Foreclosures decrease in 2010 due to short sales and modifications

The online foreclosure tracking firm counted 86,010 filings of new foreclosure actions last year, down from 106,425 in 2009. They’re up from 75,814 and 38,690 the previous two years.

California and Arizona foreclosure filings fell 33 percent and 18 percent in 2010, respectively, while Washington and Oregon had 14 percent and 10 percent more.

A number of factors have slowed the foreclosure process in Nevada, including programs such as the government’s $75 billion Home Affordable Mortgage Program, or HAMP, and the state’s foreclosure mediation program.

Officials from the mediation program on Thursday announced $300,000 in grants to provide education classes and free legal advice for Nevada homeowners facing foreclosure.

Investors flipped foreclosures for solid profits in the first half of the year as buyers hurried to take advantage of the tax credits, ForeclosureRadar Chief Executive Officer Sean O’Toole said Thursday.

However, the housing market began to slow when the tax credit expired at the end of April and the government’s push for loan modifications waned, he said.

The “robo-signing scandal” also led to a dramatic drop in foreclosure sales toward the end of the year. Bank of America completely halted the foreclosure process for nearly two months.

As a result, Nevada experienced a 6 percent drop in foreclosure sales to 42,828 in 2010, compared with 45,420 in 2009, ForeclosureRadar reported. Arizona’s foreclosure sales dropped 26 percent and California’s sales dropped 6 percent. Oregon and Washington were up 39 percent and 14 percent, respectively.

O’Toole said it’s possible Nevada will see an increase in foreclosure filings and sales this year, but not a wave.

“I expect to see a trickling out of foreclosures,” he said. “Foreclosure levels are at an all-time high in absolute numbers, but they’re at a historically low rate as a percentage compared with the people not making a payment, so it’s a weird conundrum.”

The foreclosure cloud will probably hang over Las Vegas for at least another two years, Las Vegas housing analyst Larry Murphy said. Roughly 20 percent of Las Vegas homeowners with a mortgage are 90 days delinquent on their payments and three-fourths are “underwater,” or owing more than their homes are worth.

Lenders are reluctant to foreclose on a property because they don’t want to become the landlord, but they’ll foreclose before they reduce the principal mortgage balance because “it’s in their DNA,” the president of Las Vegas-based SalesTraq said.

He reported 21,499 bank repossessions in 2010, a 10 percent decline from 24,000 the previous year. The median price of a real estate-owned, or bank-owned, home sale was $110,000, compared with $118,000 for a nondistressed home.

A survey this week from the Nevada Association of Realtors showed that most Nevadans were not aware of federal and nonprofit programs designed to help them avoid foreclosure. More than 60 percent of those surveyed said they had never heard of the Home Affordable Foreclosure Alternative program.

Al Astraus, 82, said he’s “heard rumblings” about HAFA, but nobody has told him how to apply for the program. He bought a $310,000 home in Las Vegas in 2006 and is current on his payments, but worries what will happen when his five-year adjustable-rate mortgage resets in April.

“There appears to be practically a conspiracy to accelerate foreclosures, not prevent them,” he said. “That’s leading to the demise of the American middle class. We will become a second- or third-rate country.”

Only 3 percent of homeowners facing foreclosure said they used the Nevada foreclosure mediation program or found it helpful, the Realtors’ survey found.

The program received more than 8,000 requests and mediated about 4,200 cases in its first year, with 46 percent of homeowners approved to stay in their homes, said Verise Campbell, deputy director of the mediation program. Another 16 percent came out with an agreement to vacate the home through a short sale, “cash for keys” or deed in lieu of foreclosure.

“At least they know when they’re leaving,” she said.

The grants announced Thursday include $49,250 to Legal Aid Center of Southern Nevada for foreclosure education; $76,680 to Legal Aid Center for the “Ask-a-Lawyer” program; $75,000 to Nevada Legal Services; $76,680 to Consumer Credit Counseling Services; and $31,185 to Washoe County Senior Law Project.

“Ask-a-Lawyer” allows homeowners to talk with an attorney about their situation without having to spend thousands of dollars unnecessarily or become potential scam victims, Campbell said.

Nevada Legal Services has scheduled free monthly foreclosure information classes beginning Feb. 8 in English and Feb. 17 in Spanish. More information on the classes is available at www.nlslaw.net.

District Court Judge Elizabeth Gonzales said the mediation grant is a major step toward working with Nevada homeowners to find an alternative to foreclosure and to find good legal help.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.