Without writing down the principal on your home loan – something that’s just not happening, as far as I can tell, loan modifications just aren’t working out.

A great article in todays Wall Street Journal goes into more depth – it’s well worth a read.

On Friday, October 9th, the major financial leaders (Treasury, Federal Reserve, White House and Congressmen) were all touting the great success of their loan modification programs.

While I think it’s great that some people are getting the terms of their home loans adjusted – the reality is the program really sucks for almost any Las Vegas homeowner that might want to try and keep their home.

For those of you who really want to know whats going on – take a little deeper look and click on this LINK, which will take you to the article that Diana Olick/CNN reporter put onto her blog. There you’ll see what didn’t get on tv – 5 Home loans out of 1/2 million actually got the balance on their loan reduced – yup 5 principal reductions out of 500,000 homeowners that applied for help.

Now, watch what actually made it onto the tv broadcast…

Why in the world didn’t they talk about the 5 homeowners who got a principal reduction?

In her blog post she nailed it! She pointed out that the real story is how the govt. programs are not really addressing the problem – people owe way more than their homes are worth and until they come up with a plan that deals with that – we’re just gonna keep on having people in foreclosure.

People ask why I’m so fearful of all the foreclosures that are going to come (at least in my opinion)… well, when over 1/2 of all people who do get a loan modification are in default again within six months

“gee honey, it just dawned on me that while our payment went down $100 a month, we still over about $250,000 more than the home is worth… and the way things are going – I’m afraid it’ll take us till we’re 87 years old to be in a position to sell this place for what we owe!

I guess what I’m most curious about is why more people aren’t looking at short selling their property – putting a huge problem behind them – and buying again at these low prices in two years (which is what the guidelines call for) after your credit has gotten fixed.

WASHINGTON (Reuters) – Government programs to fight the U.S. home foreclosure crisis look increasingly inadequate and should be reworked, expanded and supplemented with new ideas, a congressional watchdog said in a report on Friday.

With a foreclosure filing occurring every 13 seconds, the United States is mired in a housing slump that is destroying billions of dollars in property values and threatening to choke off the economy’s recovery from a stubborn recession.

The foreclosure crisis has moved beyond subprime mortgages into the prime mortgage market, said the Congressional Oversight Panel for the Troubled Asset Relief Program, the $700 billion bailout launched under the Bush administration.

“Rising unemployment, generally flat or even falling home prices, and impending mortgage rate resets threaten to cast millions more out of their homes,” according to the report, which focused on the Treasury Department’s efforts to curb foreclosures.

“The panel urges Treasury to reconsider the scope, scalability and permanence of the programs designed to minimize the economic impact of foreclosures, and consider whether new programs or program enhancements could be adopted,” it said.

The report was sharply critical of the larger of the government’s two big programs designed to fight foreclosures.

It increasingly appears that the Home Affordable Modification Program, known as HAMP, which reduces monthly mortgage payments to help borrowers who are facing foreclosure keep their homes, is not equipped to deal with the changing nature of the housing crisis, the report said.

The government’s other effort to stem foreclosures, the Home Affordable Refinance Program, or HARP, helps homeowners who are current on their mortgages but owe more than their homes are worth, get more affordable loans.

As of September 1, the watchdog report said, HAMP had helped arrange 1,711 permanent mortgage modifications, with an additional 362,348 borrowers in a three-month trial stage. HARP has closed 95,729 mortgage refinancings, it said.

Entire article is here

When you combine the false starts; confusing guidelines; and bad intent from some of the the lenders… is it any wonder that people are defending themselves by walking away (see short sale articles) from a bad deal and starting over?

Consider these facts:

• Nevada IS a recourse state – you can negotiate with the bank BEFORE they foreclose (think Short Sale), but not afterwards, and that could mean the difference of a couple hundred thousands of dollars (foreclosure = bad / short sale = good).
• Foreclosure on your credit report could get you fired as many employers do not allow their employees to have a bankruptcy or foreclosure on their records (think security, defense, homeland security, classified positions and those that handle cash).
• A foreclosure gets you a really bad penalty when you want to buy property again (foreclosure requires a 5 year wait; higher credit score and larger down payment vs. short sale that only requires a 2 year wait; lower credit scores and smaller down payments).

Walk away from your property – maybe yes… maybe no. But be sure to look at ALL the ramifications of what you choose to do. For a free consultation call me at 883-2131 and we’ll review them together at no cost to you.

‘Those who cannot remember the past, are condemned to repeat it.’ — George Santayana

Remember back in the “end of the boom” (I consider the end started around May of 06′ and ran for about 18 months to the end of 07′) when builders were giving away FREE PAYMENTS, FREE GRANITE, FREE SWIMMING POOL AND EVEN FREE CARS! Bribary at it’s best!

If you’ve been reading my comments you’ll remember that I’ve been screaming about the govt. bribing people to buy homes… trying to keep values up as long as possible (can you say “cash for clunkers” or “cash from the culpable”).

Check out this article I read this morning – while it’s not about Las Vegas (thank goodness), this same story is happening here by the hundreds each month.

Chaz Fullenkamp, an automotive technician in Columbus, Ohio, got an F.H.A. loan even though he was living on the financial edge. “If I got unemployed, I’d be wiped out in a month or two,” he says. Thanks to the F.H.A., however, he is better off than he used to be.

Mr. Fullenkamp used F.H.A. insurance to buy a house this spring for $179,000. The eager seller paid the closing costs and also gave Mr. Fullenkamp $2,500 in cash. He immediately applied for the $8,000 tax rebate. Even taking his down payment into account, he came out ahead.

“I knew in my heart I could not really afford the house, but they gave it to me anyway,” said Mr. Fullenkamp, 22. “I thought, ‘Wow, I’m surprised I pulled that off.’ ”

This guy sounds like he could be calling someone just like me in a year or so – and begging for help to avoid foreclosure. What in the world are our govt. leaders thinking? This guy is just doing what he’s always been told… buy real estate and use leverage whenever possible. My most positive thoughts go out to him – if the experts are right (more unemployment coming and lower home values) he’s going to need them!

This morning I reviewed enough charts and comments to have made a UNLV Professor proud – if only a student had put in as much work – that looked at where we’ve been and where we’re going. Estimated declines throughout the nation are for another 10% by June of 2010, by most of these financial experts.

In another article one of the premiere economists, Nouriel Roubini, who was one of the earliest predictors of the current problems is pointing out ”the consequences will be severe for everybody.”

Remember property values are a very local thing. There is no more value in looking at a “national” prediction of home prices than there is in looking at the “average” weather across the country. On those days when it’s 115 degrees here – having a national average of 83 degrees just doesn’t make me feel any better.

How about you?

Las Vegas casino executives are publicly stating that the building boom is over for at least 10 years, according to an article I read today in the Wall Street Journal.

While I don’t have the exact numbers – I think it’s easy to imagine Las Vegas unemployment rates hitting 25% in the coming years. After all there are currently over 10,000 highly paid ($25, $30, $35 and higher per hour) skilled workers on the MGM CityCenter project.

Just imagine what will happen to our real estate values when all those guys that are making $50,000 to $100,000 a year are laid off – and with no big projects being planned for ten years, and all those foreclosure homes sitting vacant – it doesn’t seem like too many new homes are going to be built to pick up the slack.

Maybe there’ll be a BOOM in remodeling and upgrading the old tired buildings… I wonder, how many remodels the Circus Circus, Riviera and Imperial Palace can take?

This is the kind of news I both love and hate to hear. Two worthless pieces of crap (pardon my language, but no other word seems to fit what I feel at the moment) are facing multiple felony accounts for ripping people off!

Kudos to whoever initiated the investigation – who did the detective work - and best wishes to whoever is handling the prosecution. I can only hope that more of these scam artists are busted.

As hundreds of homeowners who’ve faced foreclosure know, I have always advocated and promoted that you do not need to pay anyone to help you – you can do it yourself by using the free agencies that are available and by getting the BPO/Broker Price Opinion performed at no cost to you. This can be done by me, or another qualified licensee who wants to help our neighbors in trouble.

If you think a loan modification would help your situation – give me a call and I’ll point you in the right direction – one that doesn’t cost you a dime, let alone thousands of dollars. My number is 883-2131.