Scotsman Guide - December 2009 Residential Edition

for the past three years, nevada has had the nation’s highest foreclosure rate. and little in reno, nev., appears primed to push it down.

Although home sales in the Reno-Sparks metropolitan area jumped 51 percent between

August 2008 and this past August, the median home price for the area declined 28 per-

cent in the same period. Why? Six out of every 10 sales were bank-owned or short sales,

according to the Reno/Sparks Association of Realtors. Realty Trac also reports that one

out of every 37 housing units received a foreclosure notice in the third quarter in the

Reno-Sparks region.

Compounding matters, Reno’s unemployment rate reached 12 percent this past August,

fueled by constriction in the casino, hospitality and construction industries.

Brian Bonnenfant, project manager at the Center for Regional Studies at the Univer-

sity of Nevada, Reno, told the Reno Gazette-Journal in September that he expects more

homeowners to ditch their negative equity and enter voluntary foreclosure.

To spur purchases in devalued areas such as Reno, Nevada’s housing division this past

October moved forward with plans to lend $125 million to first-time lower-income buy-

ers statewide. State leaders expect to finance 850 Nevada homes through the bond-

backed project.

What the Locals Say

“More than 90 percent of my business involves purchases, and consistently 90 percent of these transactions are either short sales or foreclosures. Homes in the $100,000-to-$175,000 range are flying off the shelves, most of which are bank-owned and attracting multiple bids. In my opinion, if you’re not in the purchase business, you’re not in business.”

—;KEVIN;CAVALLI,;BRANCH;MANAGER,;SUMMIT;FUNDING;INC.

Vitals

▲ Population: 217,016

• Population in 2000: 180,480

• Rank (U.S.): 93rd

• Metropolitan-area population: 414,784

• Metropolitan-area rank: 116th

▲ Average commute: 18. 9 minutes

• Average commute in 2000: 17. 9 minutes

• U.S: 25. 3 minutes

▲ Median household income: $51,447

• Median household income in 2000: $40,530

• U.S.: $50,740

▲ Median age: 35. 4 years

• Median age in 2000: 34. 5 years

• U.S.: 36. 7 years

▲ Unemployment: 12 percent

• Unemployment in August 2008: 6. 6 percent

• U.S.: 9. 7 percent

Industry

• Licensing: Nevada isn’t yet a part of the Nationwide Mortgage Licensing System. The Nevada Department of Business and Industry Mortgage Lending Division ( mld.nv.gov) oversees licensing and enforcement.

• Number of broker companies:

• Reno: 43

• Nevada: 314

• State association: Nevada Association of Mortgage Professionals

• Online: namp.us

Résumé

• Demographics: 81 percent white, 7 percent Asian,

3 percent black, 9 percent other; 24 percent identify as Hispanic or Latino

• Largest private employers: International Game Technology; Renown Regional Medical Center; Peppermill Hotel Casino, Reno; Silver Legacy Resort Casino;

Wal-Mart Stores Inc.

Market

▲ Median monthly housing costs: $1,905

• Median monthly costs in 2000: $1,290

• U.S.: $1,464

▲ Foreclosure filings (MSA, third quarter): 4,787 • Filings in third quarter 2008: 2,653

▲ Foreclosure rate (MSA, third quarter):

1 per 37 households

• Foreclosure rate in third quarter 2008: 1 per 66 households

Foreclosure rank (state, third quarter): 1st

• State rank in third quarter 2008: 1st

▲ MSA foreclosure-rate rank (third quarter): 9th (out of top 203 MSAs)

• Rank among MSAs in third quarter 2008: 20th (of of 230)

▲ Homeowner-vacancy rate: 6. 3 percent

• Vacancy rate in 2000: 2.2 percent

▼ Median home price (single-family): $180,000

• Median home price in August 2008: $250,000

• U. S.: $177,500

▲ Total home sales: 476

• Total home sales in August 2008: 316

▼ Average conforming purchase-loan size (July): $185,796*

• Average size in July 2008: $230,417

• U.S.: $194,969

▲ Average conforming refinance-loan size (July): $224,344*

• Average refi size in July 2008: $175,840

• U. S.: $171,109

▲ Housing units: 98,237

• Housing units in 2000: 79,453

▼ Single-family residential building permits: 37

• Permits in August 2008: 58

▲ Federal Housing Administration volume (July): 209 loans*

• Volume in July 2008: 128 loans

*MortgageDataWeb.com

Frank Garay and Brian Stevens Co-hosts “tBWs Daily”

BY DARRICK MENEKEN

Frank Garay and Brian Stevens host ThinkBig WorkSmall’s popular “TBWS Daily,” an online video report dispensing mortgage news and opinion to viewers nationwide at thinkbigworksmall.com. Earlier this year, they led a charge to gain more than 115,000 signatures on a petition to reverse the Home Valuation Code of Conduct (HVCC). We caught up with the duo — who have a combined 37 years’ mortgage-industry experience as brokers and net-branch operators — to gauge their thoughts on 2010.

What worries do you have about efforts to stimulate the mortgage market? garay: Qualified buyers are being left in the cold.

Where do their difficulties stem from? stevens: Lenders are tightening their guidelines. They’re taking Fannie Mae and Freddie Mac guidelines, they’re taking Federal Housing Administration (FHA) guidelines and they’re layering conditions on top of those. A couple of years ago, it seemed like lenders looked for reasons to fund loans. Right now, it seems like they’re looking for reasons to decline loans.

FHA seems to be propping up the market. How important is FHA to mortgage brokers today? garay: It’s critical. Let’s face it, it’s all about the cash to get into the property, and FHA remains a 3.5-percent game. stevens: It will continue to be an FHA world. Mortgage insurance on Fannie and Freddie products is prohibitive for your average borrower.

Beginning Jan. 1, FHA will prohibit broker-ordered appraisals. As opponents of HVCC, how do you feel about that?

garay: It seems to me like FHA just wants to get unfair influence of appraisers out of the picture. They still want to make sure that appraisers are paid appropriately and make appraisals portable. Quite honestly, we have no problem with that. We completely understand that an appraiser shouldn’t be influenced by the person ordering the appraisal, but HVCC completely missed the sweet spot.

So what do you find most encouraging about today’s market and the upcoming year?

stevens: People are still getting loans, and they’re getting 30-year, fixed-rate loans at rates that were being sold on 3/1 ARMs just a few years ago. Loans are harder to get. But the loans that people can get — if they don’t mind the difficulties getting them — they’ll never have to refinance. garay: What I think is encouraging is the fact that the people in the mortgage-brokerage industry who have taken it seriously from the beginning as a career choice, most of those people are still here, and they’re going to stick around. I think we’re going to have a lot of really professional people handling these loans in the future. I think we’re going to see a lot of small mortgage brokerages get absorbed by larger mortgage brokerages. But I believe brokers are here to stay.