The new presidential legislation is scant help to distressed homeowners who have lost their jobs.  Basically the Making Home Affordable program modifies the loans by reducing in the interest rate for 5 years; extending the payback period to 40 years; or reducing the amortized principal by turning the mortgage into a balloon, where the unpaid principal is due in one large lump sum if the house is sold; refinanced; or if the amortized portion is paid off.  The homeowner needs to qualify for modification, and that means income.  This program was touted by the administration as helping 9 million distressed homeowners, lately that number has been dropped to helping between 3 and 4 million. 

On August 5th actual figures were released from the Treasury Department.  Of 38 participating mortgage companies, 10 lenders had not modified a single mortgage.  Of the remaining 28 there were 2,168,000 loans which qualified for the program, but only 498,990 have actually been modified as of July.  Only 9% of all eligible borrowers had seen their payments reduced under this program.  Of course, banks such as Bank of America and Wells Fargo have received billions in taxpayer TARP money.

Those of us who are in the trenches attempting to negotiate bad loans with lenders are not surprised at these figures.  The actual decision making personnel within the banks are nearly impossible to contact, the customer service reps borrowers can reach are often ignorant as to procedures or guidelines even within their own departments, and one can ask the same question 3 times and get at least 3 different answers.  Adding to the staffing problems, the banks are overwhelmed with requests for help by desperate homeowners and their realtors trying to work thru short sales for which there seems to be no policy or standard practices at all.  The banks hoard information and are loathe to disclose anything about a loan, or commit to any time frame or discuss short sale guidelines with anyone at all, and it doesn't appear to matter whether they work for the bank or not.  If only our nationally elected officials could be compelled to sit in our office for 3 hours and listen to these conversations we think legislation which really provides some protection for distressed homeowners would follow.

Nevada legislature has made some attempts to assist homeowners in foreclosure, by making it mandatory for a bank representative to meet for mediation with a homeowner who has received a notice of default.  However, there is a catch.  Mediation is only a discussion, and not binding.  It's too soon to judge any results of this program, but in the first six months of this option, about 3900 homeowners have signed up for the program, 1821 have been assigned mediators and 877 cases have been heard since mediations began Sept 14, 2009.

REO properties and so called pre-foreclosure or "short sales" continue the trend started last September and now overwhelmingly lead the market.  As of this writing, there were 2805 homes for sale listed on multiple listing service, and 69% of them were bank owned or soon to be. 72% of all homes sold in December were either bank owned or pre-foreclosure sales.  With the brisk sales of the last few months, the inventory of REO (bank owned) single family homes has  decreased by 61 homes to 842 as of this writing.  REO condos have decreased by 11 units since October, and are now numbered at 524.  Not only do REO properties depress sales prices for resale homes, but they also "remove" the opportunity for the seller to "move up" in the market, as there is no family selling one house to buy another. 

The current real estate market is extremely mixed, with (foreclosed) homes below $150,000 seeing brisk activity, mostly with multiple offers, and sometimes selling for more than asking price.  So called "move-up" homes in the $200,000 to $800,000 range still sit on the market.

The brightest sector of the real estate market is rentals.  With so many homes being foreclosed on in the area, many renters as well as homeowners are losing their homes, contributing to the rental market for moderately priced homes.  Many homeowners are turning into semi-investors: renting their homes instead of selling in order to wait this downturn out.  For those who have the money and the credit, this market is a great opportunity to pick up an income property.  Many tenants are also interested in longer term leases.

Resale home sales continued in demand with 441 homes sold, down 41 from last month.  The median sales price has remained stable as well, at $178,100 in December.  December's average sales price also increased 3.1% to $214,881.  This is yet another indication of how a foreclosure dominated market acts independent of demand.

The spread between initial asking price and sales price was 11% above the final sales price, but when price reductions were factored in, that spread narrowed to about 3%.

The high end of the market did well last month, with five homes selling for over $900,000. Interestingly, two of these homes were bank owned foreclosures, again showing the depth of the distress in this market.

Condo sales stayed stable in December, with 61 resale condos changing hands, down two units from last month.  All but 6 of these properties were bank owned or short sales. From the assessor's recordings, it appears that 13 new condos were sold, up 3 from last month.  These are a mix of new projects (remodeled older buildings) and resale.  (It's difficult to obtain an accurate timely accounting as recordings trickle in)

New home sales appear to be up in December. Approximately 27 new single family homes were sold, which is an increase of 7 homes from November.  (It's difficult to obtain an accurate timely accounting as recordings trickle in.)

Sellers are aggressively pricing their homes with increasing time on market. The final selling price on homes was about 3% of the asking price.  Days on multiple listing for sold homes in December increased to 126 days.