Slew of Sinfully Priced Mortgages
Leaves Sin City Homeowners in the Red

Many Las Vegas residents took a big gamble when they purchased residential properties, and now they're paying the price. With foreclosures saturating the market, it seems all bets are off that recovery will happen anytime soon.

According to Thomas Blanchard, broker/owner of REO Asset Services-1stRealty Group, a flood of REOs in the area is the result of homeowners lured into purchasing a home with no money down, with the added relative cushion of the seller paying closing costs. "As it turns out, most of [the homeowners] should have remained as renters or purchased a less expensive home'" said Blanchard. "When you realize that the startup cost to purchase a home was less than the costs to rent an apartment, you can start to appreciate just how seductive the dream of homeownership became to several thousand home buyers every month for the past 24 to 36 months in Las Vegas." To add to the problem, many homeowners chose to refinance their homes, with inattention to laon-to-value percentages.

But like many parts of the country. a crackdown on subprime loans is taking hold. "One of hte many bills they are working on is Assembly Bill 440, which would create the felony crime of mortgage fraud," said Blanchard. He cites Assembly-man Marcus Conklin, the bill's sponsor, as saying "part of the mortgage lending problem is the income needed to qualify for a traditional mortgage on a $300,000 home in Las Vegas is 170 percent of what the average family earns."

As affordable housing becomes more of a commodity than a commonality, the home-owner will continue to suffer. "If you were tp look at the daily foreclosure auction results, you would find that approximately 50 to 80 homes are on the chopping blocks daily. A good majority of these homes, approximately 30 percent, end up reverting back to the bank and becoming REOs. I would have to say that it would be extremely optimistic that a recovery or even some normalcy to the Las Vegas market would happen in the near future, let alone in 2007.