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Just read an interesting article on The Financial Fix about Fannie Mae pursuing home owners who strategically default on their mortgages. Here's the full article:

Taxpayer-owned mortgage giant Fannie Mae is targeting families by going after struggling homeowners who strategically default on their mortgage, the firm announced Wednesday.

A default is considered strategic when homeowners have the capacity to pay, yet choose to walk away from their mortgage. The trigger, researchers say, is negative equity: When the value of a home is less than what the lender is owed on it, borrowers are more likely to strategically default.

About 11.3 million homeowners with a mortgage, or 24 percent, owe more on their mortgage than the home is worth, according to real estate research firm CoreLogic. Another 2.3 million have less than 5 percent equity in their homes. All told, about 29 percent of all homeowners with a mortgage are either underwater or very close to it. The firm estimates that the typical underwater homeowner won't return to positive equity until late 2015 or early 2016.

And Fannie Mae, an arm of the federal government and a big part of the Obama administration's housing policy, wants to make sure that if struggling families walk away, they suffer for it.

Homeowners who strategically default or did not work "in good faith" to avert foreclosure through other means will be ineligible for new Fannie Mae-backed mortgages for seven years. The firm said it will also pursue homeowners in court, seeking so-called "deficiency judgments" to recoup outstanding debt by seizing borrowers' other assets. Thirty-nine states do not limit the ability of lenders to recover what they're owed.

Fannie Mae said that next month the firm "will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments."

"Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting," Terence Edwards, Fannie's executive vice president for credit portfolio management, said in a statement.

Strategic defaults among homeowners have been on the rise. More than a million homeowners went that route last year, nearly double the amount in 2008 and more than four times the level in 2007, according to a recent analysis by the credit reporting company Experian and Oliver Wyman, a management consulting firm. A study by a team of academics from the University of Chicago and Northwestern University estimated that nearly a third of home mortgage defaults in March were strategic. The deeper underwater homeowners are, the more likely they are to walk away from their mortgage, the researchers noted.

Earlier this month, the House of Representatives passed a bill barring strategic defaulters from obtaining home mortgages backed by the Federal Housing Administration. The agency guarantees nearly one in four new mortgages.

"I can't help but notice that every group now frantically calling for tough penalties for homeowners who walk away was virulently opposed to judicial modification of mortgages in bankruptcy," Rep. Brad Miller, a North Carolina Democrat, told the Huffington Post.

Bank of America and Citigroup, the nation's largest and third-largest banks by assets, respectively, support changing existing law to give federal judges the power to modify mortgages in bankruptcy, otherwise known as "cramdown." Proponents argue that if homeowners were able to modify their mortgages in bankruptcy, the number of strategic defaults would substantially decrease, if not nosedive.

About 3 million homes will receive foreclosure notices this year, real estate research firm RealtyTrac estimates. More than 1 million will be repossessed by lenders, adding to the nearly 2.2 million homes that lenders took over from 2007 to 2009.

Fannie Mae and its sister firm Freddie Mac guarantee nearly three out of every four new mortgages, according to leading industry publication Inside Mortgage Finance. The two firms control about $5.5 trillion in home mortgages, according to their federal regulator. That's nearly half of all outstanding mortgage debt in the U.S. Their share of the mortgage market is nearly double what it was 20 years ago.

Because Fannie controls such a large portion of new mortgage issuance, the freezing out of homeowners for seven years could prove devastating.

Brent T. White, a law professor at the University of Arizona, recently wrote in an academic paper that most homeowners can recover from a foreclosure within two years. In fact, defaulting on a mortgage is not as bad as most people think, White notes.

"Lenders are unlikely to pursue a deficiency judgment even in recourse states because it is economically inefficient to do so; there is no tax liability on 'forgiven portions' of home mortgages under current federal tax law in effect until 2012; defaulting on one's mortgage does not mean that one's other credit lines will be revoked; and most people can expect to recover from the negative impact of foreclosure on their credit score within two years (and, meanwhile, two years of poor credit need not seriously impact one's life)," he writes.

There is a "huge financial upside" for seriously underwater homeowners to strategically default on their mortgages, White said.

While it's still taboo among most homeowners, it's common behavior among corporations.

In December, Morgan Stanley, the nation's sixth-biggest bank by assets, walked away from five San Francisco office buildings the $820-billion firm purchased as part of a landmark $2.43-billion deal near the height of the real estate boom. A group led by Tishman Speyer Properties gave up a 56-building apartment complex in Manhattan in January after defaulting on some $4.4 billion in debt. A spokesman for the California Public Employees' Retirement System, the nation's biggest municipal pension fund and one of several investors in the venture, told the Huffington Post that they "basically walked away from it."

Fannie was effectively nationalized in September 2008. Taxpayers own 79.9 percent of Fannie and Freddie. The Obama administration announced on Christmas Eve that it would provide unlimited financial assistance to the firms, disregarding what was a $400 billion cap on taxpayer bailouts. Their debt is backed by the U.S. government.

The two firms, facing growing losses on sour mortgages in perhaps a worsening housing market, have already taken $145 billion from taxpayers. Fannie Mae is responsible for $83.6 billion of that bailout.

Freddie Mac did not say it would take a similar position on strategic defaulters.

"Such so-called strategic defaults, once rare, are now common enough to jeopardize the already-weak housing and mortgage markets," wrote economists Celia Chen and Cristian deRitis of Moody's Economy.com in an April 13 note. "If the trend continues, strategic defaults could both accelerate the pace of home foreclosures and also make it harder for new borrowers to obtain mortgages. Both factors would in turn worsen the decline in house prices."

JPMorgan Chase, the nation's second-largest bank by assets with more than $2.1 trillion, warned investors last month that underwater homeowners may not continue to make their payments even when they're able to, according to a May 10 filing with the Securities and Exchange Commission.

A top executive at Freddie Mac posted a note on the firm's website pleading with homeowners to not intentionally walk away from their homes.

"Knowing the costs and factoring in the time horizon, some borrowers have made the calculation that it is better to purposely default on the mortgage. While I understand how that might well be a good decision for certain borrowers, that doesn't make it good social policy," Freddie Executive Vice President Don Bisenius argued in a May 3 note.

The firm warned investors and analysts about the risk of increased strategic defaults in March 2008. Referring to it as "ruthlessness," Dick Syron, Freddie's former chairman and CEO, said the firm was "seeing an increase in ruthlessness" that had "the potential for changing consumer behavior."

Fannie Mae said Wednesday that borrowers who have "extenuating circumstances may be eligible for new loan in a shorter timeframe" than the seven-year period it's warning about.

Republicans in the House recently tried to rein in the twin mortgage giants. Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, attempted Wednesday to amend the financial reform bill under consideration by the House and Senate to mandate that the federal government appoint an inspector general to oversee Fannie and Freddie. The mortgage behemoths' federal regulator has been operating without an independent watchdog looking over it and Fannie and Freddie since 2008.

Republicans have also tried to amend the bill to subject Fannie and Freddie to the Freedom of Information Act so members of the public can keep tabs on the firms by compelling the disclosure of documents and records.

Both efforts were thwarted by House Financial Services Committee Chairman Barney Frank (D-Mass.), who ruled that they were not "germane" to the legislation under consideration.

Emails sent after normal business hours to spokesmen for the White House and Treasury Department requesting comment were not returned.

Ryan Grim contributed reporting.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

I just finished a guided video tour of my newest listing in northwest Las Vegas for 8525 W. Verde Way.  This gorgeous property is a modern tour de force!  Check out this video:

This property is nearly 4500 sq ft and sits on over half an acre. * 3 bedrooms * 2.5 baths * Loft/Office area * Separate Gym/Casita * Undergroud Wine Tasting Room * Rooftop Deck * Full Strip Views * Stunning Fire and Water features * Super stylish and perfect for entertaining.

If you'd like a private tour of this property, please contact Felipe Crook from Prudential Americana Group Realtors at 1-866-589-1646.

Highlights for May 2010:

The total number of SFR units sold in May 2010 was 2,884. This is a -2.3% change from April 2010, and -11.4% change from May 2009.

 On a YTD basis, SFR units now total 14,008 units closed. This is a slight increase over the same YTD period of 2009 of 13,945 units, but is almost double the 2008 YTD SFR volume of 7,379 units.

The Average SFR Sold Price was $170,488 for May 2010 and remains within the same narrow range that it has been in since mostly stabilizing in March 2009. (The record high of $428,817 in June of 2007 was followed by significant monthly price drops until March 2009.

Total SFR dollar value of Sold units for May was $491,686,242. This reflects a -3.8% change from April 2010, and -12.5% change from May 2009.

 Total YTD dollar values for the Jan through May period on sold SFR units stands at $2,367,927,257. Compared to 2008, this is a $200,716,844 increase, and compared to 2009 a -$77,242,883 decline in total dollar value.

Available SFR inventory at the end of May was 8,049 units (those without offers). When the Contingent and Pending SFR units are added to this the inventory stands at 21,143, a 1.3% increase over April 2010.

If you'd interested in seeing all available homes for sale in Las Vegas, please feel free to start your search below.   

If there is any additional information you would like to have on the Las Vegas market, please don't hesitate to ask. 

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV

1-866-589-1646

MARKET REPORT AND ANALYSIS (April 2010)

SFR Sales Volumes:

April's SFR sold volume of 2,951 'Sold' is 224 units fewer than March 2010 and 247 fewer than April 2009. (Roughly a 7% drop against both periods.) YTD SFR total Sold Volume thru April 2010 is 11,124 units. This is a 4% increase over the same period of 2009 and more than a 100% increase over 2007 and 2008. At this point, 2010 is shaping up to be the highest volume year since 2005 when I first started tracking this information.  

SFR Sales Prices:

April's Average Sales Price for SFR settled at $173,170. This was a 3.1% gain over March 2010 and a 4.2 % increase over April 2009. As you can see on the attached monthly price tracking chart, the average sales price has 'bounced' along a very narrow range since March of 2009, but, on the positive side, it is the first year to year month that shows an increase. (As noted in my previous reports, one month does not create "a trend", but it is a step forward.)

Total Home Sales Dollar Value
The total dollar value for units sold this period was $511,024,686. This was a -4.2% change from last month and a -3.9% change from April 2009.

 Inventory Status

As of May 10th, 'Active' inventory For SFR, Condo and Townhomes stood at 10,309 units. This is 35.9% fewer available properties than April of 2009 and relatively flat compared to April 12th's Available units of 10,303.

The active properties reflect: 16.7% as Bank Owned, 41.1% as Short Sale and 42.2% as 'non-distressed' properties.

3,116 properties are 'Pending' and an astounding 13,406 are in 'Contingent' Status. (81.1% of the Contingent properties (10,872 units) show as 'short sales' awaiting bank approval.) This is the highest number of 'contingent' properties ever shown in Clark County and reflects over a 70% increase from the same period last year.

Looking Forward:

Historically over the past six years, the month of May has always had higher closings than the month of April. This should hold true for 2010 as the last 10 days of April did see an increase in the number of properties that changed from Active to Pending status. This is partly seasonal and, combined with several Auctions and the expiration of the first time buyer tax credit on April 30th, history should repeat and have an increase in volume once more. Additionally, several banks have streamlined their short sale processes, and short sales, as a percentage of total closings each month, have steadily risen from under 10% of the total closings in May 2009 to approximately 25% of the total closings for May 2010.

Looking for properties in Las Vegas?  Look no further! Start your home search below!

 Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646

If you are looking for a modern home that is warm, comfortable, and perfect for entertaining, check out this stunning property I just listed:

This property is nearly 4500 sq ft and sits on over half an acre.

• 3 bedrooms
• 2.5 baths
• Loft/Office area
• Separate Gym/Casita
• Undergroud Wine Tasting Room
• Rooftop Deck
• Full Strip Views
• Stunning Fire and Water features
• Super stylish and perfect for entertaining

If you'd like a private tour of this property, please contact Felipe Crook from Prudential Americana Group Realtors at 1-866-589-1646.