– January NOD/NOS/TD Figures – NODs totaled 778, up from 763 in December, basically pretty steady for the last 4 months. NOSs totaled 394, up from 366 in December, but again, generally even with the last four month average. TDs fell to 190 from 221 in December, the lowest total we’ve seen since April 2008. I’ll resume my graph next month (note to self – free trials of Office 2007 will erase your old programs).
– The first 3 days of February are off to a blazing start, with 182 NODs, 75 NOSs, and 25 TDs filed. A large number of the NODs are from missed payments over a year ago. There seems to be a pretty direct relationship between the amount owed and how long the lenders are waiting to foreclose (though BK filings by the wealthier contribute to this).
– The amount owing on the NODs is trending up rather dramatically. Of the 54 NODs filed today, 6 were for over $1,000,000 (3 in IV, 2 ArrowCreekish, and 1 Caughlin). Another 8 or so were in excess of $500,000.
– Dine and Dash – No one really knows how many people are purchasing a new, cheaper home before defaulting on their underwater residences, but I can assure you that from my research that these are not isolated occurrences anymore. Most of the cases I have run into to have been average Joe’s who wouldn’t generally have the real estate savvy to execute these deals. I believe they are being "coached".
– TD to TD – There are people losing properties at Trustee’s Sales that are turning around and BUYING properties on the courthouse steps for cash, sometimes within a week or two. This is not wide spread yet, but is raising my blood pressure to apoplectic levels. The lenders need to get off their boney asses, do some due diligence, and start setting some very public examples that fraud is not acceptable. Give me deficiency judgments! Give me public humiliation, flogging on Victorian Square, the Scarlett R. 100%, each, every, ALL of the cases I have found of people losing properties then turning around and paying CASH for Trustee’s Deeds are all in the industry. That’s RE brokers, agents, bankers, developers, title and mortgage folks.
I’m just not in an "up" mood for Reno tonight.
Corrine
Tom, with all due respect, this is not political posturing. Nevada has huge, huge money problems that are real. The reality is that the budget CANNOT be balanced without cuts to education from top to bottom.
And, please note that to date, no politician has advocated closing any campuses. That is Mr. Klaich’s hyperbole and catastrophic fantasizing intended to stir up fear. Apparently it works with you.
Walter
I have an idea. Maybe Nevada should change its name to Goldman Sachs. Then it could send in a request to the US Treasury for $2 billion to tide it over “until the economy stabilizes”.
ALPS
I have to say, the more I read over Mr. Klaich’s possible options, the more they appeal to me.
Close down the law school? Count me in.
Tom, you going to argue Nevada needs a yearly fresh supply of new lawyers to be attractive to people like you thinking about moving here? We need to be like California where everybody is related, by blood or marriage, to a lawyer?
bob_c
Budget problems?
Look at California, Michigan, Illinois, Florida
and the worst of all, the United States Treasury
…….oh yea THEY say the financial crisis was averted by the bailout and 0% interest rates…….these defecits and shortfalls seem
almost insurmountable<—now thats a financial
crisis
Tom
Alps, that is funny, but it is a valid point that maybe there is no need for a professional school at this time. Others also raise good points about hard choices that need to be made.
My theme was that in the long run, attracting new businesses, which is part of economic diversification, is going to be very difficult if the prospective business owners don’t perceive a regular, local source of educated new employees. It is the community colleges and the mid-range state universities which meet that need, so cutting there should be very judiciously done.
Hillside, I –and others–have already sent your state a check each year, for decades, by way of visits to your resorts over the years.
Budget issues are everywhere currently, I only mean to suggest to you that heavy cuts imposed on higher education is in my opinion a short-sighted solution.
Downtownjunkie
Closing any higher education institution would be the last nail in the coffin for NV. It’s plain ridiculous that we are debating the differences between a UNR type school and an ivy league institution . The benefit of having this available to our nevada youth is ten fold the cost.
John Newell
Just a quick word in defense of UNR. I graduated from a Las Vegas high school with a sufficient GPA to attend more prestigious schools. For a variety of reasons, one of which I was paying for my own education and the scholarships available would not have paid my way at the more prestigious institutions, I decided to attend UNR. I have also taken classes (and later taught ) at both WNC and TMCC.
After I graduated from UNR, I attended graduate school at Rice University, in Houston, which is a first-tier university and is often ranked in the top-three best values in higher education in the U.S. Rice is a great university, and I indeed made some great contacts there, but the level of education provided to the undergraduates (at least from my observation) was not significantly greater than at UNR, or even at the community colleges with which I am familiar (at least with respect to core courses). Admittedly, the level of education at Rice is more consistent across disciplines, and certainly the resources at Rice far out-stripped those at UNR, but I do not believe that undergraduates at Rice left with a significantly better education than I received as an undergraduate at UNR. Having said that, I also found that the quality of the students at Rice was across the board more consistent than the quality of my peers at UNR had been, and I believe that I may have received a comparable education at UNR at least in part because I took some of my education there into my own hands. Nevertheless, I know that UNR gave me sufficient educational opportunity to obtain an education that allowed me to attend a top-tier institution for graduate work.
As for closing the law school at UNLV, doing so will not reduce the number of attorneys in Nevada. Like I did, many attorneys in Northern Nevada went to McGeorge in Sacramento (a third-tier law school, but one that afforded me the opportunity to meet a sitting Supreme Court Justice and make contacts in the area in which I want to remain), as Northern Nevada based law students continue to do today. McGeorge openly embraces Nevada students, and some classes even include Nevada law issues. As for Southern Nevada, a large percentage of attorneys there (maybe still the majority) are from out of state. I personally would prefer to see more homegrown and educated attorneys in Las Vegas who understand Nevada issues and Nevada law than to send potential lawyers out of state for education (and jobs) and import more and more CA attorneys and law firms to Las Vegas (no offense to CA attorneys in general, Tom).
inclinejj
Smarten
Are you talking about
http://www.skytavern.com/
billddrummer
I wonder how this thread morphed from a discussion about NODs and TDs to a treatise on Nevada higher education?
My daughter was salutatorian at Spanish Springs HS and chose to attend NYU over Notre Dame, UNR, and another school I’ve forgotten.
Financial pressures may result in her returning to NV for her sophmore year, but her first choice was an out of state school.
And as far as the original thrust of the thread, I fully expect strategic defaults to rise throughout the year, affecting higher value properties first, then trickling down through the price bands. The more affluent homeowner will see the economic dead end, especially if similar housing is available in their neighborhood for less than a mortgage payment.
I believe lower income people have more of a ‘moral’ distaste for defaulting on their mortgages, having been taught that ‘paying your house note is the most important thing.’
Well, it’s not. Anymore.
Old Parnell
If it were a weekend, then it would be Sky Tavern that the school buses were parked at. The non-profit ski program (not a sledding hill!) pays for the buses and drivers at market rate from WCSD to pick up kids from the high schools, instead of paying Amador or the like. A good deal for all those involved.
If it were on a weekday, then it was probably a high school ski team meet using the Sky Tavern facilities as they are free. I’m not sure if the athletes still have to pay for each trip as they do on field trips, but usually all transportation out of pocket costs are paid for. Believe me, there is no greater group of cheap skates than a bunch of teachers. Can’t wait for the next round of cuts, a prize for 51st in the nation anybody?.
skeptical
Reno #2 “drunkest city” in America:
http://www.huffingtonpost.com/2010/02/05/drunkest-cities-in-americ_n_451074.html
“In compiling the rankings, Men’s Health considered “death rates from alcoholic liver disease, booze-fueled car crashes, frequency of binge-drinking in the past month, number of DUI arrests, and severity of DUI penalties,”
Well….at least Reno is good at something….a little more effort, and perhaps we can beat out Fresno. Too skeptical? Yeah…..right….
smarten
No IJJ. It wasn’t Sky Tavern.
It’s that relatively flat section of road between the summit of Mt. Rose and the “lookout” to Lake Tahoe just above Incline Village.
On the weekends there are a lot of cross-country skiers, snowmobilers, snow shoers, sledders and just plain kids playing in the snow.
It was a weekday before 12 noon and the kids were elementary school aged.
Reno Ignoramus
Hey Grand Wazoo….
I think that you got beat up here in a way you certainly don’t deserve. You are not resposible for the flawed tax structure that we have in Nevada, and you are not responsible for the calibre of university that UNR is. Only a fool would suggest that UNR can stand alongside the finest private universities in terms of endowment and financial strength. It does not take a Ph.D from Princeton to understand that deep pockets surely do improve the educational offerings of a university. I think that UNR does as good as job as it can given what it is……a modestly funded state school in a relatively sparcely populated state. A state that does not have any tradition of supporting education at any level. I don’t know what you teach, but I glean from the fine comments you have offered on this blog over the past 3 years or so, that you do a fine job. I for one appreciate your contribution to this blog, and I hope you continue to offer your quality insight.
bob_c
Strategic defaults? Why would any note holder let
any affluent homeowner ‘off the hook’ short of
bankrupcy is absurd. There are cheats and liars,
but if the ability to pay is there (or there are
other assets) you can’t just ‘walk away’. For an
affluent to get out of an underwater home will be
a life altering event. Its the American way—-there are advantages to be living paycheck to paycheck and one is to ‘walk away’. Now, I wouldn’t loan anyone money who was that financially strapped. But the whole issue is that simple.
Sully
for those interested; regarding the state’s current fiscal crisis:
http://www.npri.org/publications/pub_detail.asp?id=621&css
inclinejj
Ok Mt Rose Meadows..There is a trail on the Reno side that goes up to Mt Rose and the IV side there is a trail that goes down to IV and connects behind Diamond Peak..
DownButNotOut
Sully – A good article on how Nevada got in this mess. It could apply to all of government, however, local up to the national level.
The ‘Last In, First Out’ method makes the most sense for any financially struggling government entity to reduce it’s budget immediately.
How many will do this? Few I imagine. It’s one thing to talk about reduced funding for schools, another to layoff or disband the most recent government run programs and the government employees running them.
Programs we lived quite well without in 2004.
MikeZ
RE: “There are cheats and liars, but if the ability to pay is there (or there are other assets) you can’t just ‘walk away’.”
I’d be careful tossing those “cheats and liars” accusations around, bob_c. And yes, you can just walk way, whether you have the ability to pay, or not.
smarten
MikeZ you’re right – we can JUST walk away [I say “just” because as you know, I’m not against “walking away” if it’s through a permissible procedural vehicle (like a short sale, deed in lieu,BK, etc.)].
We can walk away from an unwanted pregnancy.
We can walk away from our spouse.
We can walk away from our family.
We can walk away from our friends.
We can walk away from our country.
Yes MikeZ, all of these things we CAN do.
But the measure of who we are the paths we take when we reach the fork in the road which leads to either walk away or not.
Just a thought.
Move to Reno
smarten, you are resorting to improper reasoning. The choice people make in cancelling their mortgage is not all similar to the choices you listed above.
Folks should treat their personal finances exactly like a business enterprise. cash flow, break-even point, retained earnings, balance sheet, assets, liabilities, etc. There is nothing immoral in walking away from an underwater asset as long as one is aware of the consequences. Businesses do it all the time.
smarten
MTR states “there is nothing immoral in walking away from an underwater asset as long as one is aware of the consequences.” Tell that to Mrs. Tiger Woods. Or Governor Gibbons. Or Paul Teutle, Sr. [American Choopers for those of you who don’t follow the program]. Still think the reasoning is “improper?”
Hope everyone enjoys the Super Bowl!
skeptical
smarten, you’re losing credibility by the minute.
As Michael told Tessio, it’s just business, nothing personal.
If it’s good enough for Tishman Speyer, it’s good enough for Joe Sixpack.
And, yes, we are still a nation of cheaters. But when you are in the prisoner’s dilemma, it’s foolish to play straight up.
bob_c
mike,
a person with ability to pay can walk away, but will be pursued (unless the bank goofs up or the
person lies and/or cheats)
what are you warning me about? your post made no sense
MikeZ
RE: “Yes MikeZ, all of these things we CAN do.”
Well, what’s the alternative, smarten? Being back Debtor’s Prison?
The only way lenders are going to learn not to do this again is if the consequences hurt.
MikeZ
RE: “a person with ability to pay can walk away, but will be pursued (unless the bank goofs up or the
person lies and/or cheats)”
CAN be pursued.
I’d be interested in some data on how often the lenders seek recourse, I suspect it’s less than 1%.
CommercialLender
MikeZ,
I’m all for the proverbial ‘you’ (“you/your”, get it, nothing personal, right? but let’s have a thought provoking dialog.) teaching ‘your’ bank not to do it again, as you write, but for… I’m all for you having moral scruples or not or having personal responsibilty or not, but for… I’m all for laws allowing people to dodge repayment of loans in extreme cases, but for …
But I’m not all for you voluntarily walking away from a mortgage contract with your bank, legal or not, for the following reasons:
* your bank may be my bank and a loss of your mortgage funds means my deposits are that much closer to trouble, and my fees will likely increase, and my stock in the bank as an investor will go down, etc.
* your bank may be pushed over the brink to the arms of the FDIC by you and a number of other voluntarily walked-away types, encumbering me via increased taxpayer obligations.
* as the proverbial homeowner next door, your lack of personal responsibility means yet another REO when an REO could have been avoided. Thus my home a) goes down in value and b) will sit forever long on the market as 75% of all sales are dealing with similar situations as your own. Aside from this, a ‘hood full of REOs can not be good for me, my kids, my kids’ schools, my local businesses, local crime rates, etc.
* the more repayments of mortgages are avoided now, the more in the future the mortgages themselves will become both strengthened in terms of recourse and increasingly difficult in terms of underwriting. This will affect my ability, not just yours, to obtain mortgage financing in the future and therefore will further depress or hold back increases in my home value and my equity, not just yours. The many “me’s / my’s” out there will suffer from the reverse of the wealth effect where our homes are worth less, not just yours, and we’ll spend less into the economy thereby keeping the economy suffering longer and deeper than would otherwise be.
So, this is no defense of any bank for lending too much at terms too low, as that’s a whole ‘nuther topic with much truth in it. But can ‘you’ see how the many voluntary walk-aways effect vastly more people than just yourselves? Can you see the fallacy of “blaming the banks” or “blaming the [insert your pet nemesis here]”? Where’s the personal responsibility up and down the food chain from govt to banks to Wall St to flippers to Realtors to lenders to owners to frausters? Let’s all do our part in not perpetuating this mess.
Move to Reno
What your are saying, CL, is that it should be the mortgagee who suffers from the lack of sound mortgage underwriting standards and dubious appraisals, not the mortgagor.
Unfortunately, it was the mortgagor who set the standards and accepted the appraisal of the property. Turns out the standards were totally hollow and the appraisals bogus.
The mortgagor is the professional expert here, the mortgagee is considered a novice to things like home buying.
Just doesn’t seem fair to me that you want the housedebtor to keep making payments just because it is in the best interests of the bank and its depositors since the housedebtor was manipulated by the corrupt system of which the bank is a principal player.
billddrummer
To MTR,
I don’t believe CL is saying the mortgagee should shoulder all blame (or loss) for what’s happened. I believe he’s only pointing out that there are volumes of people who would suffer unintended consequences if wholesale walkaways occurred.
Whether it’s ‘right’ or not is immaterial, in my view. It’s just that a cascade of defaults would further depress prices, impair banks’ ability to lend and attract deposits, and eventually result in a lower standard of living for all of us.
Now, I’m not defending CL, because in the world of nonrecourse finance, strategic defaults are happening much more frequently. Just saying that there’s a reaction for every action. And the action of strategic defaults would trigger reactions which none of us want.
And furthermore, you commented earlier that people ‘should’ run their personal finances like businesses–income statements, balance sheets and the like. But for most people, there are far too many emotional triggers surrounding money that prevent them from looking pragmatically at their financial situation–from “it will all work out (The Pollyanna Syndrome)” to “We won’t spend anything ever again (The Scrooge Effect).”
Clearly, a middle ground exists, but finding it proves elusive for all but a very few.
That is my opinion, anyway.
CommercialLender
MTR,
I don’t buy it for a minute. Its the same argument that people beholden to credit card debt attempt to make: it was the evil lender, never my over-spending ways. Its always someone the $#@#% else, isn’t it? Instant gratification at the expense of long term risk. For all of our sakes, this country needs everyone in it to get a dose of personal responsibility.
Do you deny that borrowers demanded the instant gratification of cheap debt to buy homes above their means that they felt entitled to at the expense of long term fiscal risks? That this demand to satisfy the instant gratification borrower caused banks and Wall St to offer products with lower and lower underwriting criteria at the expense of long term repayment risks? That bankers and Wall St bond traders were greedy, demanding instant gratification of commissions and pay at the expense of long term risks to the buyer of the papers they’d sell? That power crazed politicians demanded of the private sector that people’s need for instant gratification be magically satisfied at the expense of long term risk and financial common sense? Then why is it always just the bankers’ fault? Why is it always someone else’s fault?
You are damn right borrowers who chased after instant gratification and spent beyond their means should suffer. Add to that list the bankers and politicians, bond traders, realtors, etc. who each should suffer to their level of culpability. But I for one am sick of watching this housing mess unfold while some refuse to take responsibility for their own part of the mess.
Are there some players in the food chain who lacked the sophistication to take on that home, that mortgage, that luxury vehicle, that credit card agreement? Yes, and they should never have been buyers at all. You state “the mortgagee is considered a novice”. Well, then they should obtain financial advice, save up more money, etc. but don’t buy a wildly expensive item until you’ve gained necessary experience, down payment, or financial accumen! A house or mortgage or credit card is not a right, nor is your desire to have something financed by someone else a right. Barring any odd circumstances whereby we as a society should grant compassion, they need to feel the pain. Banks need to fail (happening), borrowers need to fail (happening), politicians need to get voted out of office (happening), realtors need to suffer for their bad advice, etc. etc., but everyone up and down the damn line needs to gain from this experience the key learning of it all: accept personal responsibilty for your own actions.
In extreme cases, we all have compassion and laws to help them out with society picking up the tab, but those voluntarily walking away with cash in their pockets are sticking the rest of us with their bill.
smarten
Hey MTR, you have it backwards.
The mortgagee is the lender [or beneficiary of a deed of trust]. The mortgagor is the debtor who gives the mortgage to secure his/her/its obligation.
Other than that…
skeptical
If Incline Village follows the same pattern as Reno it has much further yet to go. $/sq.ft as of early Jan in IV was $287. If it reverts back to 2001 or earlier pricing, it will be below $200/sq.ft.
And why shouldn’t it? Considering that >$500k is an exceptionally weak segment of the market (esp. in CA and NV), I don’t see how IV will not go down much further. Considering the very high number of second/vacation homes in IV (the ones underwater homeowners unload first), it most certainly will go down further.
It seems the Forbes article of Jul 09 was spot on when it described IV as America’s Most Troubled Luxury Neighborhood: http://www.forbes.com/2009/06/25/housing-crash-unsold-homes-southampton-personal-finance-zipcodes_slide_2.html
DownButNotOut
Skep – the difference in IV RE and Reno RE is that many (most?) IV owners have deeper pockets and can keep prices higher by the very nature of holding on to their property without going broke.Lower end Renoites don’t have that option.
Can IV property owners (pre ’07) hold on for what it’ll take to ride this out? That remains to be seen, but either way, most will lose money/ equity in the long run.
skeptical
DBNO,
I agree with everything you have said. And I believe that explains why IV has been a bit “stickier” than Reno.
That said, I’ll stick my neck out and predict that IV RE has some very ugly days ahead. FWIW.
BanteringBear
Unfortunately for Incline Village, and every other toney zip code, not every owner of real estate is immune to financial problems. There will always be those who are forced to sell, and that’s where prices are set, not by those who “don’t have to sell.” Regardless if you sell or not, the value of your house is tied to those that do. Incline Village has quite a thrashing coming- for both sellers and non-sellers.
DownButNotOut
True but volume is somewhat governed by those that are forced to sell, and typically, in the more upscale areas owners have options, or maybe a better way to put is they have deeper pockets that extend the timeline for being forced to sell (denial?). The longer this trainwreck goes on the more we’ll see an increase of those forced to sell and therefore setting lower prices. If/when this hits critical mass, watch out.
RB
Not that any of you aloof and smug parents of ivy league snots care but the University has one of the most advanced Knowledge Centers (library) in American higher education. The only thing mediocre I see are the attitudes of these parents who send their kids to these bastions of elitism and cronyism. You guys really get a A grade in douchery.
billddrummer
To RB,
I agree with you that the Knowledge Center is truly a world-class facility.
I wonder if the university is doing a good enough job at marketing itself locally?
MikeZ
CommercialLender: “But can ‘you’ see how the many voluntary walk-aways effect vastly more people than just yourselves?”
Yes, of course.
But if I were in an underwater situation (FYI, I’m not) where walking away made financial sense, my primary concerns would be 1) my finances and the law, not you, not my neighbors, not my lenders.
nvmojo
FWIW, the Elko Daily Free Press lists all people who are filing NODs or foreclosing in a column right next to the Police Blotter (not sure if it is once a month or once a week).
The only thing I don’t like about that is that the mortgage lenders and real estate people who walked with the loot aren’t also reported.
Hillside
Word came out tonight that UNR is closing down the College of Agriculture. Eliminating some College of Education programs, eliminating some language programs, putting some advanced degree programs on ice (translation: forever). Taking down about $ 11 million in spending.
It’s a start. Since all the Legislature did last week was kick the can down the road until it goes back into session next January, NSHE scraped by for a few more months. Sooner or later, the Legislature is going to run out of smoke and mirrors, and have to deal with what will be about a $ 2 billion deficit next year.
skeptical
Hillside,
according to the RGJ article, the legislature has basically raised a few taxes and fees and reduced a few outlays. But one thing caught my eye, which pertains to this blog:
“Financial institutions also will pay more for filing foreclosure actions, from $50 to $200, to raise another $13.8 million.”
So, doing the quick math with my cheap microsoft calculator utility, NV is counting upon 69,000 more foreclosures in the next year, so that the state can rake in $13.8 million. In a way they are dependent upon huge numbers of additional foreclosures. In a way, they must be rooting for them!
Wow, what a way to balance the budget.
http://www.rgj.com/apps/pbcs.dll/artikkel?Dato=20100301&Kategori=NEWS07&Lopenr=100301011&Ref=AR
smarten
FWIW Skeptical, and answering those who assert taxes in NV are lower than in CA,
If you’re a mortgagee in CA; you non-judicially foreclose; the property reverts to you; and you record a trustee’s deed; there’s no transfer tax assessed.
Go through the same process in NV [at least in Washoe County] and the full force of government is imposed including the RPTT.
So foreclosure nuturing may be a means to not only balance the State budget, but the County’s as well.
billddrummer
I for one believe we are seeing the fraying of the idea that Americans pay their mortgages.
It was something you just did, and you would go to any lengths to make sure that the mortgage was paid. I distinctly remember my parents frantically negotiating with their lender to keep from having their home seized. It worked.
Later, when my father left, my mother and all of us kids (3 of us) worked to make sure the mortgage got paid.
Now, it’s an option.
What does that say about the sanctity of contract?
(I am in the camp of walk away if it makes no financial sense, but I’ve already lost a home, so perhaps my view is a bit tainted.)
Perhaps sanctity of contract is an old fashioned concept. Like doing what you said you would do.