Foreclosed properties scrutinized at Las Vegas hearing

U.S. Rep. Joe Heck's congressional office recently helped a senior couple refinance their mortgage. Working with their bank, the pair got a 30-year, fixed-rate loan that dropped their monthly payments from more than $900 to $500, he said Thursday.

"Five-hundred dollars for a senior couple on a fixed income is huge," said Heck, R-Nev. "My question for the banks is, 'Why is it so difficult to do this?' You'll do it if we call you. Why won't you do it when the consumer calls you?"

Heck's office has been helping hundreds of Nevadans renegotiate loans to get their monthly mortgage payments down as the state leads the nation for the fifth year in home foreclosures. But the freshman congressman said most homeowners still aren't getting cooperation from banks.

Looking for more private sector solutions, Heck on Thursday brought a congressional hearing to Las Vegas to explore ways to prevent more homeowners from defaulting and losing their houses.

The House Financial Services Committee held the field hearing at Heck's request. He represents the 3rd Congressional District, which has the most severe foreclosure problems in Nevada.

More than 60 percent of Nevada houses are underwater, with homeowners owing more on their mortgages than their houses are worth. Home values have dropped by more than half since 2007, according to estimates, which put Nevada houses underwater by up to
$14 billion. About one in 16 properties have been foreclosed on in Nevada, the highest rate in the nation.

"No one is immune from this problem," Heck said during the hearing.

Witnesses at the hearing in the Clark County Commission chambers included representatives of Nevada's foreclosure mediation program, the mortgage and real estate industries, a nonprofit organization that helps homeowners, and a federal credit union.

Since September 2009, the program has had nearly 16,000 mediations between homeowners and lenders, and more than 11,000 of those resulted in no foreclosure, said Verise Campbell, deputy director of the Nevada Foreclosure Mediation Program. Banks and other financial institutions haven't been very cooperative, however, Campbell said.

She recalled one lender representative yelling into the phone at her, "No mediation! No mediation! No mediation!"

After he calmed down, she told the lender when he would have to appear.

"I called it a black hole when I first started," Campbell said, adding that financial institutions have the knowledge and resources to help keep people in their homes. "We know they've been allowed to be unregulated for a long time. Now that they are re-regulated, we need to hold their feet to the fire."

Now, Nevada homeowners can "opt in" to participate in the mediation program if they're facing foreclosure. Campbell suggested making it an "opt out" program so that every distressed homeowner is protected by a mediator to force the hands of lenders unless the homeowner objects.

Heck said more needs to be done to improve the current foreclosure programs approved by the Obama administration and Congress so people don't have to default on their loans before they can qualify for help. Now, he said, homeowners must have missed several payments to get help.

"I think it's crazy to wait until you're three months behind in your payment before you're eligible for help," he said. "The goal, in my mind, is to lower an individual's monthly payments because that's what's driving people from their homes. It's not that they're upside down or that their equity has diminished. It's that they can't afford their monthly payments. That's what's causing them to be foreclosed."

Last week, Heck introduced a bill to help thousands of Nevadans get new mortgage loans though they have lost homes to foreclosure and hurt their credit ratings.

The proposed "second chance" 30-year, fixed-rate mortgages would be insured by the Federal Housing Administration.

Applicants would need to meet a set of requirements to make sure they could pay their new mortgages, including proving they have enough income and showing they have paid rent on time for at least the past 12 months where they've been living. The monthly mortgage payment also couldn't be higher than the homeowner's current rent, according to the legislation.

"I'm trying to push getting people back in their homes," Heck said.

Heck's likely Democratic opponent, Assembly Speaker John Oceguera, has criticized Heck for not doing more to address the housing crisis until the 2012 election year.

Heck scoffed at the charge. He said he was the only Republican in the House to vote to continue the Obama administration's main refinancing program, HAMP, although critics say it hasn't been very effective. He also was among only a handful of Republicans to vote to maintain the FHA loan guarantee program, he said.

"So to say that I'm not in tune with the housing crisis in Southern Nevada is just another stretch of John Oceguera's imagination," Heck said.

Oceguera welcomed the hearing and he noted he has long been an advocate for Nevada homeowners. He backed a string of bills to help and protect them, including a 2009 measure that created the state mediation program to get banks to work with homeowners facing foreclosure.

"It's not a stretch to say Joe Heck has not been proactive confronting this crisis," Oceguera said. "It was a stretch when he said the crisis was a 'blip on the radar.' It's been a 62-month-long blip for Nevadans suffering from this housing crisis." 

Nevada posted the nation's highest foreclosure rate for the 62nd month in a row, though state foreclosure activity reached a 58-month low in February, according to data released Thursday by the foreclosure tracking firm RealtyTrac. It showed one in every 278 Nevada housing units saw a foreclosure filing of some type in February. That is more than twice the national average.

Las Vegas fell on the list of the nation's foreclosure capitals to the 12th highest. The number of foreclosure filings in the Las Vegas area dropped 56 percent since February 2011.

Foreclosures in Nevada have been declining since a state law took effect in October, requiring lenders to file more paperwork to foreclose on homes.

U.S. Rep. Shelley Berkley, D-Nev., also attended the field hearing led by U.S. Rep. Shelley Moore Capito, R-W.V.

Berkley used the forum to rail against Freddie Mac and Fannie Mae, the government-sponsored mortgage holders that played a big role in the housing crisis.

"For the most part, they've been unable to write down mortgages," said Berkley, a seven-term congresswoman. "Yet there are some out there who think our nation's leaders should do nothing. ... We cannot succumb to those who want our housing market to hit bottom."

Berkley is running for the U.S. Senate against the likely GOP nominee, U.S. Sen. Dean Heller R-Nev. Heller didn't attend the House hearing, but he submitted a letter praising the effort.

Earlier this year, Heller introduced a bill that would let banks, Fannie Mae and Freddie Mac offer long-term leases to families facing foreclosure to allow them to stay in their homes. The goal is to stop homes and neighborhoods from losing value as foreclosures shutter house after house.

"Something has to be done to stop home prices from falling and put an end to this crisis," Heller said in a statement. "The real estate market provided the base for the economic growth Nevada enjoyed for 30 years, and it will be essential in leading us out of the current recession."

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919. Follow @lmyerslvrj on Twitter.