The realities of home ownership have finally hit Northern Nevada, and the truth, for some, can be summed up with one word: Foreclosure.
The foreclosure boom has real estate and mortgage experts are looking forward to the return of traditional home lending practices.
July statistics released by RealtyTrac, an Irvine, Calif.-based Web site for real estate foreclosures, show Nevadans experienced the greatest foreclosure rate per household this year.
A Northern Nevada Realtor said the foreclosure trend here, accompanied by the cooling market, is a means to a more “realistic” future.
The long run may not come soon enough for several local real estate investors, who stand to find themselves homeless, and, at the very least, with credit in shambles.
Thus far in 2007, one of 75 households in Nevada has faced foreclosure – 3.5 times the national average.
The state documented a total of 11,514 foreclosure filings during the first quarter of this year, an increase of 66 percent from the previous quarter and more than double the total reported in the first quarter of 2006.
Those dealing directly with beleaguered homeowners say the number of bankruptcies resulting from foreclosure locally has gone up “substantially.”
“We’ve seen an increase of about, I would say 150 to 200 percent in persons coming in who have a foreclosure pending or are in arrears on their primary home,” said Carson City bankruptcy attorney Stephen Young. “The main problem seems to be in good times people were refinancing their homes to reduce debt caused by overspending, not budgeting back before they refinanced.
Michael Krein, president of Nevada Real Estate Services, said he knows of 700 properties foreclosed on this year and expects that number to increase as many short-term loans are due to have payments adjusted through 2008.
In some cases, depending on the terms of the initial loan, payments can go up 50 percent, he said.
Earlier this year, both lenders and investors soured on subprime loans to people with bad credit or just starting out, which, according to experts – was the lifeblood of many upstart lending groups and the reason so many got into the market here in the first place.
Last week, Wall Street even encouraged lenders to decry jumbo mortgages (those above $400,000) even for borrowers with good credit and a 20-percent down payment.
The redefinition of the first-time buyer with zero-down payment, stretching to make loan payments, may be a short-lived phenomenon, one consumer advocate said.
By ANDREW PRIDGEN – Lahontan Valley News and Fallon Eagle Standard