Jan O'Brien - Las Vegas Homes (Broker | Real Estate Speaker & Trainer)

In the State of Nevada, short sale negotiating falls under the category of "loan modification or foreclosure consultant" as defined in Assembly Bill 152 which modified NRS Chapter 645F. You can read AB152 here: Download AB152_LoanMod_ForeclosureConsultant

In summary there are three options for negotiating short sales in Nevada:

1. Attorneys
2. Properly licensed companies/3rd party negotiators per the Mortgage Lending Division
3. A licensed real estate agent as a part of a real estate transaction.
   
   As excerpted from the RE Division position statement:
   
   There may be no separate or distinct payment or compensation for performance of
   activities defined as loan modification, foreclosure consulting or providing of covered
   services outside of a real estate transaction.
   
   Activities that by definition might include aspects of “Loan Modification Consultant,”
   “Foreclosure Consultant,” or “Provider of Covered Services” must be part of a real estate
   transaction. As such, a commission paid to a licensee through a real estate brokerage as
   a result of those activities defined in NRS 645.030 and/or NRS 645.040 shall serve as
   evidence that the activities engaged in by the real estate licensee were “acting under the
   authority of their license.”

Guest Contributor, Steve Kitnick provides the following details and commentary on the subject:

Who Can Negotiate a Short Sale in Nevada?

Strategic default is a hot topic in the press, on the blogs and in the real estate industry. Homeowners are starting to weigh all their options and make "business" decisions about whether to stay or walk away from their home. In many cases, the homeowner/borrower is truly unable to continue to make the payments due to a variety of hardships, job loss or major changes in their income. There are a variety of alternatives to foreclosure including a short sale. The best advice for homeowners in this situation is to consult with qualified legal, tax and real estate professionals to gather the best advice and information in order to make the best decision for themselves.

Have you noticed a lot of recent press criticizing the HAMP program as short-sighted and delaying the inevitable onslaught of more foreclosures? The underlying theme is pointing to "negative equity" as a primary factor for homeowners "strategically defaulting" - ultimately deciding to let their home go to foreclosure or short sale.

In case you missed some of those recent articles and resources:

Amherst Securities testified before the House Financial Services Committee (12-8-09) - Download Amherst Securities Group - HAMP Testimony

Two main points from this report:
1. Single largest problem with housing market is negative equity.
2. Current modification program does not address negative equity and is destined to fail.

WSJ Development Blog (1-4-10) NY Fed: Most Successful Mortgage Modifications Reduce Borrowers’ Principal

An excerpt from that article...

Borrowers who receive loan modifications that reduce loan balances and not simply interest rates are far less likely to re-default on their loans, according to a new study from the Federal Reserve Bank of New York. Modifications that write down loan balances “can double the reduction in re-default rates achieved by payment reductions alone,” the study says.

Negative Equity Report for Q3 (Calculated Risk Blog 11-24-09)

Data Highlights

• Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity, meaning they had less than five percent equity. Together negative equity and near negative equity mortgages account for nearly 28 percent of all residential properties with a mortgage nationwide.

• The distribution of negative equity is heavily concentrated in five states: Nevada (65 percent), which had the highest percentage negative equity, followed by Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent).

Other articles/reports/studies:

• White Paper Sees Strategic Defaults Rise with Negative Equity (12-08-09)
• Strategic Default White Paper - Strategic_Default_White_Paper.pdf
• Negative and Equity and Foreclosure - Negative Equity and Foreclosure.pdf
• Moral and Social Constraints to Strategic Default - MoralandSocialConstraintsto_StrategicDefault.pdf
• Subprime Mortgage Modification and Re-Default - Subprime Mortgage Modification and Re-Default.pdf

Lenders Pursue Mortgage Payoffs Long After Homeowners Default This article from Bloomberg.com points out what we believe is just the tip of the iceberg - mortgage companies pursuing the deficiency or shortage from a foreclosure or short sale. The laws that allow a mortgage company to pursue a deficiency judgment varies from state to state. There are several reasons why we haven't seen a lot of reporting on this - but this could change soon:

• Banks/lenders have been seriously bogged down just handling the high volume of defaulting loans, short sale requests, loan mods
• Not really politically-correct or good PR at the moment given our current economic and housing crisis
  

"The FDIC tracks the amount banks collect after defaulted loans were written off. These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Washington-based regulator. Recoveries on defaulted home-equity loans almost doubled to $392 million, the FDIC data shows. The figures dont include money retrieved by trusts overseeing mortgage-backed securities, such as the one that holds the loan on Kings former home, or efforts by distressed- asset funds and companies that buy bad loans to profit from collection rights"

Good News / Bad News

• Bad news for Las Vegas and Nevada is that it appears we have a long way to go before we fully recover from the housing crisis.
• Good News is there are great opportunties for investors, home buyers looking to purchase in the local market.

Become a Certified Short-Sale Professional - get the latest information regarding alternatives to foreclosures and processing short sales from A to Z. Live, classroom training in Las Vegas - Check this Training Schedule for details.

The Las Vegas real estate market may be showing signs of recovery. The Greater Las Vegas Association of Realtors (GLVAR) released its local housing statistics for December 2009 with some interesting findings for the year.

According to GLVAR, sales of existing homes in Las Vegas were up 64% in 2009. GLVAR reported 46,879 local housing sales in 2009. That represents a huge spike from 28,618 total sales in 2008 and trails only the 71,963 homes sold during the record year of 2004. The increasing sales continue to be driven by low prices. GLVAR reports that the average single family home sold in the area in December 2008 was $204,000 in December 2008. By December of 2009, that number had fallen to $165,000.

To read the full report: PDF file Download 2009_12_Dec (released 1-8-10)

Las Vegas Foreclosure Report for 2009

From RealtyTrac's Year-End 2009 Foreclosure Market Report™ :

... a total of 3,957,643 foreclosure filings — default notices, scheduled foreclosure auctions and bank repossessions — were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007

More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, giving it the nation’s highest state foreclosure rate for the third consecutive year. Nevada foreclosure activity in December increased 27 percent from the previous month but was still down 22 percent from December 2008. Fourth quarter foreclosure activity in Nevada was down 37 percent from the previous quarter thanks to substantial decreases in October and November.

2009 foreclosure stats would have been worse but for initiatives to slowdown foreclosures from the Lenders as well as the by the Obama Administration - including HAMP (Home Affordable Modification Program) and alternatives to foreclosures like short sales.

GLVAR reported a total of 33,974 bank-owned residential properties sold for 2009.

Las Vegas Short Sales for 2009

According to the National Association of Realtors, almost 500,000 transactions in 2009 were short sales, representing almost 10 percent of all home sales.

In Las Vegas, a total of 5,422 residential properties sold and closed in 2009.

2009 Residential Closings Recap

The GLVAR 2009 report quotes a total of 46,879 local housing sales. However, published graphs displaying the annual residential closings for 2009 totals 47,084 (a 205 discrepancy… Not sure why).

REO/Bank-Owned sales = 33,974 (72.2%)

Traditional residential sales = 7,688 (16.3%)

Short Sale Closings = 5,422 (11.5%)

Foreclosure Information - Avoiding Foreclosure

1. www.realtytrac.com National, state, county foreclosure statistics, trends, resources, information
2. RentalForeclosure.com Tenants can find out if a property is in Foreclosure - NOD filed
3. Freddie Mac - Working with Your Lender to Avoid Foreclosure
4. Hope Now - an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance will maximize outreach efforts to homeowners in distress to help them stay in their homes and will create a unified, coordinated plan to reach and help as many homeowners as possible.
5. Housing Help Now- National Foundation for Credit Counseling
6. Home Foreclosure and Debt Cancellation - (IRS.gov) and The Mortgage Forgiveness Debt Relief Act of 2007 (FAQ)
   
   
   Nevada Foreclosure Information
   
   
7. Nevada Foreclosure Help - Useful resources and info from Nevada Department of Business & Industry
8. Nevada Hope at Home collaborative effort between Nevada Public Radio, local nonprofit organizations and local financial institutions to help provide residents in southern Nevada access to reliable, easy-to-find information on the foreclosure crisis in southern Nevada
9. Nevada Revised Statutes - Chapter 107 - Deeds of Trust
   
   
   Government Resource Websites
   
   
10. www.FinancialStabilty.gov
11. www.makinghomeaffordable.gov
12. www.Treas.gov
13. www.USA.gov
14. www.WhiteHouse.gov
15. www.Hud.gov