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By JENNIFER ROBISON, LAS VEGAS REVIEW-JOURNAL

Man, this economic forecasting stuff is hard.
Throw out any new retail sales report, some new consumer confidence numbers or an iffy study on the housing market’s recovery, and there goes every projection you’ve made on where the business climate is headed.

For an idea of just how movable a target economic prognostications can be, consider Ty Weinert and her Potato Valley Cafe.

Weinert filled out the Review-Journal’s online business survey on Jan. 3, with all the hopes and expectations of the New Year coloring her bright outlook. Spending usually picks up once people pay off the credit cards that financed holiday spending, and the bidding process for the bankrupt and stalled Fontainebleau on the Strip was closing in on a finalist. Maybe, Weinert thought, people will grow confident enough to shell out $6 or $7 for her downtown eatery’s Cuban pork sandwiches and cheese-and-bacon stuffed potatoes. And perhaps completion of the Fontainebleau would give the city’s economic engine a big boost.

But Weinert’s not so confident today. Her customer base continues to dwindle, as the recession begins to result in pay cuts and layoffs among the government workers who make up 60 percent of her business. The 2010 Winter Las Vegas Market, usually a boon to her company, proved a bust, with not a single catering order as of Thursday afternoon (the furniture trade show began Monday and ended Friday at downtown’s World Market Center).

“I was truly being hopeful at the time I filled out the survey,” Weinert said. “But January was definitely worse for us than I thought it would be. Maybe I was just way too optimistic.”

Weinert had good company, though. Nearly 58 percent of the survey’s 100 or so participants said they believe the worst of the recession has passed, while 41 percent said they expected harder times ahead. Nearly half, or 45.8 percent, said they foresee at least a little jump in sales for their company in 2010, while just 27.7 percent plan on no improvements in revenue.

The survey ran from Nov. 22 to Jan. 4.

Political campaign consultant Gary Gray filled out the survey on Jan. 4, and he’s sticking with his initial prediction that the worst is over.

He sees a little less anxiety these days, and less talk about business bankruptcies. But most importantly, his economic barometer — campaign contributions — hints at clearer economic skies.

Donations were down substantially in 2008 and 2009, but contributions overall are up about 20 percent in early 2010 when compared with bleaker days. It’s not an exact measure, because elections in 2009 were more regional, while 2010’s campaigns include nationally watched Senate and gubernatorial races. Still, Gray credits the jump in spending partly to more optimism.

“We’ve started to see an uptick. I wouldn’t call it a wave, but it’s certainly a ripple,” Gray said. “It shows that there’s more money available, that people are once again getting interested, and they’re willing to write a check.”

Nor has Jerome Snyder backed away from his earlier expectations.

Snyder said he expects more hard times for Southern Nevada, especially given the fiscal and economic woes of California, which feeds Las Vegas many of its tourists.

“The occupancy rates at the hotels may be good, but people are not spending, and they’re not gambling,” Snyder said. “To fill rooms with bodies gives a false comfort that things are better.”

Snyder said his businesses should be OK, though. One of his companies, broadband provider KeyOn Communications, should receive stimulus money to help move high-speed Internet service into rural markets. His other enterprise involves marketing a new appetite-control pill, and there’s no shortage of potential patients for the product.

Respondent Mark Brown predicted solid sales growth at Zen Gaming, a company specializing in both Internet poker and live table games inside casinos. Global interest in playing poker on the Web is surging, and big gains in new subscribers mean healthy increases in advertising revenue for his business (Zen has an agreement with the Review-Journal to run the newspaper’s online poker room). Even the table-game side of Zen should do well, because the company’s live poker games allow casinos to deal more hands per hour for more revenue, Brown said.

“I think we’re going to have a tremendous year,” Brown said.

The rest of the Las Vegas Valley might not fare so well, Brown added.

Business inside local resorts should remain depressed in the near term, and thanks to plenty of existing inventory, new residential and commercial building will likely be almost nonexistent at least through early 2011, he said. It’ll be five to 10 years before the market adds another megaresort. That stagnation will yield fewer new jobs, which could translate into fewer new residents.

Plus, get ready for a different attitude among elected officials and business leaders, Brown said.

“In general, whether we’re talking about local government or business, I think we’ve all learned the lesson that we can do more with less, in both capital and human resources,” Brown said. “We’re not going to see the job opportunities that used to exist, even as we begin to pull out of this downturn.”

Still, Las Vegas possesses one of the nation’s most resilient and resourceful business communities, Brown said, so the city will return to growth eventually. Las Vegas remains one of the world’s hottest destinations, and the Strip will always be popular with people looking to part with their discretionary dollars (unless they’re, um, saving for college). It’s just going to take a year or so longer to right the ship.

Weinert isn’t sure she can hold on that long.

She’s already cut hours among her three employees; workers who put in as many as 30 hours a week now get just 20 hours weekly. She froze wages, dropped her food vendor and began buying produce herself and swapped out the foil she used to wrap her goodies in with less-expensive wax paper.

But Potato Valley continues to hemorrhage business.

At the Las Vegas Market, the groups that used to spend up to $2,000 with the eatery to host three-day catered events for clients no longer order in. Orders for delivery to individual attendees have disappeared. Weinert’s holiday catering business fell from six events in 2008 to just one full party in 2009. And customers who have jobs stress over whether they’ll be employed in a month or two, so they’re in no spending mood. Diners who used to come in twice a week stop by maybe twice a month now.

It would take a miracle to see Potato Valley through the recession, Weinert said.

“We’ve been open three years by the grace of God himself, and that’s it. I don’t know what the future holds, and it’s definitely not looking good,” she said. “I’m not sure how long we can last, but we’ll just keep putting our best foot forward.”

Weinert financed Potato Valley’s startup with equity from her home and a business loan from the U.S. Small Business Administration. Today, the business doesn’t turn a profit, and it subsists on income from Weinert’s husband, a union carpenter.

Selling the restaurant to another entrepreneur likely isn’t an option, either. Planned downtown developments such as Symphony Park and a new Las Vegas City Hall aren’t close to opening, and few consumers troll downtown’s streets for fun after 5 p.m. Any potential buyer would need a good 18 months’ worth of cash reserves to stay open through the downturn, Weinert said.

But even Weinert offers a glimpse at the resilience Brown referred to.

“I don’t think people should be discouraged about starting a business. It’s not a horrible time to start a business,” she said. “You can get great rates on rent and great deals with vendors, and you can probably find some good employees. You just have to have the money to weather the storm we’re in.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

If you’ve got the credit but not the cash, there are programs to assist first time home-buyers to clost the gap between dreaming about and actually owning their own home. Prices and mortgage interest rates have never been equally lower making this the perfect time to make your dream of homeownership a reality.

Nevada Housing Division offers programs for new homebuyers The State of Nevada Housing Division’s First-Time Homebuyer Program is being offered to help the state’s low-to-moderate income residents buy a home.
“Today we can offer prospective homebuyers an amazing low mortgage rate of 4.5 percent,” said Charles L. Horsey, administrator, Nevada Housing Division. “The Division was established in 1975 and historically this is the lowest rate we’ve ever been able to offer Nevadans.”
In addition to the 4.5 percent, mortgage interest rate, the division offers a down payment assistance program of up to $4,500. If eligible, the buyer can also take advantage of up to $8,000 federal tax credit for first-time homebuyers and up to $6,500 tax credit for repeat buyers.
A first-time homebuyer is considered to be anyone who has not owned a home within the past three years. However, these conditions are waived for veterans if they meet the income criteria. The division’s income limits represent one of the highest limits of any government program anywhere in the state. For a household size of 3 or more persons, income limits range from $75,785 up to $103,320 per household, depending where in the state a family resides. The maximum purchase price of a home ranges from $258,691 up to $409,587.
The Nevada Housing Division serves all areas within Nevada, both rural and urban, and has more than 50 participating lenders serving the state. Since the Nevada Housing Division’s creation in 1975, the agency has funded more than $2 billion in loans and has assisted more than 20,000 families achieve homeownership.
Anyone interested in learning more about the Division and learn about qualifications for the 4.5 percent mortgage rate, visit nvhousing.state.nv.us. The Web site features criteria for securing a loan, steps to follow in becoming a homeowner, along with a list of participating lenders.
Feb. 06, 2010
Las Vegas Review-Journal

By MERCEDES CARDONA, Daily Finance

Retailers ended a difficult fiscal year with slightly better than expected sales in January, which led some companies to boost their guidance for their upcoming year-end earnings reports.

According to a tally of major retailers by Thomson Reuters, comparable sales at stores open at least a year rose 3.3%. Gainers were led by apparel stores, which were up 7.4% on a same store basis; discounters also did better than average, up 4.5%. But even the troubled department store sector rose 2.5%, including the battered luxury retailers.

“Despite lean clearance inventories and some adverse weather that held back sales in January, industry sales posted an impressive gain,” said Michael P. Niemira, chief economist of the International Council of Shopping Centers. He singled out apparel chains, which had their best showing since March 2007.

Most merchants reported increases in January and during the quarter ending Jan. 31, although in many cases, it wasn’t enough to turn around sales for the year. Retailers make their year’s profits during the fiscal fourth quarter, which most companies close at the end of January, to include the post-holiday clearance sales. But most retailers reported that their inventories were down significantly this January, along with discounting. With fewer markdowns, even modest sales growth translates quickly into increased profits.

J.C. Penney Co. (JCP) blamed lower January sales on a shortage of clearance merchandise, and noted that sales of regular and normal promotional-priced items were up by high single-digit percentages. The department store chain’s same-store sales were down 4.8% in January, 3.6% for the quarter, and 5% for the year.

Meanwhile, rival Kohl’s Corp. (KSS) reported its same-store sales were up 6.5% in January, 4.5% for the quarter and 0.4% for 2009, which led the company to raise its earnings guidance. Kohl’s now expects to report earnings of $1.36 to $1.37 per share for the fourth quarter, up from its previous forecast of $1.28 to $1.30.

Signs of a Rebound for Some Big Name Stores

The department store segment is looking up, after several years of suffering. Macy’s (M), also raised its guidance after posting better than expected sales. The parent of Macy’s and Bloomingdale’s reported same-store sales rose 3.4% in January and fell 0.8% for the fourth quarter, better than the drop of 1% to 2% it had expected. That led the company to raise its earnings guidance to $1.35 to $1.37 per share for the fourth quarter, up from its previously forecast range of $1.14 to $1.18, and raised its expectation for the fiscal year to $1.36 to $1.38, instead of $1.15 to $1.19.

In the luxury segment, Saks Inc., (SKS) another retailer that had taken a beating in the recession, also showed signs of a turnaround. It reported a 7% increase in same-store sales in January, though it was down 4.8% for the quarter and 14.7% for the year. Rival Nordstrom (JWN) had a 14% increase in same-store sales in January, and its full-price stores showed renewed strength. While its Rack discount stores had been driving sales growth during the recession, they posted a 5.3% same-store growth in January, compared to 8.9% for the full-line Nordstrom stores.

Both Nordstrom and Saks had fought against the drop in luxury sales by pushing down some of the prices for designer apparel, but Nordstrom had been more aggressive than Saks in stocking more moderate items, and had seen better sales over the past year. The luxury market appears to be perking up this year, thanks to the improvement on Wall Street — as witnessed by better than expected results at Tiffany & Co. (TIF), Burberry Group Plc. (BURBY) and Coach (COH) — which bodes well for the high-end department stores.

Discounters Lost Some Yardage in Super Bowl Shift

But consumers remain cautious discount shoppers, as seen in the results for warehouse clubs and discounters. Both Costco Wholesale Corp. (COST) and rival BJ’s Wholesale Club (BJ) posted gains thanks to rising gas prices; that helped them overcome the shift of the Super Bowl to February, which cost them in sales of food and TV’s. Costco’s comparable sales were up 8% for the month, while BJ’s was up 8.4%; Costco estimated the Super Bowl move cost it between 0.5 and 1 percentage point in sales gains, while BJ’s put the drag at 2 percentage points. On the plus side, the warehouse clubs are seeing less deflation in food prices, which has been a continuing problem over the last year; Costco’s management estimated that price deflation has shrunk to less than 1% in some food categories.

Target Corp. (TGT) also said its electronics department suffered from this year’s Super Bowl shift, but noted that food sales remain strong. The company said it expects same-store sales in February to be flat or up slightly. Total January same-store sales were up 0.5%, which the company said was due to lower clearance sales than last year, and sales for the quarter were up 0.6% but where down 2.9% for the year. CEO Gregg Steinhafel said in a statement that the company is bound to improve in 2010, since it’s showing higher comparable sales in apparel and home — two segments where Target has set itself apart from other discounters.

Retailers will have to continue to focus on wringing profits from modest sales, because consumers remain very tight with their shopping budgets. According to a poll by consulting firm Retail Forward, the number of consumers who say they feel worse off about their household income now as compared with a year ago has risen: 32% said so in January 2010, compared to 27% in January 2009. Likewise, fewer feel they’re better off (25% in 2010 versus 30% in 2009).

“The modest pickup in retail spending is persisting despite challenges ranging from income constraints to bad weather,” said Retail Forward’s senior economist, Frank Badillo. “The recovery should continue on an uneven path as shoppers slowly resume spending that was postponed or reduced during the recession as a precaution.”

But the survey also found households felt more secure in the value of their homes and investments, more had a handle on credit card and mortgage payments, and job security was edging upward. All these bode well for retail’s recovery later in the year, although Valentine’s Day, the next big shopping holiday, appears poised to disappoint. The ICSC’s Niemira is forecasting February sales will be up a modest 2% above last year’s.

Specialty Retailers See Quarterly Rises

In fact, Limited Brands (LTD) expects flat sales in February, despite promotional activity at both its Victoria’s Secret and Bath & Body Works chains. Limited’s same-store sales were up 6% in January, thanks to a 17% increase at Victoria’s Secret from shifting its semi-annual sale to January; that offset an 8% drop at Bath & Body Works, which cut back its semi-annual sale by eight days to match its lower inventories. Company same-store sales were up 1% for the quarter, but down 4% for the year.

Other specialty apparel retailers also saw healthy increases. Gap Inc. (GPS) which showed a 5% increase in same-store sales in January, boasted it posted gains at all its chains for the third month in a row. Old Navy had an increase of 10%, Gap was up 2% at Gap and Banana Republic rose 4%. Total same-store sales were up 2% for the quarter, but are still down 3% for the year.

Aeropostale (ARO), which posted a same-store sales increase of 11% for the month, 6% for the quarter and 8% for the year, upped its earnings guidance to reflect the better sales. It now expects fourth-quarter earnings of $1.41 to $1.42, up from $1.33 to $1.34 per share, a 40% to 41% increase over last year’s earnings. That also led to a new full-year forecast of $1 per share, up from its previous guidance of 90 to 92 cents per share.

Even Abercrombie & Fitch (ANF), whose sales had taken a beating this past year, posted an 8% increase in same-store sales in January, led by a 12% increase at its flagship brand. Abercrombie, which had been punished over the last year for moving too slowly to lower prices, was helped by redemptions of gift cards it gave away as part of a holiday promotion. However, same-store sales were still down 13% for the quarter and 23% for the year.

Compared to January 2009, It’s Easy To Look Good

So the rising tide does appear to be lifting all boats — slowly. Some of the improvement in January is no doubt a result of cycling through the anniversary of devastating post-holiday clearances in 2009 that followed an equally damaging round of holiday markdowns among merchants caught overstocked in a recession. Niemira noted that sales were down 4.8% in January 2009, making this an easy comparison.

A fuller picture will emerge when the Commerce Department releases full January retail sales statistics Feb. 11, which will include auto and gas sales, restaurant receipts and sales at Wal-Mart (WMT), which does not report monthly figures.

By HUBBLE SMITH LAS VEGAS REVIEW-JOURNAL

New home sales in Las Vegas are projected to increase to about 5,400 in 2010 and the median price should be close to $220,000 by the end of the year, a slight bump from December’s median of $216,000, housing analyst Dennis Smith said Thursday.

The president of Las Vegas-based Home Builders Research reported his year-end data and 2010 projections in his first housing webinar, which replaces his annual housing outlook previously held at various locations around the city.

New home prices fell 13.2 percent in 2009 and are down from a high of $330,900 in 2006.

“I think we’re going to see a slight increase,” Smith said. “I’m not saying we’ll see a huge jump, but by the end of the year, I think we’ll be looking at closer to $220,000 than $210,000. The only thing that could change this is a flood of (foreclosure) inventory, the ’silent inventory’ everybody talks about.”

Las Vegas has the fifth-highest foreclosure rate in the nation with one out of 119 households in some stage of foreclosure filing, according to Irvine, Calif.-based RealtyTrac.com.

Smith is projecting about 45,000 resales this year, nearly identical to the 44,885 recorded resales he counted in 2009. The median price for resales will edge up 3.3 percent to $127,000 in 2010 and climb another 3.4 percent in 2011 to $134,000, based on a stable inventory of 8,500 homes on the market.

By: Heather Peck, Rosen & Company West

Every state is different when it comes to foreclosures. And in times like these, things have changed. Even here in Las Vegas, it used to be if they foreclosed on your house, the sheriff showed with someone from the bank up a day to two later to evict you, lock you out and then make arrangements for you to come back and get your stuff.

But these are troubled times, and there are large numbers of homes being foreclosed on every day. Currently, at least in Las Vegas, if your house is not purchased at auction by an investor or new owner occupant, the bank will assign your property to an asset manager. This could be a real estate agent or an asset management company who takes care of the property until the bank is ready to list the house.

The asset manager or agent will come by and do an occupancy check to see who’s living in the house. If its a rental tenant, they have different rights than the previous owner.

If you’re a tenant with a lease, the bank has to, by law, give you at least 90 days to make arrangements to move. They may offer you cash to move sooner, or if you have a lease that doesn’t expire for a longer period of time, they are supposed to honor the terms of your lease. This doesn’t mean you don’t have to continue to pay rent, it just means you’ll pay it to the asset management company or whoever the bank chooses while you make plans to move. Another alternative is to go get prequalified and buy the house you’re living in.

If you are the previous owner, the process is a little different. After they do the occupancy check and discover you are still living in the house, they will probably still offer you a cash for keys offer, giving you 30 days to move and also offering you up to $1500 to move and leave the property in good condition. But make no mistake, you have to move out. You have no rights, and the bank is just trying to protect their interest by offering you cash so you won’t trash and strip the property when you move. They could call the sheriff and have you evicted if they wanted to. Once the title went back to the bank (and it usually only takes 1 day to record back into the banks name), you’re tresspassing and subject to immediate eviction.

Another scenario is when an investor buys the house. They may actually come and try to make a deal with you, offering to rent the property to you for a couple of years, and possibly sell it back to you on a lease option. Depending on your current financial situation, this may or may not be a good option for you. Rent may be less than what your house payment was, and you don’t have to move. They will probably want an option payment, but you haven’t paid a mortgage payment for 6 or 7 months so hopefully you now have a little cash set aside.

Lastly, a new owner occupant may have bought the property at the auction. This is now beginnning to occur more frequently. They have the right to evict you. They too may offer you a small financial incentive to move or they may show up with the sheriff. Its their call. Remember, once the property sold to someone else, you’re trespassing.

Foreclosure is a difficult situation and no fun for anyone. This process as I described may or may not work in other states or even cities across the country. Take the time to find out how it works where you live. Talk to a couple of agents who specialize in foreclosures in your town.

Please don’t put your head in the sand. No one wants the sheriff to show up and tell them they have to get out NOW!

If you’re behind on your mortgage, or you think you’re going to be, call a professional and find out what your options are. The sooner you do, the more options you have. They may include a loan modification, forensic audit, deed in lieu, short sale or foreclosure. Some processes are just bandaids, some are real solutions depending on your situation. There is lots of help out there, and a lot of it is free.

Contact Heather: 702-595-7380 or email: LasVegasExpert@yahoo.com

This is just another avenue of down payment assistance programs that are available to home buyers.
By Michael Mishak, Las Vegas Sun

Three years ago, as the Culinary Union sat down with Las Vegas casino companies for a new round of contract talks, labor leaders sought to preserve the city’s identity as a worker’s paradise, the place where a housekeeper owns a home. Part of the Las Vegas dream had always been homeownership — and the housing bubble, driven by subprime mortgages and real estate speculation, was pushing that core promise out of reach for many of the union’s rank-and-file members. The median sale price for a single-family home in 2007 topped $300,000.

So the union asked the casino companies to chip in to a fund that would help its workers buy homes. Three years later, nearly 200 families have used about $1.1 million in down-payment assistance to purchase homes. The program, a joint partnership with a matching grant from the state, has leveraged $24.3 million in home sales throughout Southern Nevada.

Under the program, members can get up to $20,000 in down-payment assistance but must first qualify for a mortgage, contribute 1 percent of the purchase price and complete an eight-hour homebuyer education course. Borrowers must repay the down-payment loan when the home is sold or refinanced. Today, half of the trust fund, or about $1 million, remains.

To be sure, the recession has rocked the union, which has lost roughly 10 percent of its members to layoffs and hour reductions. But tumbling home values and access to the loans has created opportunity for 197 families over the past year, with the program seeing big demand in the last quarter of 2009.
These first-time homebuyers are a rare bright spot in Nevada’s battered economy. Below, four of their stories:

Carla Henderson, 48: Booth cashier, Paris Las Vegas
Carla Henderson and her husband moved to Las Vegas from Kansas City 25 years ago. They raised a family on casino jobs and had dreams of starting their own mom-and-pop restaurant.
But life had other plans. They ended up with custody of their three grandchildren, making home a rented condo near UNLV. Over the years, Henderson watched their neighborhood decline and feared for her grandkids’ safety. When the complex saw a rash of shootings, the Hendersons went house shopping.
They sought financial counseling through a nonprofit but their paperwork was going nowhere. Enter the Culinary’s housing program. After taking an eight-hour class, Henderson had her sights on a house. Apparently, so did a group of vandals. They broke in, smashed holes in the walls and destroyed the toilets, sinks and bathtubs. Total damages: $80,000.
Henderson found another house and, with the help of the down-payment loan, closed on the deal last spring. “That was always the obstacle for me,” she said. “I had good credit, good work history. I just didn’t have the lump sum to put down. That was keeping the dream from coming true.”
Shortly after moving in, she had her first house party — and invited her loan officer, home inspector and real estate agent. Her grandchildren — ages 9, 11 and 12 — love the place. Her husband has planted fruit trees and the couple are busy on a variety of improvement projects.
“I have never been more ecstatic,” Henderson said. “It’s that security, to be able to say, ‘This is the foundation. This is mine.’ ”
Still, there’s guilt, especially when she thinks of her troubled co-workers.
“I’m happy, but in the back of my mind, in order for me to have my happiness means somebody else lost theirs,” she said. “And there’s a part of me that feels bad because my happiness came about as a result of somebody else’s misfortune.
“But I worked hard and the opportunity presented itself. I’ve put down roots now. I’m not moving. I’m not selling. This is it.”

Minjia Li, 26: Bus person, Japonais, at the Mirage
Minjia Li came to Las Vegas from China a decade ago.
He graduated from Clark High School and pursued a degree in electrical engineering at UNLV, supporting himself with a bus job at Japonais in the Mirage. Li interrupted his studies to return to Shanghai to get married. He and his wife came to Las Vegas to start a life together, but a house seemed out of reach.
“The market was crazy,” Li said. “I thought I would never purchase a home in my life.”
Then the recession hit and sliding property values prompted them to start looking. Still, real estate agents wouldn’t return their calls. The home-buying education class at the Culinary Training Academy changed that. Officials even helped him navigate the bureaucracy of verifying money his relatives had sent from China to help with the purchase.
Li and his wife moved into their four-bedroom house, complete with three-car garage, in July.
“I do believe that people deserve the right home and it takes efforts from everyone — the right Realtor, the right financing,” he said. “This is a total achievement of the American dream. For you to be settled and grow in America, to feel you are a real American, you need a home.”
He was so inspired by the experience that he got his own Realtor’s license and has sold four homes. Still, Li said, the banks need to loosen credit for working families.
“The banks aren’t helping the people that need to be helped,” he said. “They are looking for cash purchases and the easy deals. Investors are taking advantage of that. When we see the right people can’t get the right help, there’s a lot of frustration.”

Juan Exposito, 55: Room service server, Harrah’s
Juan Exposito (wife Milagro is also pictured) moved to Las Vegas from Los Angeles in 1997. He got a job working room service at Harrah’s and moved his family into a rental home in Summerlin. A few years later, he considered buying a home but the prices had skyrocketed. Rent was far cheaper than a mortgage.
“It felt like California,” he said. “We didn’t have a chance to buy a house.”
When home values tumbled, Exposito went on the hunt. He looked at 50 homes over the past year before settling on a four-bedroom home. His limit was $200,000. He got his dream house for $170,000. His neighbor, he said, paid $450,000 at the height of the bubble. Today, Exposito’s mortgage payment is $200 cheaper than the rent he used to pay.
“It’s like it came from the sky to us,” he said. “It’s what people call the American dream, to find this type of house for the price I got it. It’s unbeatable.”
Asked about his house, Exposito gushes: “It’s 2,400 square feet, living room, dining room, huge kitchen, family room, guest room with full bath.”
Still, the recession has taken its toll. Harrah’s reduced Exposito’s hours, so he works an additional shift at Red Rock to round out a 40-hour week. His tips are also down dramatically, from around $300 a night in the go-go years to $100 now. Nevertheless, Exposito is glad to be working.
The house, he said, provides stability.
“I’m happy,” he said. “I feel safe.”

Erika Pabst, 67, & Judy Hahn, 49: Retired food server, Binion’s & Hostess, Hugo’s Cellar, at the Four Queens
Erika Pabst and Judy Hahn met when they served tables at Binion’s two decades ago. Pabst, a former flight attendant from New York, and Hahn, a Vegas transplant from Washington, struck up a friendship and decided to become roommates, renting a spacious three-bedroom apartment.
After years of apartment living, they had talked about buying a house but prices were too high. When the Culinary announced its housing program, Pabst and Hahn jumped at the opportunity. The down-payment loan was crucial, as was the education program, which walked them through each step of the purchase.
They settled on a four-bedroom house with a view of Sunrise Mountain.
Four years ago the asking price was $279,000. Pabst and Hahn paid $124,000.
Compared to some of their co-workers, they said they had it easy.
“I’ve heard horror stories,” Hahn said. “Someone finds a house, puts in a bid and then an investor outbids them. It’s been hard for people to even find a house.”
In October, Pabst and Hahn moved in and have been busy painting and laying tile. After 21 years of serving at Binion’s, Pabst was laid off last May.
She’s collecting her pension and Social Security and looking forward to volunteering for her friend’s judicial campaign.
“We are kind of overwhelmed with all the space we have,” Pabst said. “We’re loving it.”

Important information for any homeowners considering doing a short sale on their home.

NEW YORK (CNNMoney.com) — As terrible as it is to lose your house to foreclosure, at least it’s a relief to put your biggest financial headache behind you, right?
Wrong.
Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.
It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.
“My understanding was that the deficiency was negotiated away,” she said. “Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it.”
Where the foreclosure plague is spreading
Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called “liar loans” where they didn’t have to verify their income.
Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.
“After the banks foreclose, it’s very common now to have large deficiencies with houses not worth the balances owed,” said Don Lampe, a North Carolina real estate attorney.
Lenders mostly declined comment. Although Corey’s lender, BB&T did indicate it was pursuing more deficiency judgments.
“They follow the rise and fall of foreclosures,” said the spokeswoman, who would not discuss Corey’s account.
Can they come after you?
Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.
“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”
In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.
Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.
Check the foreclosure rate in your state
Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.
But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.
“People shouldn’t have a false sense of security that a deficiency judgment may not be later sought,” Zaretsky said.
He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.
“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.
Ticking time bomb
What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.
It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.
It wasn’t until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.
“I told them, ‘Hey, you guys released the title,’” he said. “As far as I know, I’m off the hook.”
He wasn’t. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”
Lenders are also very inconsistent. One of Zaretsky’s short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.
Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.
“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”
If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.
“We don’t favor any short-sale contracts that leave any deficiency that can be pursued,” he said.
Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.
By Les Christie, staff writerFebruary 3, 2010: 3:21 PM ET

Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.

In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

•All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
•In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
•The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website.