Tens of thousands of Las Vegas homeowners in the Las Vegas Real Estate Market who are facing a Las Vegas Foreclosure will get another way to keep their homes through the new federally guaranteed mortgage program passed by congress and signed into Law by President Bush earlier this week. The program enables eligible homeowners to cancel their existing mortgage and and substitute it with a 30 year fixed rate loan for up to 90% of the home’s current value.
But the caveat to the process is it’s up to the banks that issued the original mortgage to make a decision whether to allow Las Vegas homeowners to take advantage of the program. Many local banks could take a sizable loss via the outstanding principal owed on the mortgage. So, it’s up to the bank to make a decision to accept this loss versus letting the homeowner trigger a foreclosure.
However, homeowners have to meet certain criteria to be eligible for the program. For example, they must have spent more than 31% of their gross monthly income on their mortgages and have originated their loans before Jan 1, 2008. Also, these new loans can only be applied to a borrower’s primary residence.
Whether or not a homeowner in the Las Vegas Real Estate Market is rescued depends on whether the banks think they can help homeowners stay afloat without engaging the government’s expensive program (for them). If the bank or lender is convinced they can work with the homeowner by allowing them to continue to make payments and regain their financial footing, this will most likely be the path the bank will select. As this route will cost the banks less in the long run and save them from taking big losses.
As of this moment in time everyone is still scrambling feverishly to get a handle on the broad implications – meaning, banks, lenders, mortgage companies, homeowners, real estate agents, etc. We are still very early in the process and there are lots of question marks about the actual implementation of the plan and impact on the Las Vegas Real Estate Market.
The program is geared to not only helping our local Las Vegas Real Estate Market via a helping hand to homeowners facing a Las Vegas Foreclosure, it is also geared to stopping the free fall in housing prices by injecting more liquidity into the Las Vegas Real Estate Market (and nationally) and support for Fannie Mae and Freddie Mac, the nation’s largest mortgage issuers.
The program will begin in October of this year and based on news reports to date the FHA has indicated they expect the program to be up to full sped by next year – the program’s ultimate impact on the Las Vegas Real Estate Market will not be known until it is underway. Stay tuned for more analysis.
