Comments on: Foreclosure Nightmare Stories http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/ Your Source of What\'s Happening Now Tue, 02 Dec 2008 01:29:16 +0000 http://wordpress.org/?v=2.3.1 By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3252 H Smith Mon, 25 Aug 2008 10:24:07 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3252 By Greg Farrell, USA TODAY LAS VEGAS — In the shadow of Sunrise Mountain, where Rolling Hills Drive turns into Gold Mine Drive, a plain two-story home sits unoccupied, like thousands of other houses here in southern Nevada. Some of these empty homes have "for sale" signs. Others bear signs saying "foreclosure." Authorities say hundreds of them, including this one on Rolling Hills Drive, should have a different sign out front, one that reads "fraud." Prosecutors contend this house was sold last year to a straw buyer as part of a sprawling mortgage fraud perpetrated by a husband-and-wife team involving 277 properties in greater Las Vegas. Prosecutors have charged Eve Mazzarella, 30, and Steven Grimm, 45, with bank fraud, alleging the two caused banks to make more than $107 million in dubious loans and netted a profit of at least $15 million. Both defendants pleaded not guilty to the charges. A trial has been scheduled for October. To the untrained eye, the size, scope and sophistication of the alleged scheme is noteworthy. But to the FBI in Las Vegas, the problem is the opposite: In recent years, there have been so many mortgage fraud cases, the bureau and local prosecutors have had to establish a special task force to combat the problem. Scott Hunter, the FBI's supervisory special agent here, describes the region as "mortgage fraud ground zero." The problem is so widespread that everyone seems to know someone affected by it. Even one of the FBI's Las Vegas agents has a connection: Special Agent Henry Schlumpf's wife was the real estate broker who sold the Rolling Hills Drive house last year to a straw buyer representing Mazzarella and Grimm. The problem is hardly confined to Nevada. On a national level, mortgage fraud is a pandemic that stretches from California to Rhode Island, and from Alaska to Florida. The FBI currently has 1,380 active investigations into mortgage fraud, compared with 818 for fiscal 2006. According to the website MortgageDaily.com, reported cases of fraudulent mortgage loans amounted to more than $4 billion in 2007, up from $1.6 billion in 2006. But the $4 billion number doesn't come close to describing the losses generated by mortgage fraud. Neighboring homeowners take a financial hit. Nowhere is that more apparent than in Las Vegas, where housing prices appreciated by a staggering 40% in 2004 alone. The surge in values drew investors, speculators and first-time buyers into the market like gamblers to a craps table. "We've got people who walked into neighborhoods who paid $200,000 to $400,000 more than they ever should have paid," says the FBI's Hunter. "That story is going on all over Las Vegas. Everybody thought the market was hot, but a lot of that was being manipulated." Many of those who overpaid are stuck with mortgages larger than what their homes are worth. Those who took out home-equity lines of credit based on inflated valuations of their homes are now caught in a financial squeeze. Las Vegas had one of the nation's highest foreclosure rates last year, with 4.2% of its homes being repossessed by banks, up 169% from 2006. "There's a close correlation between states with foreclosure problems and states with mortgage fraud problems," says Sam Garcia of MortgageDaily.com. "There's a good portion of foreclosures that probably resulted from some form of mortgage fraud." Profit or possession Mortgage fraud comes in two flavors: "fraud for housing" and "fraud for profit." Fraud for housing occurs when would-be home buyers overstate their income or misrepresent their credit history to secure a mortgage to buy a more expensive house than they can reasonably afford. In most cases, people who commit fraud for housing intend to live in their homes and pay their mortgages. Fraud for profit is considered the more serious crime, since the goal is to rip off banks. In one common version of these schemes, a fraudster buys a home, gets an inflated appraisal, then resells the home at the artificially high price to a straw buyer who has no intention of living in the house or paying off the mortgage. Mortgage fraud perpetrators can't act on their own; they need accomplices to trick a bank into underwriting a loan that's larger than a property is worth. To pull this off, mortgage fraudsters often work in league with corrupt appraisers, who inflate the value of target properties, says Jenny Brawley, head of mortgage fraud investigations at Freddie Mac. The fraudster also needs someone to play the role of the buyer. In a true sale, a buyer would never willingly overpay for a home, but mortgage fraud schemes don't work unless a straw buyer shows up and puts in a sky-high offer for a property. Straw buyers fall into two categories: willing accomplices who hope to share in the profits; or dupes who are told they can make a quick $5,000 or $10,000 by joining a "real estate investment partnership." Once a mortgage fraud perpetrator has his team in place, he needs to figure out how to cover his tracks. Fraudsters know they can't close a bogus real estate transaction one day, then disappear the next without raising suspicion. To keep the banks at bay, sophisticated con artists pay the mortgage bills for six months or even a year after a sale, creating the illusion of a legitimate real estate transaction. Until 2006, when the real estate market began to cool in earnest, a fraudster could often resell a property, essentially covering his tracks. "A lot of these schemes were masked because of an appreciating market," says Freddie Mac's Brawley. "The orchestrator of a fraud could flip 50 or 100 houses and do pretty well." Case studies In the past few years, regulators have filed hundreds of cases against mortgage brokers, appraisers and straw buyers. Although the details of each case are unique, they often share similar characteristics: • Eye-popping price appreciation. How hot were real estate values in Texas in the winter of 2003? So hot that Carlos Paul Gonzalez arranged to buy a home in The Woodlands, a Houston suburb, for $376,850 on Jan. 29, then sell it for $515,795 on Feb. 12. That sounded too good to be true to federal prosecutors there, who filed an indictment charging Gonzalez and a partner, Ken Russell Browder, with recruiting straw buyers to overbid for a series of properties, including the home in The Woodlands. The two men have pleaded not guilty in the matter, but in April, a title agent named in the indictment, Jannice Bonner, pleaded guilty to participating in the mortgage fraud scheme. • Straw buyers. Last December, federal prosecutors in Utah charged five men and one woman with defrauding two lenders out of $13 million in mortgage loans. Prosecutors allege the defendants inflated the values of homes, buying and selling them through straw buyers and a pair of shell companies, Home Owners Group (H.O.G.) and Paragon Investment Group (P.I.G.). •Professional involvement. In recent years, the FBI has estimated that 80% of mortgage fraud cases involve real estate professionals who couldn't resist the temptations of easy money. Other cases involve people with criminal backgrounds migrating toward the mortgage business. The epidemic of mortgage fraud is a reminder that wherever easy money is made, criminal activity soon follows. "Mortgage fraud has always been here," says Hunter, "but the level of complexity has gone up. It's not just white-collar criminals. There are elements inside the real estate industry. You don't just show up one day and do this. You learn to perfect the craft of mortgage fraud." A 40% rise in one year In terms of mortgage fraud, Las Vegas was bound to become a hotbed. When property values there soared 40% in 2004, speculators saw they could get rich quick without having to visit the city's casinos. For Larry Watson and his wife, Anne Marie, their home at the corner of Rolling Hills Drive and Gold Mine Drive had soared in value since they bought it in 1999 for $139,000. For years, they rented out the property, but they say continuing problems with tenants had resulted in tens of thousands of dollars in legal fees. In February of 2007, the Watsons say, they just wanted out, and listed the home for sale at $310,000 with a local real estate agent, Erin Schlumpf. But by then, the real estate market in Las Vegas had cooled, and for two months, the Watsons got no offers. In May, Schlumpf stunned them, saying a young man named Jonathan Carter was willing to buy their property for $340,000. But there was a catch: After the closing, the Watsons would have to make a $43,000 payment to a company called Pro Design, effectively reducing the sale price to $297,000. In June, the Watsons say they got worse news: An appraiser determined that the value of their home was only $290,000, and therefore, the bank wouldn't approve the $340,000 mortgage application. Schlumpf then said Carter would be willing to buy the house for $295,000, but the catch remained: The Watsons would still have to pay $43,000 to Pro Design. "I didn't understand where the $43,000 was going," says Larry Watson, who works in the information-technology department of Clark County, Nev. "I was advised that Pro Design is a corporation that holds money to be used in the repair of a property. I really got suspicious." Nevertheless, exhausted by the process and concerned about the weakening market, the Watsons accepted the deal. At closing, a payment of $43,000 was made to Pro Design, a company controlled by Steven Grimm, according to Nevada state records, as well as the federal indictment. According to the documents signed at closing, Grimm's wife, Eve Mazzarella, received a commission as broker and agent for the buyer, and Schlumpf and her boss split a commission for representing the Watsons. The Watsons never met Carter, the buyer, since he didn't show up at the closing. But Schlumpf urged them to sell quickly in June because Carter was in a hurry to move into the house, Watson says. Carter says now he never intended to live in the house. Instead, he told USA TODAY, he was led to believe he'd make money on a real estate investment brokered by Grimm, just as several of his friends had. All he had to do was allow the home to be purchased in his name, and Grimm would handle the mortgage payments. Shortly after the sale of 1729 Rolling Hills Drive last year, Carter began receiving notices from Amtrust Bank saying that he was behind on his monthly payments. Carter says he called Grimm to complain. "He was like, 'Oh, it's getting taken care of,' " says Carter. But Grimm made only one mortgage payment after his call, Carter says, and the bank has been dunning him since. Carter's attorney, Kirk Kennedy, says the bank has begun foreclosure proceedings. Schlumpf, wife of an FBI agent, says she can't comment on the matter, as it's under investigation. The FBI wouldn't comment, either. And there is no evidence to suggest that anyone connected to the deal other than Grimm and Mazzarella is under investigation. Of the 277 properties that Mazzarella and Grimm are accused of using to defraud banks, this is the box score from 1729 Rolling Hills Drive: The Watsons lost $43,000 from the profit they might have earned on their property; Carter's credit rating is ruined; and Mazzarella and Grimm could end up in jail. The property was no gold mine after all. By Greg Farrell, USA TODAY
LAS VEGAS — In the shadow of Sunrise Mountain, where Rolling Hills Drive turns into Gold Mine Drive, a plain two-story home sits unoccupied, like thousands of other houses here in southern Nevada.
Some of these empty homes have “for sale” signs. Others bear signs saying “foreclosure.” Authorities say hundreds of them, including this one on Rolling Hills Drive, should have a different sign out front, one that reads “fraud.”
Prosecutors contend this house was sold last year to a straw buyer as part of a sprawling mortgage fraud perpetrated by a husband-and-wife team involving 277 properties in greater Las Vegas.
Prosecutors have charged Eve Mazzarella, 30, and Steven Grimm, 45, with bank fraud, alleging the two caused banks to make more than $107 million in dubious loans and netted a profit of at least $15 million. Both defendants pleaded not guilty to the charges. A trial has been scheduled for October.
To the untrained eye, the size, scope and sophistication of the alleged scheme is noteworthy. But to the FBI in Las Vegas, the problem is the opposite: In recent years, there have been so many mortgage fraud cases, the bureau and local prosecutors have had to establish a special task force to combat the problem.
Scott Hunter, the FBI’s supervisory special agent here, describes the region as “mortgage fraud ground zero.”
The problem is so widespread that everyone seems to know someone affected by it. Even one of the FBI’s Las Vegas agents has a connection: Special Agent Henry Schlumpf’s wife was the real estate broker who sold the Rolling Hills Drive house last year to a straw buyer representing Mazzarella and Grimm.
The problem is hardly confined to Nevada. On a national level, mortgage fraud is a pandemic that stretches from California to Rhode Island, and from Alaska to Florida. The FBI currently has 1,380 active investigations into mortgage fraud, compared with 818 for fiscal 2006.
According to the website MortgageDaily.com, reported cases of fraudulent mortgage loans amounted to more than $4 billion in 2007, up from $1.6 billion in 2006.
But the $4 billion number doesn’t come close to describing the losses generated by mortgage fraud. Neighboring homeowners take a financial hit. Nowhere is that more apparent than in Las Vegas, where housing prices appreciated by a staggering 40% in 2004 alone. The surge in values drew investors, speculators and first-time buyers into the market like gamblers to a craps table.
“We’ve got people who walked into neighborhoods who paid $200,000 to $400,000 more than they ever should have paid,” says the FBI’s Hunter. “That story is going on all over Las Vegas. Everybody thought the market was hot, but a lot of that was being manipulated.”
Many of those who overpaid are stuck with mortgages larger than what their homes are worth. Those who took out home-equity lines of credit based on inflated valuations of their homes are now caught in a financial squeeze. Las Vegas had one of the nation’s highest foreclosure rates last year, with 4.2% of its homes being repossessed by banks, up 169% from 2006.
“There’s a close correlation between states with foreclosure problems and states with mortgage fraud problems,” says Sam Garcia of MortgageDaily.com. “There’s a good portion of foreclosures that probably resulted from some form of mortgage fraud.”
Profit or possession
Mortgage fraud comes in two flavors: “fraud for housing” and “fraud for profit.” Fraud for housing occurs when would-be home buyers overstate their income or misrepresent their credit history to secure a mortgage to buy a more expensive house than they can reasonably afford. In most cases, people who commit fraud for housing intend to live in their homes and pay their mortgages.
Fraud for profit is considered the more serious crime, since the goal is to rip off banks. In one common version of these schemes, a fraudster buys a home, gets an inflated appraisal, then resells the home at the artificially high price to a straw buyer who has no intention of living in the house or paying off the mortgage.
Mortgage fraud perpetrators can’t act on their own; they need accomplices to trick a bank into underwriting a loan that’s larger than a property is worth. To pull this off, mortgage fraudsters often work in league with corrupt appraisers, who inflate the value of target properties, says Jenny Brawley, head of mortgage fraud investigations at Freddie Mac.
The fraudster also needs someone to play the role of the buyer. In a true sale, a buyer would never willingly overpay for a home, but mortgage fraud schemes don’t work unless a straw buyer shows up and puts in a sky-high offer for a property.
Straw buyers fall into two categories: willing accomplices who hope to share in the profits; or dupes who are told they can make a quick $5,000 or $10,000 by joining a “real estate investment partnership.”
Once a mortgage fraud perpetrator has his team in place, he needs to figure out how to cover his tracks. Fraudsters know they can’t close a bogus real estate transaction one day, then disappear the next without raising suspicion. To keep the banks at bay, sophisticated con artists pay the mortgage bills for six months or even a year after a sale, creating the illusion of a legitimate real estate transaction.
Until 2006, when the real estate market began to cool in earnest, a fraudster could often resell a property, essentially covering his tracks.
“A lot of these schemes were masked because of an appreciating market,” says Freddie Mac’s Brawley. “The orchestrator of a fraud could flip 50 or 100 houses and do pretty well.”
Case studies
In the past few years, regulators have filed hundreds of cases against mortgage brokers, appraisers and straw buyers. Although the details of each case are unique, they often share similar characteristics:
• Eye-popping price appreciation. How hot were real estate values in Texas in the winter of 2003? So hot that Carlos Paul Gonzalez arranged to buy a home in The Woodlands, a Houston suburb, for $376,850 on Jan. 29, then sell it for $515,795 on Feb. 12.
That sounded too good to be true to federal prosecutors there, who filed an indictment charging Gonzalez and a partner, Ken Russell Browder, with recruiting straw buyers to overbid for a series of properties, including the home in The Woodlands.
The two men have pleaded not guilty in the matter, but in April, a title agent named in the indictment, Jannice Bonner, pleaded guilty to participating in the mortgage fraud scheme.
• Straw buyers. Last December, federal prosecutors in Utah charged five men and one woman with defrauding two lenders out of $13 million in mortgage loans. Prosecutors allege the defendants inflated the values of homes, buying and selling them through straw buyers and a pair of shell companies, Home Owners Group (H.O.G.) and Paragon Investment Group (P.I.G.).
•Professional involvement. In recent years, the FBI has estimated that 80% of mortgage fraud cases involve real estate professionals who couldn’t resist the temptations of easy money. Other cases involve people with criminal backgrounds migrating toward the mortgage business.
The epidemic of mortgage fraud is a reminder that wherever easy money is made, criminal activity soon follows.
“Mortgage fraud has always been here,” says Hunter, “but the level of complexity has gone up. It’s not just white-collar criminals. There are elements inside the real estate industry. You don’t just show up one day and do this. You learn to perfect the craft of mortgage fraud.”
A 40% rise in one year
In terms of mortgage fraud, Las Vegas was bound to become a hotbed. When property values there soared 40% in 2004, speculators saw they could get rich quick without having to visit the city’s casinos.
For Larry Watson and his wife, Anne Marie, their home at the corner of Rolling Hills Drive and Gold Mine Drive had soared in value since they bought it in 1999 for $139,000. For years, they rented out the property, but they say continuing problems with tenants had resulted in tens of thousands of dollars in legal fees.
In February of 2007, the Watsons say, they just wanted out, and listed the home for sale at $310,000 with a local real estate agent, Erin Schlumpf. But by then, the real estate market in Las Vegas had cooled, and for two months, the Watsons got no offers.
In May, Schlumpf stunned them, saying a young man named Jonathan Carter was willing to buy their property for $340,000. But there was a catch: After the closing, the Watsons would have to make a $43,000 payment to a company called Pro Design, effectively reducing the sale price to $297,000.
In June, the Watsons say they got worse news: An appraiser determined that the value of their home was only $290,000, and therefore, the bank wouldn’t approve the $340,000 mortgage application. Schlumpf then said Carter would be willing to buy the house for $295,000, but the catch remained: The Watsons would still have to pay $43,000 to Pro Design.
“I didn’t understand where the $43,000 was going,” says Larry Watson, who works in the information-technology department of Clark County, Nev. “I was advised that Pro Design is a corporation that holds money to be used in the repair of a property. I really got suspicious.”
Nevertheless, exhausted by the process and concerned about the weakening market, the Watsons accepted the deal.
At closing, a payment of $43,000 was made to Pro Design, a company controlled by Steven Grimm, according to Nevada state records, as well as the federal indictment. According to the documents signed at closing, Grimm’s wife, Eve Mazzarella, received a commission as broker and agent for the buyer, and Schlumpf and her boss split a commission for representing the Watsons.
The Watsons never met Carter, the buyer, since he didn’t show up at the closing. But Schlumpf urged them to sell quickly in June because Carter was in a hurry to move into the house, Watson says.
Carter says now he never intended to live in the house. Instead, he told USA TODAY, he was led to believe he’d make money on a real estate investment brokered by Grimm, just as several of his friends had. All he had to do was allow the home to be purchased in his name, and Grimm would handle the mortgage payments.
Shortly after the sale of 1729 Rolling Hills Drive last year, Carter began receiving notices from Amtrust Bank saying that he was behind on his monthly payments.
Carter says he called Grimm to complain. “He was like, ‘Oh, it’s getting taken care of,’ ” says Carter. But Grimm made only one mortgage payment after his call, Carter says, and the bank has been dunning him since. Carter’s attorney, Kirk Kennedy, says the bank has begun foreclosure proceedings.
Schlumpf, wife of an FBI agent, says she can’t comment on the matter, as it’s under investigation. The FBI wouldn’t comment, either. And there is no evidence to suggest that anyone connected to the deal other than Grimm and Mazzarella is under investigation.
Of the 277 properties that Mazzarella and Grimm are accused of using to defraud banks, this is the box score from 1729 Rolling Hills Drive: The Watsons lost $43,000 from the profit they might have earned on their property; Carter’s credit rating is ruined; and Mazzarella and Grimm could end up in jail.
The property was no gold mine after all.

]]> By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3251 H Smith Mon, 25 Aug 2008 10:21:44 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3251 Fraud and lending in Las Vegas Tuesday, February 5th, 2008 Mortgage fraud is again stepping into the media limelight. NPR’s Morning Edition reports on new FBI investigations which are being carried out in Las Vegas, Nevada: a city which is fast emerging as the mortgage fraud capital of America. Current turmoil in the city’s property market has led the FBI to uncover a number of schemes involving 14 financial institutions. The tactics which were used included paying fake buyers several thousand dollars to be listed on mortgage applications for several houses in the same neighborhood. Once these loans closed, corrupt appraisers would then exaggerate the property value and the underlying investors would sell and keep the profits. Such schemes artificially inflated home values throughout the city, and forced many desperate buyers into adjustable rate mortgages which they couldn’t really afford. In some cases this led to a cascade effect of foreclosures. Once one or two homes in a neighborhood were foreclosed on, surrounding property values declined and more homeowners became trapped in costly mortgages they might have otherwise been able to escape. Investigators suspect Las Vegas is just the vanguard in a growing trend of such schemes, and anticipate similar, albeit less extensive, discoveries across the country over the next year or two. Fraud and lending in Las Vegas
Tuesday, February 5th, 2008
Mortgage fraud is again stepping into the media limelight. NPR’s Morning Edition reports on new FBI investigations which are being carried out in Las Vegas, Nevada: a city which is fast emerging as the mortgage fraud capital of America.
Current turmoil in the city’s property market has led the FBI to uncover a number of schemes involving 14 financial institutions. The tactics which were used included paying fake buyers several thousand dollars to be listed on mortgage applications for several houses in the same neighborhood. Once these loans closed, corrupt appraisers would then exaggerate the property value and the underlying investors would sell and keep the profits.
Such schemes artificially inflated home values throughout the city, and forced many desperate buyers into adjustable rate mortgages which they couldn’t really afford. In some cases this led to a cascade effect of foreclosures. Once one or two homes in a neighborhood were foreclosed on, surrounding property values declined and more homeowners became trapped in costly mortgages they might have otherwise been able to escape.
Investigators suspect Las Vegas is just the vanguard in a growing trend of such schemes, and anticipate similar, albeit less extensive, discoveries across the country over the next year or two.

]]> By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3235 H Smith Thu, 07 Aug 2008 03:11:48 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3235 HOUSING AND ECONOMIC RECOVERY ACT OF 2008: Law may be of little help to LV Lenders would have to approve FHA refinancing By JOHN G. EDWARDS REVIEW-JOURNAL The new housing recovery law gives a glint of hope to homeowners facing foreclosure, but local business leaders doubt it will help many Southern Nevadans. The Housing and Economic Recovery Act of 2008 that was signed into law by President Bush on Wednesday authorizes the Federal Housing Administration to refinance loans for up to 90 percent of a home's appraised value, which would help homeowners who owe more than their home is worth. Michele Johnson, CEO of the Consumer Credit Counseling Service, said Thursday she doubts the federal law will help much here. "Even if it were beneficial for consumers in Nevada, I believe it would be helpful on a very limited basis," she said. Lenders with second-home loans would be wiped out and probably won't agree to the FHA loan arrangements if they don't also hold the first mortgage on a home, she said. "How many second-mortgage lenders are going to be willing to eat the balance (on their loan)?" she said. "Probably 70 percent of the homeowners we're seeing have a second mortgage with a different financial institution (than the first mortgage lender). Most of the (second-home loans) were for down payment on the house." In order to take advantage of the new program, a homeowner or his mortgage broker will need to convince the lender to write off the amount that the original loan exceeds the home's market value, plus 10 percent. The question is whether the lender is willing to accept a loss in order to recover 90 percent of the home's value, said Brock Davis, outgoing president of the Southern Nevada Chapter of the Mortgage Bankers Association. And if the lender is willing, can the institution absorb the loss, Davis asked. Lenders would need to write off tens of thousands of dollars on each of the FHA refinanced loans, and the lenders may not be able to take a financial hit of that size, analysts say. Wells Fargo Bank, one of the biggest home lenders in Nevada, is analyzing geographic areas and may approve the FHA refinancing and loan reductions in distressed areas, possibly including parts of Clark County, said Kirk Clausen, regional president of Wells Fargo Bank. "It could include some forgiveness on some mortgage loans that might be underwater," Clausen said. "It's probably too early to commit on any across the board loan forgiveness (of amounts exceeding 90 percent of appraised value)." The FHA refinance option probably will work for only a small percentage of financially struggling home owners, he said. Yet, "I think it's going to do a lot to really stabilize the home mortgage market," Clausen said. Assemblyman Marcus Conklin, D-Las Vegas, is chairman of a legislative panel on home mortgages. Conklin said the bill was good for the country, but said it probably won't help many in Southern Nevada because many mortgage balances exceed home values here by such a large amount and lenders may be unwilling to take such a large hit. Las Vegas home loans "were really overcooked" and typically exceed the current value of homes by 20 percent or more, he said. A Las Vegas homeowner may have a $500,000 loan on a house with a current appraised value of $230,000, Conklin said. That would be too big of a loss for most lenders to accept, he said. If the public believes the law will help the housing market, Davis said, the law may become self-fulfilling by convincing people that the worst is over and it's time to buy a home. "Anything right now is a benefit," said Patty Kelley, president of the Greater Las Vegas Board of Realtors. She noted the law includes a $7,500 tax credit for some first-time buyers. However, she said, it's too soon to know if that provision will help many. Bankruptcy trustee Tim Corey said homeowners would have benefited more if Congress had given bankruptcy judges authority to force lenders to reduce the mortgage balances to the value of the home. Several decades ago, bankruptcy judges had that power but it was eliminated first by the 9th U.S. Circuit Court of Appeals and later by the 2005 bankruptcy reform law. Corey doubted Congress would restore the bankruptcy "cram-down" provision. The new law "will help a fair amount of people," said Martin Lobel, a Washington, D.C., attorney and former legislative aide to the late Sen. William Proxmire. "It's not a total solution to the problem." Before the home mortgage crisis ends, Lobel said home prices will need to decline to more appropriate levels that are justified by the local economy. Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420. HOUSING AND ECONOMIC RECOVERY ACT OF 2008: Law may be of little help to LV

Lenders would have to approve FHA refinancing

By JOHN G. EDWARDS
REVIEW-JOURNAL
The new housing recovery law gives a glint of hope to homeowners facing foreclosure, but local business leaders doubt it will help many Southern Nevadans.

The Housing and Economic Recovery Act of 2008 that was signed into law by President Bush on Wednesday authorizes the Federal Housing Administration to refinance loans for up to 90 percent of a home’s appraised value, which would help homeowners who owe more than their home is worth.

Michele Johnson, CEO of the Consumer Credit Counseling Service, said Thursday she doubts the federal law will help much here.

“Even if it were beneficial for consumers in Nevada, I believe it would be helpful on a very limited basis,” she said.

Lenders with second-home loans would be wiped out and probably won’t agree to the FHA loan arrangements if they don’t also hold the first mortgage on a home, she said.

“How many second-mortgage lenders are going to be willing to eat the balance (on their loan)?” she said. “Probably 70 percent of the homeowners we’re seeing have a second mortgage with a different financial institution (than the first mortgage lender). Most of the (second-home loans) were for down payment on the house.”

In order to take advantage of the new program, a homeowner or his mortgage broker will need to convince the lender to write off the amount that the original loan exceeds the home’s market value, plus 10 percent.

The question is whether the lender is willing to accept a loss in order to recover 90 percent of the home’s value, said Brock Davis, outgoing president of the Southern Nevada Chapter of the Mortgage Bankers Association.

And if the lender is willing, can the institution absorb the loss, Davis asked.

Lenders would need to write off tens of thousands of dollars on each of the FHA refinanced loans, and the lenders may not be able to take a financial hit of that size, analysts say.

Wells Fargo Bank, one of the biggest home lenders in Nevada, is analyzing geographic areas and may approve the FHA refinancing and loan reductions in distressed areas, possibly including parts of Clark County, said Kirk Clausen, regional president of Wells Fargo Bank.

“It could include some forgiveness on some mortgage loans that might be underwater,” Clausen said. “It’s probably too early to commit on any across the board loan forgiveness (of amounts exceeding 90 percent of appraised value).”

The FHA refinance option probably will work for only a small percentage of financially struggling home owners, he said.

Yet, “I think it’s going to do a lot to really stabilize the home mortgage market,” Clausen said.

Assemblyman Marcus Conklin, D-Las Vegas, is chairman of a legislative panel on home mortgages. Conklin said the bill was good for the country, but said it probably won’t help many in Southern Nevada because many mortgage balances exceed home values here by such a large amount and lenders may be unwilling to take such a large hit.

Las Vegas home loans “were really overcooked” and typically exceed the current value of homes by 20 percent or more, he said.

A Las Vegas homeowner may have a $500,000 loan on a house with a current appraised value of $230,000, Conklin said. That would be too big of a loss for most lenders to accept, he said.

If the public believes the law will help the housing market, Davis said, the law may become self-fulfilling by convincing people that the worst is over and it’s time to buy a home.

“Anything right now is a benefit,” said Patty Kelley, president of the Greater Las Vegas Board of Realtors. She noted the law includes a $7,500 tax credit for some first-time buyers. However, she said, it’s too soon to know if that provision will help many.

Bankruptcy trustee Tim Corey said homeowners would have benefited more if Congress had given bankruptcy judges authority to force lenders to reduce the mortgage balances to the value of the home. Several decades ago, bankruptcy judges had that power but it was eliminated first by the 9th U.S. Circuit Court of Appeals and later by the 2005 bankruptcy reform law.

Corey doubted Congress would restore the bankruptcy “cram-down” provision.

The new law “will help a fair amount of people,” said Martin Lobel, a Washington, D.C., attorney and former legislative aide to the late Sen. William Proxmire. “It’s not a total solution to the problem.”

Before the home mortgage crisis ends, Lobel said home prices will need to decline to more appropriate levels that are justified by the local economy.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

]]> By: dbighitter http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3205 dbighitter Fri, 25 Jul 2008 06:41:37 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3205 I live and work here in las vegas. I live in an apartment here and own a house in Mesa, Az. and have moved my parents into it who a retirees from the Midwest. I dont have any trouble paying my bills or paying mortgage because I bought the house when I knew I could afford it and saved up the money for it. Just like people used to do it. Not like most of the people in foreclosure and I say most because some happen due to unseen illness or job loss,who went out and didnt use their heads and let these greedy real estate agents and lenders convince them they could afford these way over priced houses. Now people like me who work and know how to manage their money will have to end up being over taxed to bail out you easily manipulated people. Most of you put yourselves in this situation now suck it up, give up the house go to work and save money so you can buy a house the old way, a fixed 30 year mortgage with 10% or more down. I am not being mean and good luck. I live and work here in las vegas. I live in an apartment here and own a house in Mesa, Az. and have moved my parents into it who a retirees from the Midwest. I dont have any trouble paying my bills or paying mortgage because I bought the house when I knew I could afford it and saved up the money for it. Just like people used to do it. Not like most of the people in foreclosure and I say most because some happen due to unseen illness or job loss,who went out and didnt use their heads and let these greedy real estate agents and lenders convince them they could afford these way over priced houses. Now people like me who work and know how to manage their money will have to end up being over taxed to bail out you easily manipulated people. Most of you put yourselves in this situation now suck it up, give up the house go to work and save money so you can buy a house the old way, a fixed 30 year mortgage with 10% or more down. I am not being mean and good luck.

]]> By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3203 H Smith Wed, 23 Jul 2008 00:43:07 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3203 GAIL BURKS & the Nevada Fair Housing Center, Inc. 3380 W. Sahara Avenue, Suite 150 • Las Vegas, Nevada 89102 is a sham & so is the so-called Mortgage fraud hotline 584-5555! Anybody that doubts me please e-mail me & I will be happy to attach all proving documents! Seatime37@aol.com. I have left countless messages for the NEW mortgage fraud hotline & they never return any calls! Anybody that has lived here for a while knows they have been plagued by corruption just read the newspapers. I recommend not donating any more money to these Las Vegas corrupted backed agencies, she could not even get up out of her office & explain to me why she will not press charges against a certain proven local predatory mortgage broker! GAIL BURKS & the Nevada Fair Housing Center, Inc. 3380 W. Sahara Avenue, Suite 150 • Las Vegas, Nevada 89102 is a sham & so is the so-called Mortgage fraud hotline 584-5555! Anybody that doubts me please e-mail me & I will be happy to attach all proving documents! Seatime37@aol.com. I have left countless messages for the NEW mortgage fraud hotline & they never return any calls! Anybody that has lived here for a while knows they have been plagued by corruption just read the newspapers. I recommend not donating any more money to these Las Vegas corrupted backed agencies, she could not even get up out of her office & explain to me why she will not press charges against a certain proven local predatory mortgage broker!

]]> By: James Talmon http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3197 James Talmon Sat, 19 Jul 2008 16:19:52 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3197 I've lived in this city for 14 years. The housing crises is crushing a lot of good hard working people. I have been doing all I can to help. People just want to know if it's possible for them to keep their home. They want straight forward advice and REAL help. There are several programs that may be able to help them do just that. However, the reality is that not all options will apply to everyone. Each homeowner will have a unique set of circumstances. Sometimes, bankruptcy may be the only option. But it should be the LAST option. If you would like to know more about what we've been doing, please visit my website at www.jpa-enterprises.info -- the four sections that I would recommend you see is our "FAQs" (Frequently Asked Questions); "About Us"; "Agency Programs" and "Basic Qualifications". If you like to know more, please contact me. I’ve lived in this city for 14 years. The housing crises is crushing a lot of good hard working people. I have been doing all I can to help. People just want to know if it’s possible for them to keep their home. They want straight forward advice and REAL help. There are several programs that may be able to help them do just that. However, the reality is that not all options will apply to everyone. Each homeowner will have a unique set of circumstances. Sometimes, bankruptcy may be the only option. But it should be the LAST option. If you would like to know more about what we’ve been doing, please visit my website at www.jpa-enterprises.info — the four sections that I would recommend you see is our “FAQs” (Frequently Asked Questions); “About Us”; “Agency Programs” and “Basic Qualifications”. If you like to know more, please contact me.

]]> By: Clyde Simons http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3196 Clyde Simons Sat, 19 Jul 2008 15:38:51 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3196 Our Lender or the loans servicer has put us in foreclosure and is returning the payments. The issue is over a payment they say they did not receive. We are being bullied even though we have the cancelled check in question. Their entire push is to have us sign a document that makes us pay all kind of fees and late payments. This amount is over $10,000 and will be attached to the loan balance. They say this is the only way to stop the foreclosure. We don't have the money to fight this in court! Where can we go for help? We have all the documented facts if we can get someone to listen. ineedmortagehelp@gmail.com Our Lender or the loans servicer has put us in foreclosure and is returning the payments. The issue is over a payment they say they did not receive. We are being bullied even though we have the cancelled check in question. Their entire push is to have us sign a document that makes us pay all kind of fees and late payments. This amount is over $10,000 and will be attached to the loan balance. They say this is the only way to stop the foreclosure.
We don’t have the money to fight this in court! Where can we go for help? We have all the documented facts if we can get someone to listen.
ineedmortagehelp@gmail.com

]]> By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3129 H Smith Sat, 21 Jun 2008 15:40:39 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3129 Has anyone been received any help from Credit consumer counseling services? I have been working with Kendra since 7 months ago with really no help at all. Please let me know. Has anyone been received any help from Credit consumer counseling services? I have been working with Kendra since 7 months ago with really no help at all. Please let me know.

]]> By: Susan Thomas http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3121 Susan Thomas Fri, 20 Jun 2008 04:56:38 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3121 Too little, too late! I wish I could have kept my house - I made the mistake of renting my house to a friend of a friend & once she got in there guess what??? She didn't pay. I moved to a much lower paying state (UT) and could not keep up with my $1800 a month mortgage. I got NO help from Countrywide, the County Court or anyone. SO, guess what??? BYE-BYE, brand new house. Nice having you while I did. Too little, too late! I wish I could have kept my house - I made the mistake of renting my house to a friend of a friend & once she got in there guess what??? She didn’t pay. I moved to a much lower paying state (UT) and could not keep up with my $1800 a month mortgage. I got NO help from Countrywide, the County Court or anyone. SO, guess what??? BYE-BYE, brand new house. Nice having you while I did.

]]> By: H Smith http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3120 H Smith Fri, 20 Jun 2008 01:19:31 +0000 http://blogs.lasvegasnow.com/blog/2008/06/13/foreclosure-nightmare-stories/#comment-3120 In regards to Patrick Welsh's comments you can call it ignorance but you are only speculating & I am speaking from experience. I know several people that were mortgage brokers here & Los Angeles & they have confided in me that they purposely steered people into subprime mortgages even if they thought they could get them a prime mortgage! Subprime was their bread & butter. I have no pity for former mortgage brokers that formerly preyed on others for a living especially the elderly. I think we should put them on a rocket & send them into outerspace! In regards to Patrick Welsh’s comments you can call it ignorance but you are only speculating & I am speaking from experience. I know several people that were mortgage brokers here & Los Angeles & they have confided in me that they purposely steered people into subprime mortgages even if they thought they could get them a prime mortgage! Subprime was their bread & butter.
I have no pity for former mortgage brokers that formerly preyed on others for a living especially the elderly. I think we should put them on a rocket & send them into outerspace!

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