Lawmakers take steps to end state’s foreclosure crisis | NevadaAppeal.com

Lawmakers take steps to end state’s foreclosure crisis

Members of a legislative study committee agreed Monday they want to help homebuyers who are facing foreclosure through no fault of their own.

But they made it clear they have a lot less sympathy for speculators left high and dry by their own greed.

The panel headed by Assemblyman Marcus Conklin, D-Las Vegas, voted to ask the Interim Finance Committee to help fund a toll-free hotline for homeowners in trouble because of rising interest rates pushing their monthly payments beyond what they can afford. They were told by experts in the field the big problem is too many homeowners don’t know where to go for help.

Legislative research analyst Dave Ziegler told lawmakers nearly 29,000 Clark County homes are up for sale, just under half of them vacant, which lawmakers interpreted to mean they are owned as investments by speculators.

Ziegler said Nevada has had the highest foreclosure rate in the nation for nine consecutive months – one filing for every 185 households in September. And he said national experts predict things will continue to get worse for the next 18 months before starting to recover.

The big problem there is the number of adjustable rate mortgages that will jump upward by several percent in the coming year.

More than 2 million adjustable-rate mortgages are scheduled to reset around the country by the end of 2008.

Tony Ramirez, of the U.S. Department of Housing and Urban Development, said there are more than 15,800 properties in Nevada in pre-foreclosure status as of August.

He presented figures showing another 11,700 properties have already been foreclosed on.

While the vast majority of those homes are in Clark County, statistics presented by Ramirez show 40 homes foreclosed on in Carson City and 40 more in Douglas. In Carson City, he said 28 are in pre-foreclosure – 52 in Douglas.

In Lyon County, the situation is worse with 46 homes foreclosed on and 86 in some stage of pre-foreclosure as of a week ago.

Ken LoBene, of HUD, said all parties agree the hotline is a good first step. But he estimated it would cost $400,000 to set up the hotline, with most of that money going to the staff who can walk consumers through their options and get them to the right places for help.

Michelle Johnson, who runs Nevada’s Consumer Credit Counseling Service, said the funding is badly needed. She said the federal government cut back its funding for services like credit counseling from $281,000 in 2006 to just $81,000 this year.

At the same time, she said the number of homeowners in trouble her organization has helped through the first nine months of this year increased by 2,000 over last year.

Gail Anderson, of the state Department of Business and Industry, said they are already well along in developing a Web site to help guide homeowners who are in trouble with their mortgages. The committee agreed the Web site is another vital tool for consumers.

Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, said the goal is to “send these people to a place they can trust for help.”

Sens. Bob Beers, R-Las Vegas, and Warren Hardy, R-Henderson, said they want to know how many of those homes were purchased as speculative investments and have never been someone’s primary residence.

Hardy said that information is needed “so we can determine as best we can determine whether this is the investment market correcting itself or is it a true crisis.”

He said he also wants to know how many of the mortgages in question are the adjustable rate mortgages now rising beyond what homeowners can afford and how many are traditional mortgages.

Conklin said he has been told up to half the homes in foreclosure are owned by speculators.

Hardy made it clear he doesn’t support much help for those owners.

“There’s got to be pain associated with the greed,” he said. “If we soften the load for the individuals who created this, there’s no incentive to correct it.”

LoBene said they will prepare a proposal to set up and fund the hotline for the Nov. 14 meeting of the state’s Interim Finance Committee, which would have to approve funding for the toll-free line.

Gail Burks of the Nevada Fair Housing Center said a good 800 phone system could cost more than $350,000 but a joint effort involving government agencies, nonprofits and lenders could be started now at a lower cost.

Burks said it’s important to act quickly because whether borrowers were individual homeowners or speculators they’re all caught up in a Titanic-like situation: Without efforts to resolve the crisis “we’re all going to go down together.”

HUD representatives supported the 800 line and said new federal efforts also will help borrowers.

Those efforts include one called Hope Now, to boost the number of homeowners who can be reached with credit counseling and help in refinancing to mortgages they can afford; and another called FHA Secure, expanding eligibility requirements for refinancing loans guaranteed by the Federal Housing Administration.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750. Associated Press reporter Brendan Riley contributed to this report.

By the Numbers

Nevada Foreclosures

• Nevada has had the highest foreclosure rate in the nation for nine consecutive months – one filing for every 185 households in September.

• 15,800 properties in Nevada were in pre-foreclosure status as of August. Another 11,700 properties have been foreclosed on.

Area foreclosures

Carson City 40

Douglas County 40

Lyon County 46

Homes in pre-foreclosure

Carson City 28

Douglas 52

Lyon 86

On the Net

Hope Now and FHA Secure:

fha-assistance.org

What’s next

Funds will be sought through Nevada’s Interim Finance Committee to set up a toll-free hotline to aid consumers.