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Two proposals to help the housing market emerged from President Barack Obama’s job speech to Congress. But, only one may have an impact locally, analysts said.
The proposals include a plan to convert repossessed homes into rentals. The second would allow homeowners with government-backed mortgages to refinance them at lower interest rates of about 4 percent.
It’s the second proposal that caught the attention of local housing analysts because it would help lower payments and keep people in their homes, especially those who are considering strategic defaults.
“There are a lot of people who would be helped by a lower payment,” said Dennis Smith, president of Home Builders Research. “They don’t want a bailout, but if they can refinance, that would make a difference with them.”
Federal programs aimed at helping people refinance their homes have been geared for those current on their mortgage who are underwater as much as 25 percent, which may not help many who owe even greater amounts on their mortgage than their homes are worth. The Federal Housing Finance Agency is looking at increasing eligibility for those more than 25 percent underwater.
“A lot’s going to depend on how low lenders and FHA goes for people far enough underwater,” said Ken Lobene, HUD’s field office director. “If it goes to 30 to 50 percent it would be very helpful.”
Any major refinancing effort among Las Vegas homeowners would help set the bottom of the market and slow the rate of foreclosures and short sales that continue to bring down prices, said Steve Bottfeld, executive vice president of Marketing Solutions.
“The name of the game here is to slow down the rate of foreclosures and what this proposal can do is help increase prices,” Bottfeld said.