Yonas Woldu Greater Las Vegas Real Estate

As Nevada once again leads the country in foreclosures, there is plenty of help available for distressed homeowners. Unfortunately, many offers of help aren't help at all, but are in fact predatory scams that will leave people worse off than they were before.

One reliable source of help for certain homeowners who qualify is the federal government. Just last week, final details were released about the loan modification piece of the new Making Home Affordable Program. So far, six lenders have been approved to restructure loans under the program: JP Morgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing. The catch for over 28% of Nevadians is that they owe more than 105% of the home's values and are too underwater to qualify for government help.

The Federal program is free. Even if you do not ultimately qualify for this program, there is plenty of free or very low cost help available from HUD-approved counselors and non-profit groups that will either help you stay in your home or move on to a new stage in your life.

Meanwhile, there are many for-profit companies that are charging big bucks for loan modification. Some are legitimate, but many are schemers who have pulled names of delinquent homeowners from public records and responses to fast talking ads on late night TV. Some scammers have even set up shop with company names or website similar to those of reputable organizations. Hope Now Modifications, a flagrant New Jersey scamming operation, claimed affiliation with the Hope Now Alliance. The website www.financialstability.org, which directs customers to a variety of sleazy payday loan, stop foreclosure, and debt relief sites, plays off domain-name similarity with www.financialstability.gov, the U.S. Treasury site.

Typically, the company promises to resolve the foreclosure in exchange for an upfront payment, often equal to a month's mortgage payment. The company may pocket the fee, while presenting homeowner with a phony document that the foreclosure has been set aside. They may even ask the homeowner to sign over the deed to the property. The homeowner may think all is well until he receives a bankruptcy filing in the mail, filed in his behalf, without his knowledge. This leaves the homeowner with more legal bills, a poor long term credit picture as he have difficulty buying or renting for 10 years, and perhaps, no home if he has signed over the deed. In some cases, the company does not even contact the lender.

At this point, the scammers have incurred the wrath of the President nor the Treasury, the Department of Justice, the Department of Housing and Urban Development, and the Attorney Generals of several states. All have issued warnings to homeowners and have pledged better government cooperation to stop this type of fraud.

If you need help with your mortgage, check the government site or call (888) 995-HOPE before agreeing to pay for loan modification services. Have a complex real estate situation? Yonas Woldu can help. For help with selling or buying property in Las Vegas, Green Valley, or other areas of Clark County, contact Yonas Woldu or Nebi Adhanom.

It's looking like many Nevada residents won't qualify for new Making Home Affordable program, as 58% are "underwater" or have negative equity; over 28% owe more than 125% of their home's value. The federal program cuts off at 105%. With only $75 billion aimed at zillion dollar crisis, the program was never intended to reach everyone. As is, the program has over 1,000 pages of documentation. (No wonder the Administration rolled out a user friendly website to help people determine eligiblilty through a few simple questions.)

To hit every situation would have made the program too comples, would have delayed it, would have made it astronomically expensive, and would have raised more ire than this one has. As noted here a couple weeks ago in our post on the fairness of housing rescue, many people who have sacrificed to pay their mortgage or who bought a more modest home in the first place, are annoyed that they have to bale out those who were frivilous, short sightsighted, or greedy, in addition to those who might have lost their jobs or suffered some other unavoidable reverse.

There are issues though that need to be resolved, such as second loans on homes. Half of seriously delinquent homeowners hold second mortgages. Currently, banks that hold second mortgages and investors who own securities backed by first mortgages are arguing about how losses should be shared. If borrowers are still liable for the full amount of the second mortgage or home equity loan they will still be paying so much of their income that the new arrangement could be at risk. Since modifying the mortgage is not the end of financial problems for most homeowners, the new mortgage is already at risk without the burden of the second mortgage debt.

Understandably, banks who write home equity loans and second mortgages don't want to absorb a total loss on their loans to assure the stability of modifying the first one! Delinquencies on home equity loans nationwide is at a record 3.03% in the fourth quarter or 2008 vs. 2.39% a year ago; delinquencies on home equity lines of credit is 1.46% up from 0.96%.

Have a complex real estate situation? Yonas Woldu can help. For help with selling or buying property in Las Vegas, Green Valley, or other areas of Clark County, contact Yonas Woldu or Nebi Adhanom.

Recent difficulties in the Las Vegas housing market have put "short sale" in the vocabulary of real estate professionals and home buyers and sellers alike. Short sale, where a lender accepts less than the loan value to terminate the mortgage, offers a troubled homeowner an alternative to foreclosure. It offers a buyer a great deal on a home at a price below market value. It offers the bank an opportunity to take less of a loss on loan than they would if the property went into foreclosure.

Lenders would prefer that borrowers kept their original agreements but in Las Vegas, where inflated home prices and lax loan practices were the norm, many homeowners have lost their homes and thousands of others have negative equity where they owe more than the house is worth. In this environment, one might think lenders would see short sales as a necessary evil that would help them clear their books.

The reality is that short sales progress slowly and often not materialize. They are set in motion when the homeowner or his agent presents a hardship letter that states that circumstance now prevent the homeowner from making the payment, along with a settlement statement. In the normal course of events, there are counteroffers on both sides.

Based on recent sales figures, only 10% of short sale offers make it to the end of the line. Of the approximate 28,000 properties for sale in Las Vegas in March, 2009, 9,000 are short sales. This figure includes 3,300 pending sales with 272 sales that have gotten approval. Some 5,000 contingent properties have 2,300 short offer awaiting sender approval. If the 10% figure holds true, there will be over 2,000 disappointed buyers, 2,000 frustrated sellers, 2,000 obstinate lenders, and 2,000 irritated realtors left with no deal.

For those short sales that go through, the key is having a skilled real estate negotiator. For help with short sale or for buying property in Las Vegas, Green Valley, or other areas of Clark County, contact Yonas Woldu. or Nebi Adhanom.

The government just introduced a slick new website to help consumers figure out if they qualify for the refinancing or loan modification plans underwritten by the new Making Housing Affordable program. As we discussed in last week's blog, not everyone will qualify for the programs. On the loan modification side, it's great that a standard formula is being applied but there are drawbacks:

• A payment of 31% of income, though considerably lower than the prevailing percentage in many areas, may still be too high for some families - especially in view of rising unemployment.
• If the house was more than a family could really afford in the first place, even a modified payment might be unaffordable.
• For homes where the value has gone below the value of the loan - the underwater buyers - there is help only if the loan is not more than 105% of the home's current value.

Prior to the release of the new plan, there was growing concern that 25% of modified loans were still defaulting and at risk of foreclosure. The head of the Office of the Comptroller of the Currency, John Dugan, said whether looking at 30 or 60 days delinquencies, re-defaults were increasing and were not leveling off after 6 or 8 months. Defaults rates were on the rise for all loan types yet prime fixed rate loans and sub-prime fixed rate loans have the highest re-default rates. In general, borrowers were going in default after one payment or several payments.

Prior to the new plan, Shelly Bair, chairman of the FDIC, predicted that over the next 2 years, 4 to 5 million loans will enter foreclosure. She believed the stakes are too high to rely on lender commitments to apply more streamlined loan modification rules. Lenders are reporting that more borrowers are also allowing their loans to hit the 90 day delinquent mark so they can take advantage of modification applications.

The new plan, despite its faults, does address some of Ms. Bair's concerns. The program will help people who are not in default and requires the lender to comply with the program standards. Both lenders and borrowers will be rewarded if the new loan works out.

Will the new program prevent foreclosure or just delay it? Stay tuned for the answer as the months pass and we see what happens with our economy.

At Prudential Americana, we think positively about the economy and about your ability to buy an affordable Vegas home. Check out our Vegas Real Property website to see the great properties Yonas Woldu and Nebi Adhanom are offering

Also check out our new AskYonas website. For every real estate problem, I have a solution. Now let's make it happen.

In the wake of the stimulus plan and the housing recovery plan announced by the President last month, there has been a lot of discussion about what's fair in the plans. Who was helped? Who should have been?

The $275 billion housing stability plans seeks to help two groups of homeowners:

• Diligent homeowners with little equity who have been hurt by falling home prices but who are not delinquent
• Homeowners who are behind on their payments, which currently represent too high a percentage of their income

Refinancing is available only for those financed by Fannie Mae or Freddie Mac, up to their approved limits. Those who owe more than 105% of the current value of their home won't benefit. (In Las Vegas, this describes many homeowners.)

The administration wants to help people maintain their principle residences. Critics fear that those who bought irresponsibly or managed their money recklessly will be helped along with the genuine needy. Those who overstated their income or took out home equity loans to go on vacation or use it for other thing s might qualify while those who were honest and people who can manage their overpriced mortgages might apply for relief along with those who are struggling. Those who risked delinquency on their other obligations to pay their mortgage would get no help. Because the plan will reward irresponsible behavior, the plan contains a degree of "moral hazard."

As for the loan modification part of the plan, borrowers now do not have to be delinquent in order to have their loan terms modified. They just have to prove that their current payments create hardship. Previously, lenders feared that buyer stopped making payments to qualify of refinancing. Now, there is concern that borrowers who previously had additional jobs to help pay the mortgage may try to make their income appear lower.

Since taxpayers will ultimately foot the bill for some of the housing programs, many who could use help but don't qualify will pay so that others might benefit. For even the least judgmental, that can hard to swallow. It is particularly galling to see corporate giants guzzle up taxpayer funds, while small businesses and homeowners grapple for credit. (Another time, another post on that!)

Still, nine million people are expected to be assisted by the plan. With a housing crisis as serious as we have, it is impossible to help everyone who needs help in a way that will please everyone else. Jimmy Carter once said, "Life isn't fair." Barack Obama has called for sacrifice. Perhaps perceived unfairness is the price our country will have to pay to help nine million.

Seen our new AskYonas website? I am ready to help you find your dream home in Green Valley and other areas of Greater Las Vegas. At Prudential Americana, Yonas Woldu and Nebi Adhanom can show you affordable properties in Henderson and the Greater Las Vegas area. Check out our Vegasrealproperty website to see our featured properties.