Las Vegas Mortgage Defaults Jump 27% in Month - Mortgage Articles - Bad Credit Resources

Foreclosures.com: Las Vegas Mortgage Defaults Jump 27% in Month

SACRAMENTO, Calif.--(BUSINESS WIRE)-- Foreclosures.com, a California based investment advisory firm specializing in distressed properties, reported today that notices of trustee sales in Clark County, NV rose to 602 in June from 438 in May.

"Defaults had been tailing off from their January high of 639," said Foreclosures.com president Alexis McGee. "Now they're heading up again." Ms. McGee went on to say that, while it was difficult at this stage to pinpoint causes of defaults, it is very possible that some speculators who came late to the party were getting trapped as they try to resell.

She said that some in Las Vegas say that a major Las Vegas builder, Pulte Del Webb, essentially put the pin in the Clark County home price balloon when they abruptly slashed prices by as much as 20% late in October 2004.

"We saw data in late 2004 that indicated that as much as 25% and possibly more of new home sales in Las Vegas were to out of state speculators who had no intention of ever occupying the properties," Ms. McGee stated.

Foreclosures.com has been publishing foreclosure lists and assisting property investors since 1992. The company also serves metro markets in California, Phoenix, AZ, Chicago, IL, New York and all of New Jersey.

Ms. McGee also expressed concern about the increased use of zero equity, interest only, and so-called option ARMS to finance purchases. "Typically, the interest only loans convert to fully amortize adjustable rate loans in five years. However, Scott Bice, Nevada's mortgage commissioner, thinks a great many of those loans in Nevada will convert in two years." She added that Las Vegas could see a flood of home sales, a spike in foreclosures, or both as the interest only loans convert.

"At the conversion point," said Ms. McGee, "payments could increase from 20% to as much as 40%, depending on how long the interest only period is and how far the adjustable rate indices rise." In 2004, 33.7% of Las Vegas purchase loans were interest only.

Ms. McGee said that her firm's mission was to assist investors in locating troubled homeowners to offer free advice to work out solutions with their lenders or sell their way out of foreclosure to conserve some equity. "Either way," she added, "the distressed owner avoids losing everything at auction."