Foreclosure bailout
Real Estate and Development
By Brian Wargo found at
inbusinesslasvegas.com
Famed bond manager Bill Gross has called on U.S. government to bail out the
millions of American homeowners who face losing their homes to foreclosures, but
you haven't heard such a call in Nevada where the state has the highest
foreclosure rate in the nation.
As Gov. Jim Gibbons and a group of lenders were scheduled to meet Oct. 4 to
consider measures to help Nevadans keep their homes, it will be hard convincing
any taxpayers at the national or state level to kick in massive amounts of tax
dollars to bail out those whose poor financial decisions may cost them their
home.
Many will ask: What's next — bailing out those who have gotten themselves
into credit card debt?
Gross, the founder of the fixed-income investment firm Pimco and a columnist
for Fortune magazine, argues that if the government can bail out Chrysler, than
why can't it help homeowners, even if speculators are helped.
That would prevent destructive housing deflation more so than cutting
short-term interest rates, Gross argues. That doesn't guarantee adjustable-rate
mortgages will stop rising or make mortgage lenders relax their standards, he
said.
Even though new home sales have been softened even more by the credit crunch
and rising foreclosures that continue to add to the housing inventory, the
division president of one leading Las Vegas builder said the government should
opt against any massive bail out. He said buyers should take responsibility for
speculating or buying more home than they could afford. He referred to it as
giving an alcoholic another drink.
"I am a free-market guy," the division president said. "I
don't believe in a bailout. It just rewards irresponsible behavior so people
take more risks."
It not only diverts capital on Wall Street but the use of government funds
increases the deficit and takes money away from greater needs such as health
care, the builder president said.
Las Vegas housing analyst Steve Bottfeld warns against any massive federal
bailout because it would be abused. He said the government should focus on
stopping similar problems in the future by cracking down on those who took
advantage of the mortgage system.
"I really think you have to criminalize those who take advantage of the
mortgage system and lie. I am not referring to investors but to
speculators," he said. "When you get 40 foreclosures with the same
name on it, you can't get that number of mortgages without lying. The reason for
it is very simple. That person just hasn't hurt the lender. That person has hurt
the entire industry."
No one is following Gross' advice so far.
In Nevada, Senate Majority Leader Barbara Buckley, D-Las Vegas, has urged a
new subcommittee dealing with foreclosures to consider restructuring state
programs to use existing funds to provide loans to help homeowners refinance
their homes.
Buckley, who said she is against helping speculators, said the action is
needed to help prevent the housing crisis from hurting the economy.
At the federal level, proposed legislation targets homeowners who took out
interest-only or adjustable-rate mortgages. Homeowners with good credit could
refinance their loans with FHA insurance and obtain mortgage insurance for jumbo
loans of $417,000 or more.
In other news:
• New York-based Artisan Real Estate Ventures has acquired Summerhill
Villas Apartments in Las Vegas for $52 million, according to several business
Web sites. Las Vegas-based Great American Capital is the owner of the complex at
2150 N. Tenaya Way. The complex built in 1990 has 440 units in 33 buildings.
• The Nevada Contractors board has disciplined nine contractors, including
six who had their license revoked. Those companies who had licenses revoked were
Temple Development Corporation of Las Vegas, B.S.I Landscape & Golf of Las
Vegas; Carson Taylor Construction of Henderson; Silver State Carpets of Las
Vegas; American Custom Concrete of Pahrump; and HY Construction of Las Vegas.
Jaehn Construction West of Las Vegas, Framer of Nevada of Las Vegas and
Innovative Concrete of Las Vegas were disciplined as well.
• The public is invited to submit comments on three draft plan elements of
the Las Vegas 2020 master plan that will be considered by the Planning
Commission at 6 p.m. Oct. 25. The public can also submit comments on the city's
Web site.
• Noteware Development, the developer of Brickwater Condominiums, has named
Gina Jackson as vice president of development for its Las Vegas and Phoenix
operations. She will oversee daily operations, sales and marketing for two
mid-rise infill products. The Las Vegas and Phoenix projects total $100 million
and include more than 400 condominiums. Jackson previously served as the
director of sales and marketing and day-to-day operations at Sky Las Vegas.
Brickwater, which is located at Giles Street and Mesa Verde Lane, east of Las
Vegas Boulevard South, is scheduled to begin construction by the end of the
year. The five phases will have 178 units.
• Suzette La Grange, vice president of the industrial division with
Colliers International Las Vegas, has been named winner of the National
Association of Office and Industrial Properties 2007 Developing Leaders award. A
selection committee comprised of NAIOP members and industry leaders throughout
the county selected 15 nationwide award recipients. NAIOP members under 35 apply
for the award. Recipients will be celebrated at NAIOP's annual meeting for
commercial real estate Oct. 16 through 19 in Atlanta.
• Las Vegas developer Michael Jabara announced that crews have started
excavation in anticipation of a spring groundbreaking for the Summit at Brian
Head, a 420-condominium development in Brian Head, Utah.
• Alliance Residential Co.'s Las Vegas division announced plans for three
multifamily communities. Broadstone Azure in North Las Vegas will add 312 units.
It will be situated on 15 acres across from the Deer Springs Crossing retail
center. It will be completed in February. The company has purchased 10 acres in
North Las Vegas for its 186-unit Broadstone Indigo. It is near a 312-unit
community that will open in December near the Las Vegas Beltway. Alliance is
also developing Broadstone Eldorado on 19 acres within the Eldorado master
planned community. It will have 408 luxury apartments.
• Kenneth Lowman, the broker/owner of Luxury Homes of Las Vegas, said a
retired gaming executive purchased a home in the Promontory at The Ridges, a
Summerlin village, for $5.1 million. The all-cash purchase closed escrow in six
business days, he said. The home has a half basketball court and gym in the
basement, a third floor observation deck and a game and theater room. It has six
bedrooms and 7 1/2 baths. NBA All Star Kevin Garnett recently stayed in the
home, he said.
Brian Wargo covers real estate and development for In Business Las Vegas and
its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4011
or by e-mail at wargo@lasvegassun.com.
related
In Response to the home mortgage crisis, should the government help out
lenders and borrowers?
Let market take care of problem, not government
The foreclosure rate hardly has the potential for causing wholesale economic
disaster
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“There’s so much inventory out there that the buyer can pick and choose,” said Susan Sirles Fidler, a Realtor at Re/Max 10, Oak Lawn. But she cautioned, “The stuff that’s almost free is almost free because it’s going to cost you an arm and a leg to put it back together. It’s not buyer beware as much as buyer be smart.”
