The number of Nevada homeowners who owe more on their mortgages than their homes are worth took a huge leap in the fourth quarter of 2010. Nevada currently leads the nation in percentage of mortgages underwater, with a full 67 percent of Nevada homeowners upside down in their mortgages. Nationally, one in four US homeowners with a mortgage are underwater, up from 23 percent in the previous quarter, according to a new report from Zillow. Foreclosure moratoriums and falling home prices are to blame.
While many Nevada homeowners plan to wait for prices to recover, real estate experts predict that it could take up to 20 years for Nevada home prices to rebound. The problem arises for those who have had their hours reduced, lost jobs or have to move. They will have trouble selling their homes for enough to pay off the mortgage and thus may face foreclosure.
Negative equity not only makes it harder to sell a home, it also makes it more difficult to modify a troubled loan. Less than 2 percent of Nevada homeowners have qualified for government assistance programs, (HAMP, HAFA, Hope Now, Making Homes Affordable, etc.) due to Nevada’s negative equity and the high redefault rates for Nevada loan modifications. 80 percent of modified loans in Nevada are likely to default again within12 months. (The national redefault rate is 60-70 percent for sub prime loans according to the Wall Street Journal.) According to the Las Vegas Review Journal, "Most homeowners in Las Vegas are so far upside down on their homes, (owing significantly more than their home is worth) that they don't qualify for the government's $75 billion Home Affordable Mortgage Plan." According to Eric Witksoki, Chief of the Attorney General’s Bureau of Consumer Protection, and the state consumer advocate, “Money spent on mortgage modification consultants is a bad bet for consumers.” Additionally, Witkoski commented that spending money on loan modification is “worse than some of the odds at the casino tables.”
Meanwhile, mortgage servicers have stepped up efforts to avoid foreclosures through short sales or short payoffs, where the home is sold for less than the amount owed. According to Bill Myers, Nevada Short Sale Expert and owner of The Myers Team with Century 21 MoneyWorld, “Most major banks are now waiving their right to pursue deficiency action against Nevada homeowners in short sale approval letters.” A deficiency judgement is a lawsuit which a bank may file against a homeowner whose mortgage foreclosure sale did not produce sufficient funds to pay off the loan in full.
According to Myers, “If you are a Nevada homeowner who is upside down in your mortgage, there has never been a better time to do a short sale. The reason to do a short sale is to minimize damage to your credit and avoid being sued by your bank. If you file bankruptcy, your credit is destroyed. We have closed hundreds of short sale transactions, and have yet to see a bank file a deficiency judgement lawsuit against one of our clients. Unfortunately, some bankruptcy attorneys have capitalized on the fear of Nevada homeowners, and convinced people that bankruptcy is their best option. This could not be farther from the truth.” Myers said.
The Myers Team is ranked the #1 Short Sale Team in Nevada. In 2010, they closed more short sale listings than any Realtor or Broker in Nevada. For additional information, please visit http://www.NevadaShortSaleInfo.com