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.
for more information on las vegas bank own homes visit www.buybankownhomes.com
Showing posts with label las vegas real estate news. Show all posts
Showing posts with label las vegas real estate news. Show all posts
Sunday, July 24, 2011
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.
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.
Tuesday, May 24, 2011
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
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.
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
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
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.
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.
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