Las Vegas Home Specialist

Bank of America has done it again.  A family in Yorba Linda, CA, who had lived in their home for 18 years, but had fallen victim to the current economic times, became unable to pay their mortgage payments.  Since their economic situation did not improve and they were unable to reach an agreement with Bank of America, the family put the house on the market last spring in an effort to forestall a foreclosure.  The house, even in a down market, was worth over $500,000; the mortgage was less than $300,000.  The house remained unsold and in December the owners were notified that a trustee’s sale was set for January 6.  In the nick of time, an offer was received.  Nevertheless, Bank of America refused to postpone the trustee’s sale, even though escrow was due to close in the middle of January.  Having exhausted all efforts to obtain a postponement, the owners were forced to file an emergency bankruptcy the day before the sale.  The action kept Bank of America from selling the house and, hopefully, the house will be sold on time.

As we start another year, I’ve been thinking about the decisions so many of us must make about our futures.  Should we move to find more opportunity even if our hearts remain in the place we live?  Should we stay in our homes even if they will never be worth what we owe on it?  What is the right thing to do?

When American Airlines filed for bankruptcy at the end of last year, it was a strategic business decision which will allow the corporation to reduce its debt and cut its operating costs.  This could be considered a smart business decision, made in order to stay in business.

There is really no stigma attached to these kinds of corporate decisions.  Yet for millions of homeowners who owe more than their homes are worth, a different standard seems to be set for them.  Like American Airlines, many homeowners can continue to pay their bills, including their mortgages.  Yet their economic situation would be much improved by divesting themselves of the nonperforming asset – the house.

Corporations walk away from real estate obligations all the time.  In an especially ironic example, the Mortgage Bankers Association, whose president has gone on record saying defaulters are sending the wrong message “to their family and their kids and their friends,” did a short sale on its corporate headquarters.  The question may be, should homeowners think more like banks and focus on the bottom line?

Here are some of the holiday events we may enjoy in our valley.

11/16-1/1/12 18th Annual Holiday Cactus Garden:  Ethel M’s Botanical Cactus Garden, 2 Cactus Garden Dr. Visitors are invited to wander the garden’s illuminated pathways, while taking in the sights, smells and sounds of the holiday season from 5pm-10pm, seven dasy a week, excluding Christmas Day.

11/18-1/1/12 Glittering Lights at Las Vegas Motor Speedway:  View 2.5 miles of LED lights at this drive-through experience that is a beloved tradition for friends & family to enjoy together.  Sun-Thu, 5:30-9pm, Fri-Sat 5:30-10p.m.  www.vegasglitteringlights.com

11/19-12/31  Magical Forest:  Opportunity Village, 6300 W. Oakey Blvd. Feast your eyes on the more than 3 million lights on hundreds of decorated trees.  Ride the Forest Express passenger train, take a spin on the Carousel or visit Santa. There is fun for the whole family and plenty of special events and offers throughout the Forest season. Nightly 5:30pm, closed Sundays.  www.opportunityvillage.org

11/21-1/20/12  Opening of the Skating Rink at the Village at Lake Las Vegas:  30 Strada Di Villagio.  www.montelagovillage.com  www.thevillage.com

11/24-12/24  Storytelling with Santa on the Beach:  Christmas time is about being with family and enjoying time together.  What better way to spend time by joining Loews Lake Las Vegas for Storytelling with Santa on the Beach.  There will be goodies like cookies & milk, hot cider & s’mores by the fire pit. 6-8pm  www.lakelasvegasevents.com/entertainment

11/25  Tree Lighting Ceremony at the District at Green Valley Ranch:  2240 Village Walk Dr. Fun for the whole family. A 50 foot tree, special entertainment and a Santa photo opportunity in Suite 181. Starts at 5pm.  www.thedistrictatgvr.com

12/3  Christmas Parade of Lights:  Las Vegas Boat Harbor/Lake Mead Marina complex at Boulder Beach. Decorated boats will proceed out of the Marina & cruise along Boulder Beach. Starts at 6:30pm.

12/3  Las Vegas Great Santa Run:  Town Square on Las Vegas Blvd. Pre Register 12/1-2 online. Averaging around 10,000 Santas annually, this family event attracts people from around the world. Run the 5K; walk the 1 mile Kris Kringle Jingle or just enjoy the festivities.  www.opportunityvillage.org/santa_run.php

12/3,4, 10-11, 17-23  Holiday Spectacular Experience:  Springs Preserve 333 S. Valley View Blvd. A family friendly winter wonderland filled with fun, colorful excitement and much more! Bathed in the glow of thousands of colorful, eco-friendly LED lights, the family-friendly celebration will feature tasty treats, holiday arts and crafts, train and reindeer (pony) rides for the little ones, and photos with Santa. 5-9pm    702-822-7700

12/6  Fremont Street Tree Lighting Ceremony:  The 45 foot tree will be adorned with festive decorations and will stand below the 12.5 million lights of the Viva Vison screen. You can also watch Santa zipline just after the mayor flips the switch on the Fremont Street Christmas tree. 5-6pm.  www.vegasexperience.com

12/6-1/2/12  Bellagio Fountains:  In front of the Bellagio Hotel on the strip.  The free fountain water show is performed to Christmas mustic and is a beautiful site.  www.lasvegas-how-to.com/christmas-in-las-vegas.php

12/6-1/2/12  Bellagio’s Conservatory & Botanical Gardens:  The displays feature flying reindeer made of whole pecans, a polar bear family created with white carnations and a seven foot tall, custom sculpted rocking horse in the midst of a  whimsical rail display featuring a working train. The centerpiece is a 42 foot Shasta Fir tree featuring thousands of holiday lights.

12/9,10  WinterFest:  Henderson Convention Center, 20 Water St. This year’s theme will be An Old Fashioned Christmas Delight as the event will feature a varity of family-friendly activities including an official tree lighting ceremony with Mayor Hafen and Santa Claus, gingerbread house displays and introducing a new Evening Light Parade!  www.hendersonlive.com/special-events/winterfest   702-267-2171

12/20  Menorah Lighting at M Resort:  12300 S. Las Vegas Blvd. A giant indoor menorah lighting will be held at the M Resort Spa Casino to celebrate the Jewish holiday of Hanukkah, the “Festival of Lights.” Children can enjoy chocolate coins and toy dreidels at the lighting. 4-6pm.  www.themresort.com  702-797-1000

12/20  Fremont Street Menorah Lighting:  Fremont St. bewteen Las Vegas Blvd. & 4th St. Latkes, music, entertainment & more.  4-5pm.

12/21  Menorah Lighting at the District at Green Valley Ranch:  Please check the web site for time and lcoation.  www.thedistrictatgvr.com

12/31  America’s Party-Las Vegas New Year 2012:  Includes a spectacular fireworks show by Fireworks by Grucci of New York, fired from the roofs of the MGM Grand, Aria, Planet Hollywood, Caesars Palace, Treasure Island (IT), the Venetian and the Stratosphere.

12/31  Fremont Street Experience New Years:    Besides the Vegas strip, another great place to ring in 2012 would be at the Fremont Street Experience in downtown Vegas.  The new Year’s Eve America’s Party at Fremont Street is always a blast.  This year the best of the best will be performing for 14 combined hours of live concerst on three stages.

Recently I completed a closing on a short sale which had a long, tangled history.  This particular short sale makes an interesting, if cautionary, tale.  Over two years ago,  in September of 2009, I listed a house as a short sale from someone who had relocated.  The house was vacant but in nice condition, located in Silverado Ranch.  The house was listed for $120,000.  By the end of September an offer had been made and we started talking with the lender, Bank of America, which held both loans.  We went through four buyers before finally obtaining an approval letter in August of 2010, by which time the second loan had been sold by Bank of America to Green Tree.   However, the approval did not waive the deficiency (the difference between what the property sold for and what was owed on the loan).  Under these circumstances, Bank of America would have six years to pursue the homeowner for that deficiency.  If the property was lost in foreclosure, the bank would only have six months in which to file a lawsuit.  Naturally, the seller declined to do the short sale and, as far as we knew, the property sold at trustee sale sometime in August.

In November, 2010, I received a call from the homeowner.  Bank of America had contacted her to advise that they had not foreclosed on her house and were offering her a “cooperative short sale.”  This is similar to a HAFA short sale, by Bank of America.  Bank of America was now willing to waive the deficiency.  The cooperative short sale is supposed to move more quickly than a regular or HAFA short sale.  We listed the house again in November and by mid-December were once again in contract.  This time, the buyers stayed loyal; despite the fact that the cooperative short sale was supposed to be a streamlined process, the approval letter was not issued until May, 2011.  Then, with closing barely a week away, the house, which had been vacant for over two years, was severely vandalized and no longer worth the agreed upon sales price of $110,000.  We tried to get the sales price lowered, but Bank of America refused to agree to a lower sales price.  Once again, the property went on the market, this time as a regular short sale; an offer was submitted to Bank of America in June and an approval with a deficiency waiver was issued in September.  The property sold in October for $75,000 , over two years after it was first listed.  Had Bank of America agreed to a deficiency waiver in August, 2010, the property would have sold for $120,000.

The president was in Las Vegas this week and announced some changes to the Home Affordable Refinance Program, HARP.  This program was established in 2009 to allow homeowners to refinance their mortgages at lower rates.  Originally, the program was  limited to homeowners whose house values were less than 25 percent below what was owed on the house.  As a result, the program was not very helpful to homeowners here in Las Vegas, who are looking at losses of 30 to 60 percent.

Now, the program allows a refinance regardless of the loss in value.  Also, certain fees have been eliminated making a refinance less expensive.  To make the program more attractive to the banks, they will no longer have to buy back the mortgages from Fannie Mae or Freddie Mac.

Homeowners may qualify for the HARP program if their loan was sold to Fannie Mae or Freddie Mac before June of 2009.  You must be current on your mortgage.  One late payment in the previous six months or more than one in the last year disqualifies one from the program.  As with all the programs initiated to avoid foreclosure, HARP is voluntary.  The lender does not have to participate in the program.

More details on the program are due to be released on November 15.  Want to know if your mortgage is owned by Fannie Mae or Freddie Mac?  Go on line to freddiemac.com/mymortgage or fanniemae.com/loanlookup.  Or give me a call at 702-401-2349 or email info@lasvegashomespecialist.com and I’ll be happy to look it up for you.

MSN Money ran a recent article listing the states that spend the most money at candy shops (such as See’s) and guess who finished first? If you guessed Nevada, you’d be absolutely right!

Folks with a sweet tooth can find plenty of places in the Las Vegas area to satisfy their desires. Many of the big casinos have candy shops such as Ghirardelli’s and Vosges. And then of course, in addition to See’s we have Godiva shops and the famous Ethel M factory store. It’s no wonder Nevadans love their candy shops!

What are your favorite stores for candy?

Over the weekend I attended a birthday party.  In talking with one of the guests, I learned that a year ago, her lender, Chase, had sent them, entirely unsolicited, an offer to modify her loan from an interest only loan  to a 30 year fixed rate at 5 percent AND to reduce the principal amount of the loan by $117,000.  She had an excellent payment history in all ways and this was Chase’s reward to her.  When she sells her house, the $117,000 will be added to the 1099 she will receive, but, as long as she (and her husband) don’t net more than $500,000 profit from the sale of the house, there will be no taxable capital gain.

There are two key factors at work here.  One, the excellent payment history and two, the toxic aspect of the existing loan.  Interest only loans were popular because of the low monthly payment, but in a falling market, that unreduced principal becomes a risky proposition to the lender.  Even borrowers with excellent payment records may begin to feel they are in a no win situation as they watch the value of an asset on which they owe money become worth much less than what is owed on it.  In this case, Chase chose to make a preemptive move to keep this performing asset for turning into a nonperforming one.

Generally, the lenders who are offering these principal reductions are not the originating lenders, but, rather, purchased the loans at a reduced value – like Chase did with Washington Mutual.  They are, therefore, in a position to make these offers without experiencing a significant loss.  If you’re wondering why Bank of America doesn’t do more with the toxic loans it purchased from Countrywide, it’s because they paid close to top dollar for those loans.

Don’t expect this to be a trend, though.  All the major banks have refused to consider modifying principals on 30 year fixed loans.  It’s also not likely to happen if you are experiencing financial difficulty.  I have some clients who would like to do an FHA short refinance on their fixed rate loan.  An FHA short refinance is like a short sale, but without the sale.  The first lien holder agrees to release it’s lien for the amount of a new FHA loan.  The result is a new loan with a lower principal.  The current lender, Wells Fargo, has told them that they would rather, foreclose, do a short sale or have the house burn down than do an FHA short refi.  With no coherent policy, it’s no wonder we are all confused and angry at the banks.

Deutsche Bank is not a friend to those in the armed services.  A short sale I am working on right now is stuck because Deutsche Bank, the investor, refuses to review a short sale unless the loan is in default.  In this case, a master sergeant in the Air Force is being transferred from Nellis AFB to a base in Delaware.  To protect his security clearance, he is staying current on his payments until he relocates.  Despite this, Deutsche Bank continues to refuse to review the file for short sale approval until he stops making payments.  It boggles the mind that Deutsche Bank would be so intransigent, especially when it comes to a situation in which a member of the armed forces is under orders to move.  In an effort to convince Deutsche Bank it needs to review its policy, I have sent a letter to the Senate Majority Leader, Harry Reid, requesting assistance and copies to the chairman and director of asset management with Deutsche Bank.  With short sales, it’s important to never take no for an answer.

An argument may be made that Las Vegas is experiencing another real estate bubble, but, this time, at the bottom of the market. At the height of the market, it was accepted that Las Vegas real estate was overvalued by over 30 percent. Since this kind of value increase is unsustainable, the bubble began to deflate and then burst as world money market problems exacerbated our situation. Now it’s generally acknowledged that residential real estate in Las Vegas is undervalued by anywhere from 28 to 41 percent, although I would say it is as undervalued now as it was in 2006. With an average per square foot sales price of $77, houses may be purchased for less than the materials used to build them, or less than replacement cost. Certainly, buyers are taking advantage of this bubble, just as sellers took advantage of the previous one. There may be more sales this year than there have ever been in Las Vegas history. The record was set in 2004 with 55,408 sales. The one area which may prove to be a drag is the lack of new home sales. With houses selling at less than replacement value, new home sellers are at an extreme disadvantage. You might think of the market as an hour glass, with a bubble at the top and now a bubble at the bottom. We can take some pleasure in imagining the bursting of this bubble and the rise in prices which should occur at that time. What will make that happen? Here in Las Vegas the answer would seem to be more jobs. There also has to be a loosening in underwriting criteria so more people may qualify for a loan, although we certainly don’t want to go back to the bad old days of lending to anyone. There do have to be some underwriting criteria.

For more info, contact us through LasVegasHomeSpecialist.com

Our virtual assistant, Charlotte, took a photo of an unusual item she found in the road.

Yep, it’s an organ, not something one sees lying in the road every day!

Have you ever found something weird, odd or bizarre in the road? Post your story by commenting on this page and email us your email address to be entered into a drawing for a $5 Starbucks gift card.