuations. The median closed-transaction sale price for 2010 dropped 6.3 percent year-over-year, from $160,000 in 2009 to $150,000 in 2010.

Key metrics used to value companies also fell slightly in 2010, with the average revenue multiple falling 2.1 percent and the average cash flow multiple falling 0.6 percent.

for more information about homes for sale is

www.buybankownhomes.com

PPP govt did not validate, condone acts of Musharraf, says CJ


ISLAMABAD: The Chief Justice of Pakistan, Justice Iftikhar Mohammad Chaudhry has said that whenever a country is ruled by the chosen representatives under the dispensation of the Constitution the system of good governance is strengthened.

Addressing the inaugural session of the 17th Commonwealth Law Conference in the Indian city of Hyderabad on Sunday, he said an independent judiciary was necessary for the enforcement of fundamental rights, trade and commercial activities.

Dilating upon the theme of the conference “Emerging economies and the rule of law: opportunities and challenges,” the chief justice said that rule of law bore a substantial impact on the economic development across the globe.

The judiciary in Pakistan has passed through different phases where efforts were made to adopt unconstitutional measures, a press release received here quoted the CJ as saying.

“But the judiciary ensured its independence in all the circumstances because it is of the opinion that when there is constitutionalism and rule of law, it guarantees a democratic system in the country instead of military rule,” he added.

Referring to the steps taken on Nov 3, 2007, Justice Iftikhar said that for the first time in the history of Pakistan the judiciary asserted itself and the Supreme Court declared those measures unconstitutional and illegal in its landmark order issued on the same day.

The superior judiciary, sacked unconstitutionally, was ultimately restored and the democratic government did not validate or condone the acts and actions taken by the military ruler, he added. The chief justice said that constitutionalism and the rule of law guaranteed enforcement of human rights and thus helped flourish industrial and commercial activities. “The rule of law and equality before law are the hallmark of Islamic thought and philosophy, which derives its authority from the Holy Quran and traditions of the Prophet (PBUH).”

Having alluded to the history of rule of law, he said the concept had been further developed by the International Commission of Jurists, known as Delhi Declaration 1959. According to it, this formulation implied that the functions of the government should be so exercised as to create conditions in which the dignity of man as an individual is upheld.

“This dignity requires not only the recognition of certain civil or political rights but also creation of certain political, social, economic, educational and cultural conditions, which are essential to the full development of his personality,” he said.

About Pakistan’s Constitution and role of judiciary, the CJ said it had given necessary powers to the Supreme Court to protect the fundamental rights.

“The judiciary has to safeguard the fundamental rights of citizens, including the right to life, liberty with its wide connotation and right to property. The courts have attempted to restore and enhance the confidence of all citizens and persons, including the trade, commercial and industrial class and foreign investor, in the system of governance in the country.”

Justice Iftikhar said that as an important organ of the state the judiciary played a key role in financial and economic discipline, promotion and strengthening of democratic institutions and ensured development of projects.

“Its decisions and rulings have impacts on the system of governance. A reformed and modernised legal system, administered through an efficient system of judicial administration, goes a long way in resolving conflicts, settling disputes, restoring rights/entitlements and redressing grievances, which in turn, leads to peace and tranquillity in society,” the press release quoted him as saying.

Such an environment, he said, was ideal for trade and commercial activities, investment and industrialisation, leading to economic growth and prosperity.

The chief justice said that Pakistan being a member of the World Trade Organisation had promulgated various acts and ordinances so as to bring itself on a par with international standards in terms of observance of trade laws and trends.—APP

Government seriously implementing reforms agenda: PM


LAHORE: Prime Minister Yousuf Raza Gilani has said his government is seriously implementing a 10-point reforms agenda given by the PML-N last month.

Talking to reporters at his residence here on Sunday, he said performance would be among the major considerations in appointing new ministers after the dissolution of the federal cabinet.

In an effort to allay fears of employees of loss-making national corporations, he said the institutions would be restructured and not privatised.

The prime minister admitted that there was pressure from the US on the issue of Raymond Davis, an American citizen accused of killing two men in Lahore.

“We agreed to the 10-point agenda only after weighing all its aspects,” he said. He mentioned some measures taken to implement the agenda for which the PML-N has set a deadline of Feb 20.

“As some of the points require just administrative decisions, we can do it. Where there is need for legislation, we can at least move a bill in parliament, while reconstitution of the Election Commission is in the offing and talks on tabling a unanimous accountability bill are also making progress.”

Referring to the call for sacking corrupt ministers and reducing the cabinet’s size to 11 per cent of the parliamentary strength as enshrined in the law, he said removing anyone from the cabinet would not mean that the person in question had not been up to the mark.

The prime minister hinted at curtailing the perks and privileges of the ministers “to give a symbolic message to the masses that their government means business, although these perks do not cost the national exchequer much”.

Trying to dispel a perception that the MQM and JUI-F would not rejoin the cabinet, he said: “Altaf Hussain has convened a meeting of the coordination committee after talking to me, while Maulana Fazlur Rehman too has been consulted by me and President Asif Zardari at the Kashmir solidarity conference.”

Answering a question, he said a formal invitation would be extended to the PML-N to rejoin the cabinet only when it would appear that the response would be positive.

Prime Minister Gilani disowned a deadline set by his party for the Punjab government to implement a 19-point agenda for improving governance in the province. PPP’s representatives in the Punjab cabinet have said they will stage a sit-in outside the Punjab Assembly after the expiry of the ultimatum on Tuesday.

“Setting deadlines is not my policy. After all, we’re friends and not masters and petty differences between the coalition partners should be taken casually.”

The prime minister said the PPP and PML-N had agreed on restructuring the loss-making corporations instead of privatising them. “Their boards will be replaced and non-controversial persons with untainted careers and of world repute will be appointed to lead the corporations.”

He said progress had been made on improving the performance of the Pakistan Electric Power Company and a summary had been moved for the purpose.

Declining to comment on the sub judice matter of Davis, he admitted there was diplomatic pressure from the United States to release the accused. He said courts would decide the issue of immunity of the accused.

“In matters of national interest one must not play to the gallery, like some people have done by giving irresponsible statements,” he said and added that extreme caution should be exercised on sensitive issues.

Twin blasts in Karachi wound two


KARACHI: Two bomb explosions outside two police stations in different parts of Karachi caused panic among residents on Monday, at least two people were injured in the blasts.

The first blast occurred outside Eidgah police station of Lee Market, while the second blast took place near Shah Latif police station of Malir area.

Officer Irshad Sehar says Monday’s bombings in Karachi were several miles apart. He says they caused minor damage.

Police and law enforcement agencies and rescue teams have cordoned off the areas.

Sehar says the apparently coordinated explosions were meant to create fear and panic in the city of 14 million people.

Karachi is a chaotic city where criminal, political and militant violence is common.