President Obama chose Exhibit A in the housing crisis – Las Vegas – to unveil his new home-refinancing program earlier this week, but got a decidedly mixed reaction from the folks on the front lines of the real estate mess.
Realtors and politicians in the area were certainly in favor of proposals aimed at kick-starting the moribund market in the Vegas area -- they just weren’t sure the latest plan was the way to do it.
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Under the proposed new plan, homeowners with qualifying mortgages sold to Fannie Mae or Freddie Mac before May 31, 2009, can refinance regardless of the current value of the home.The new mortgage plan removes a loan cap, which previously prevented homeowners from refinancing if they owed more than 125% of their home's current value. As long as the borrower hasn't missed any mortgage payments in the prior six months, the homeowner will have the chance to refinance at a lower rate.
Las Vegas mortgage broker Sonny Martell, whose clients are mostly underwater in their mortgages, believes the expectation of borrowers having an unblemished mortgage payment history in the past six months is not realistic.
"It will help the people that are making their payments," said Martell, "but because people have been so underwater, they haven't been making their payments in Las Vegas."
Martell believes that any relief for homeowners is a good thing, but said the government should've paid attention to homeowners in the first place, as opposed to focusing on the nation’s big banks.
In an area hit hard by unemployment -- Nevada leads the nation with a 13.4% jobless rate -- it remains to be seen if folks in the Silver State will even have enough funds to make a mortgage payment.
"It's a runaway train and I don't know what it's going to take to stop it," said Martell, "but these little moves are not going to stop the train."
Nevada Republican Congressman Joe Heck said he supports the policy, and the President’s proposal to remove the cap is “a good thing.” But, Heck added, "Washington needs to realize that economy-jobs-housing are linked and must be viewed as a continuum in order to solve the problems we face.”
According to a September report from CoreLogic, Nevada was the state with the highest percentage -- about 60% -- of homeowners dealing with underwater mortgages.
"I think anything that they can do to help people to stay in their homes is a great strategy," said Gary Thomas, Vice President of the National Association of Realtors.
But Las Vegas realtor Dana Burnett said she doesn’t think there's “a huge number of Freddie and Fannie loans out there right now" and the plan is “not going to help all the other underwater homeowners" who aren’t insured by the government.
The Federal Housing Finance Agency plans to release specific details of the revamped program by mid-November.