Fixed-Rate Loans in Next Las Vegas Foreclosure Listings
The next flood of foreclosure listings in Las Vegas and in other parts of Nevada will come from defaults of fixed-rate prime mortgage loans, based on data collected by First American CoreLogic and Nevada housing agencies.
First American CoreLogic reported that the number of fixed-rate prime mortgage loans which are already three months delinquent has increased by nearly 4 percent compared to prime loan delinquencies last year. Foreclosures of prime loans statewide increased by over 3 percentage points, second to Florida’s prime mortgages which are already in foreclosure listings.
Rosemary Murphy is one among many Nevadans who got their mortgage loans in the conventional way, submitting well-screened loan documents, passing all income requirements and taking out fixed-rate 30-year prime mortgages.
Murphy, an employee of the Clark County School District, took out her mortgage loan nine years ago, long before risky ARM loans were offered to borrowers.
In 2004, encouraged by the housing boom, she resigned from her job and set up a mortgage brokerage enterprise in Texas together with her husband. They used money from the refinancing of their home, which had increased in value to $800,000.
Unfortunately, subprime lending failed and caused the housing crisis, pushing down home prices and tightening credit. Murphy’s business collapsed last year, causing her to miss several of her monthly mortgage payments of $3,960.
Murphy’s lender has warned her that her home would be foreclosed in August if she does not pay her arrears. Murphy claims that her lender refuses to work out a loan modification so that she could save her home from foreclosure listings.
When questioned, most banks do not comment on individual cases, but they insist they do not modify loans when the homeowner does not have enough income to cover even modified monthly loan payments.
Debbie Kohl, an executive of the Henderson City unit of credit counseling agency Auriton Solutions, said more and more homeowners who took out prime loans are calling the agency for help and the major reasons are unemployment and underemployment.
Kohl said that many are no longer receiving overtime payments and instead, they are given furloughs. Self-employed professionals like dentists, electricians and plumbers said they are getting only a few calls from clients. With less income, many of them default on their loan payments, subsequently losing their homes to foreclosure listings.
Jaime Lopez, an officer of Neighborhood Housing Services of Southern Nevada, added that troubled homeowners had traditionally prevented foreclosure by selling their homes to pay off mortgage loans. But because of the low prices and large number of homes in foreclosure listings now, homeowners could not sell their homes at a price that could help them.
