Mortgage default notices fewer in valley

Fewer Las Vegas homes may be headed to foreclosure as notices of default and trustee sales slowed in April.

Lenders filed notices of default on 2,574 Las Vegas homes in April, a 48.1 percent decrease from the same month a year ago, while notices of trustee sales fell 20 percent, to 4,390, according to Las Vegas-based LV Default, which tracks home auctions.

The number of homes sold to private parties -- primarily investors -- at trustee auction rose to 957 in April, up nearly 71 percent from a year ago. Investors in April spent $89 million at the auctions staged every business day at 10 a.m. at Nevada Legal News, 930 S. Fourth St.

They're getting homes at 20 percent to 40 percent of previous sales prices, said Tony Martin, of LV Default.

For example, a 3,083-square-foot home at 1829 Francisco Peak Place in upscale Summerlin with an estimated bid (or what it sold for in October 2007) of $606,670, or $197 per square-foot. The opening bid will probably be around $70 per foot, Martin said.

More than 2,600 homes were to be auctioned, but the sales were canceled in April. Meanwhile, 2,994 homes were taken back by the beneficiaries -- foreclosed on by the banks.

With 75 percent of trustee sales going back to the bank, Martin asks: Where are they?

"The interesting thing you'll notice is the housing market is dictated and puppeted by the lending institutions," Martin said. "Prices are in the hands of the banks right now. They understand that they can throttle the process at every level, starting with NODs."

Banks are able to maximize profits with a measured release of foreclosed homes, rather than further depress prices by flooding the market with foreclosures, he said.

Banks use software to analyze each subdivision within a ZIP code to determine if they want to sell a particular home at trustee auction, he said. They have manuals to choose which homes they want to save and which ones to sell based on property condition and market value.

Consumers are growing angrier as more foreclosures are projected and lenders remain unwilling to work with borrowers, said housing analyst Dennis Smith of Home Builders Research.

"It is very difficult to remain nonjudgmental when we are at ground zero of the foreclosure mess," he said. "It certainly appears that most decisions are made based only on the bottom line and not what is good for the housing market and the public."

Las Vegas won't see any recovery in the housing market until distressed homes make their way through the inventory, Smith said.

Andy Zubio, an investor with Wilshire Financial Network in Las Vegas, said auction sales benefit the community in a number of ways. Investors are buying properties that are in disrepair, rehabilitating them and turning them into rentals for families displaced from previous homes, he said.

An investor may buy a home at auction for $60,000, spend $10,000 remodeling, then sell it to a first-time homebuyer for $80,000, or at about a 15 percent profit, Zubio calculated. His company offers seller financing for homebuyers with marginal credit.

"There are many good deals, but you have to have patience," said Zubio, who goes to three or four auctions a week. "There are a lot of bidders bidding on great opportunities. My advice is to go down there with an open mind and be patient. Get to know the lay of the land and do your homework."

Las Vegas-based SalesTraq reported 1,833 bank repossessions in April, a 16 percent decrease from the same month a year ago. There were 1,973 bank dispositions, leaving an inventory of 11,546 bank-owned homes in Las Vegas. The inventory has dwindled from more than 14,000 in January 2010.

The firm showed 785 auction sales in April at a median price of $90,100; 1,973 bank-owned sales at a median of $105,500; 822 short sales, or lender-approved sales for less than the mortgage owed, at a median of $120,000; and 1,390 nondistressed sales at a median of $110,000.

Martin said the number of auction sales spiked in March and April after a federal judge overturned a lower-court decision that stopped ReconTrust from foreclosing on homes in Nevada. More than half of April's auction sales were deeds held by ReconTrust, a subsidiary of Bank of America. ReconTrust currently has 3,974 properties listed for trustee sale in Clark County.

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