Housing chief touts new aid for struggling homeowners

Housing and Urban Development Secretary Shaun Donovan stood at a street-side podium between two houses on Pine Valley Drive in Las Vegas.

One southwest valley house was surrounded by green grass, well-kept and inviting. The other was vacant, its yard a scorching brown with a Realtor's sign by the sidewalk.

Nevada is "ground zero" in the world of foreclosures, Donovan said, adding that the contrast between the two houses was a perfect setting to announce an expansion plan to curb the housing market crisis.

The expansion will allow homeowners who are 125 percent underwater on their mortgages to refinance, up from the previous 105 percent limit established when the plan was detailed in February.

The new maximum means an eligible homeowner with a $375,000 mortgage could refinance if his or her house is worth at least $300,000.

This is good news for Las Vegas, which leads the nation in foreclosures. Approximately 67 percent of current mortgage holders have mortgages that exceed the worth of their homes, Donovan said.

"The foreclosure filings in Las Vegas are more than 7 percent the national average," he said.

And foreclosures affect the whole area, not just those losing their homes.

Peggy Edwards, who owns a house on Pine Valley Drive with a foreclosure next door, has lived in the house for 18 years.

She and her husband decided to put the house on the market about two years ago, hoping to relocate to the Washington area, where Edwards was born.

But when her husband unexpectedly died, those plans were put on hold. When the housing market collapsed, the plans were tossed.

"I'm stuck," she said.

Although Donovan -- accompanied by Senate Majority Leader Harry Reid and Rep. Dina Titus, D-Nev. -- thinks the expansion will help, Edwards isn't sure.

The refinancing program is only for homeowners with loans guaranteed by Fannie Mae or Freddie Mac, mortgage finance institutions now controlled by the government.

In the months since the Making Home Affordable plan was announced, more than 200,000 borrowers have received offers for trial loan modifications.

Informational mailings about the program have been sent to more than 1 million borrowers who might be eligible.

But with housing values so low, even a 125 percent ceiling won't help everyone.

"When we were on the market two years ago, I was hoping to get $180,000," Edwards said. "Now I'd be lucky to get $80,000."

Titus said the expansion plan is proof that elected officials are listening to their constituents.

"We understand what's going on," Titus said. "Every new foreclosure bites to the bone."

Contact reporter Mike Blasky at mblasky@reviewjournal.com or 702-383-0283.