Life goes on for Las Vegas residents.  Another month, another set of depressing foreclosure figures in the midst of some glimmers of hope in the housing market.  Though foreclosures decreased in the last months, Nevada has the nation's highest foreclosure rate.  This rate is up 111% since April, 2008.  Properties in Nevada, Florida, California, and Arizona, along with six more high foreclosure states, account for 75% of foreclosures in the country.  On a local level, Las Vegas has the highest foreclosure rate of any metropolitan area with a population over 200,000 - in 56 homes received a foreclosure filing in April.

Recently, the Nevada Association of Realtors interviewed a sample of participants who have experienced foreclosure since 2007.  The study noted the fact that there was little data available on people who experienced foreclosure.  Many foreclosed homeowners do not have a current phone number on file; in Nevada, foreclosure can happened quickly so many in this situation moved quickly as well, which made it even harder to track a last known phone number.  Nonetheless, the 307 interviewed provide some insight into the crisis. 

We will present the raw data from the report another time but the conclusions advanced in the report about who was likely to experience foreclosure are reveal no magic answer about who was likely to do so; basically, anyone from any economic, political, ethnic, or educational class could suffer foreclosure if something changed in their life.  The report referred to this as "Plus One Factor," a change in income, debt relationship that made paying the mortgage out of reach.  Some respondents indicated that they may have contributed to the problem by getting into loans for homes they could not afford, but the group showed a poor understanding of the responsibilities of home ownership, the types of loan they had, or the options available to them to avert foreclosure.

The report challenges two major assumptions that form the basis of public thinking about the foreclosure crisis.  People who go through foreclosure are often considered greedy and/or naïve.  The fact is, most people interviewed did not knowingly borrow more than they could pay, but something changed.  It's easy to assume that the change is due to job loss, but often unexpected medical bills, divorces, caring for a loved one, or an increase in dependents in the home, became the Plus One factor.  Some people might not have read the fine print on the contracts or thought out their purchase thoroughly enough, but respondents were from all income levels and educational backgrounds have been caught up in the mess.

If the conclusions of this report are representative of what nationwide results would be, were a broader study conducted, this means that a lot of the "moral hazard" arguments advanced against the new programs offered foreclosed homeowners are groundless.  Most people personally know of someone who scammed the system and may be getting an "undeserved" break; the media always picks up on the part time daycare worker who bought a $500,000 home.  A few cases might not represent the true picture that would emerge if a broader study were done.

Data from other sources might support an argument that the most likely foreclosure "victims" are poorer and more likely to be black or Hispanic; this study does not show that foreclosed homeowners are any more likely to be trapped in bad loan or more unlikely to seek help, based on race, ethnicity, or income.  This means that information on how to avoid foreclosure needs to be widely disseminated. 

The report does not probe underwater mortgages caused by falling home values.

The whole Face of Foreclosure Report is available on the Nevada Association of Realtors' website.

Need foreclosure alternatives?  Want to buy distressed property?  Contact us for concrete help.

N & Y Team

Nebi Adhanom Direct: (702) 277-9922

Yonas Woldu Direct: (702) 236-8997

Fax: 702-898-9738

www.VegasRealProperty.com

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