Help for Las Vegas Homeowners?
President Obama in Phoenix
Yesterday, President Obama unveiled a New Help for Homeowners plan in Phoenix, Arizona. Speaking to a pretty excited crowd, he gave a general overview of the new $275 Billion dollar Hope more specifically called the “Homeowner Affordability and Stability Plan”.
Phoenix, like Las Vegas has pretty much seen the same thing with home values dropping more then 30%+ since the peak of the real estate boom and has certainly had it’s share of foreclosures so it was kind of fitting that he unveiled the plan in Phoenix to a cheering crowd of supporters.
Wonder what it would be like if he spoke to a group of Realtors® that are in the trenches everyday? Hmmmm…
Specific Details will not be Released until March 4th, 2009 but some general guidelines can be found at the White House Blog (I love that by the way). Click the link below for some general details of the new plan:
Specific detailshave not been released yet so it’s difficult to determine if the plan will really help anything out for Las Vegas Real Estate. Specific doubt happens when you read this particular Q & A from the White House site:
- I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.
That statement alone disqualifies many of the Las Vegas homes that are ending up in foreclosure. Keep in mind, when homeowners have equity in their property, they generally do not let it go to foreclosure. However… it’s not that cut and dry and read on as to why.
From the White House Blog concerning Homeowners with a First and Second Mortgage:
- I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.
Key Phrase: Dependent on the lender holding the second mortgage cooperating. Remember… many of the same Las Vegas foreclosures that you see have lost much more then 20% of their value. But.. it’s still not that cut and dry and here is why:
From the Case Scenario Sheet Provided
Check out scenario C. Interesting to say the least.
Will this Plan do anything for
Las Vegas Real Estate?
What will this do for Las Vegas Real Estate? Not much in my opinion. Las Vegas Real Estate has already taken a major hit in home values from the peak… I’m certainly not saying that Las Vegas real estate is going to continue a downward out of control spiral because Las Vegas home values are much closer to recovering and stabilizing then many, many real estate markets in the United States due to being far along in the correction process. That factor along with a couple of other details of the plan including:
- Lenders are not Required to Modify loans under the Plan
- Investment and Vacation Homes do not Qualify
- The Loan to Value ratios
- Lenders are not required to participate
The questions of whether the Government should get involved with tampering with the real estate market to begin with can certainly be debated since previous involvement is why we saw home values skyrocket to unaffordable prices to begin with.
What About Homeowners who Need Out?
As a Las Vegas short sales specialist that helps homeowners who need to get out of their Las Vegas home due to loss of income, a job relocation or other qualifying hardship, I do not see any new hope or help here to address this situation. These are the people who do not just walk away from their Las Vegas home to let it go to foreclosure which costs the lenders even more money in the long run and for that reason, it’s kind of disappointing that lenders will not have any incentives to help speed up the process and get their act together and closing these faster.
In my opinion, that’s what we really need for Las Vegas Real Estate… Some heat on lenders to speed up the short sale process and keep these homes from going to foreclosure in the first place for people who can’t stay.
Kind of ironic to put “affordability” and “stability” in the title to a new plan when the lack of stability was created by exotic mortgages to purchase unaffordable homes to begin with.
Just my opinion and keep in mind, specific details of the new plan will not be released until March 4th.
Paul Francis, CRS
Las Vegas Real Estate
702.592.3058
Related Reading:
Fannie Mae Extends Foreclosure Moratorium
Hope for Homeowners? Too late..
Housing and Economic Recovery Act of 2008
March 10, 2009 at 7:04 pm
[...] other words… the seller has no intention of bothering with the new Government Plan to save real estate values from correcting on their own. You probably heard about this new plan… it’s the one where they want to take [...]
March 18, 2009 at 1:50 pm
[...] far behind in the real estate correction process. Unlike other plans that would do little to help out Las Vegas Homeowners, the continuation of low mortgage rates should help the Las Vegas real estate market as more [...]
April 23, 2009 at 7:07 pm
[...] really no surprise considering the foreclosure moratoriums that were put in place while new help for homeowner programs were being created and delaying the correction process in cities such as Las Vegas where [...]
August 8, 2009 at 11:49 am
I think the prices are going to climb as they always do.
March 15, 2010 at 10:52 pm
[...] loan modification program that was cheered on in March of 2009 where I specifically said it would help very little for Las Vegas Home owners. Quote from the 02/19/2009 Blog Article I wrote concerning the original Help for Homeowners [...]
March 16, 2010 at 4:44 am
[...] program that was cheered on in February of 2009 where I specifically said it would help very little for Las Vegas Home owners. Quote from the 02/19/2009 Blog Article I wrote concerning the original Help for Homeowners [...]
July 22, 2010 at 12:29 pm
I think vegas will be making a recovery soon, and that when the short sales will become less relevant.