Las Vegas Foreclosures to Rise with BofA Bank-Owned Homes

by Donald Hanz on cities

Las Vegas foreclosures are expected to rise further this year with the planned release into the Nevada market of about 6,000 foreclosure homes by Bank of America over the next several months. According to a BofA executive, the foreclosures could be released at about 500 units a month.

The properties make up part of the so-called shadow inventory held by banks while they negotiate short sales or loan modifications with borrowers or while they wait for more favorable pricing trends.

According to John Ciresi, portfolio manager for BofA in Maryland, the number of homes being repossessed by BofA in the first months of 2009 throughout the U.S. ranged from a low of 11,000 to a high of 14,000. In the latter part of 2009, delayed foreclosures were pursued, pushing up filings to 29,000 in November and 35,000 in December.

Ciresi said that there were a lot of properties held off in 2009 as lenders were pressured to modify loans, to implement moratoriums and to negotiate repayment plans through state mediation programs. He also said that he expects further increases in Las Vegas foreclosures because of the failure of about 60 percent of mortgage modifications, the continued increase in number of residents losing their jobs and the continued decline in property values.

Ciresi also reported that BofA has been receiving about 40,000 new short sale offers a month, but has not been processing as many as it has received because of the difficulty of the process.

According to California-based research firm Concord Group, the Las Vegas market will still struggle from bank and government foreclosures over the next two years. It said that Southern Nevada has lost more than 90,000 jobs since the downturn, falling to about 850,000.

Concord said that currently, Las Vegas has a supply of 16,215 residential units for sale, 8,845 units of which are bank-owned homes, HUD homes and other types of foreclosures. The city currently has a total of 700,000 households, which is expected to rise by 2.5 percent over the next 5 years.

Meanwhile, despite the record number of foreclosure properties in Las Vegas, the city did not receive any funding for neighborhood and housing revitalization from the second funding round of the HUD. HUD officials explained that the city had difficulties in appropriating its first-round funding.