Cities, county find buying valley homes isn’t easy

Sunday, Nov. 8, 2009 | 2 a.m.

Neighborhood Stabilization Program

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Federal funds meant to ease valley’s foreclosure problems (7-7-2009)
HUD providing $18.5 million to help purchase foreclosed homes (3-30-2009)
North Las Vegas eyes foreclosure solution (11-14-2008)
State plan could ease pressure of ‘tsunami’ (10-23-2008)

Real Estate in Crisis

Eve Barrozo’s street is one of only five in the valley where the county has purchased houses under an 8-month-old program aimed at “stabilizing” neighborhoods.

The retiree stood in front of her home Friday and drew a circle of silence with her right hand that helped explain why the county is now the owner of 6844 Francis Celia Ave.

That house across the street, empty, Barrozo said. The two to the right, empty. The one to the left, the bank just had the auction. The one in back, someone finally rented it.

Like most Las Vegas Valley residents, Barrozo has seen her neighborhood, a few blocks away from Sam Boyd Stadium in East Las Vegas, change under the onslaught of foreclosures.

“These people,” she said, pointing to the corner house, “we only talked when we picked up the mail. But I miss the sound of their kids in the back yard.”

And, of course, most of the value of Barrozo’s house has also disappeared, dropping from nearly $250,000 only three years ago to $100,000 now.

The Neighborhood Stabilization Program was created, in part, to try to help people like Barrozo. The Housing and Urban Development Department gave Las Vegas Valley municipalities $64.3 million this year to buy homes then renovate and sell them to low- and moderate-income families. The local governments had hoped to turn around hundreds of houses — and help at least as many families in the process.

But nearly halfway into the 18-month window for spending the money, a Sun analysis of Clark County, Las Vegas and North Las Vegas records shows that the local governments haven’t made much headway. Beyond the five homes purchased, only nine more appear to be on deck. And not any have families living in them yet.

Officials say the primary obstacles hampering local governments in launching the program have been ongoing changes in rules and, more recently, the volatility of local real estate due to investors swooping in.

Meliah Schultzman, who has been monitoring the federal funding from the Oakland office of the National Housing Law Project, said market conditions have been the primary problem for governments nationwide trying to roll out the plan for stabilizing neighborhoods.

“Generally, funds have been spent much slower than expected,” Schultzman said. “What we’ve heard is that investors are snatching up properties with cash much faster.”

Schultzman said experts are projecting that up to one-third of the 306 state and local governments with neighborhood stabilization funds might wind up missing deadlines, meaning the governments would have to return unspent funding.

Locally, the hope was that millions of dollars flowing into the valley would buy hundreds of houses by September of next year. The money also goes to nonprofit organizations involved in purchasing, renovating and helping homebuyers.

Mike Pawlak, who oversees the county’s $30 million from the community resources management division, is the local official who has had the most success with the program so far. The county bought the first five houses and has seven more in the pipeline.

To get to this point, he said, the county spent two months reviewing more than 700 properties on Fannie Mae and Wells Fargo Web sites in the 13 ZIP codes the county is targeting. Each municipality chose ZIP codes according to foreclosure rates and other factors. From that initial group, the county determined that 140 houses fit the program’s guidelines. After inspection, the county asked for prices on 38. But most of those were quickly bought by private bidders, faster and richer.

Pawlak said the program requires properties meet standards including environmental and historical reviews. This takes time. Also, governments must buy the houses at

1 percent below appraised value. Initially, that figure was 10 percent, but HUD changed the rules. Still, investors are willing to pay more.

Tim Whitright, who oversees Las Vegas’ $20.7 million in the Neighborhood Services Department, wrote in an e-mail that the “Las Vegas housing market for homes valued at or below $250,000 is experiencing an increased sales rate in which ‘cash carrying’ investors are successfully bidding list price plus 10 percent or more on foreclosed homes.”

Whitright also wrote that many investors are not even taking the time to inspect houses because real estate agents “are telling them that a delay of just 24 hours will cost them the opportunity to buy.”

In late October, the county began using a coalition of nonprofit organizations called the National Community Stabilization Trust as an end run around investors. Organizations formed the trust to serve as a go-between for governments and banks. Locally, the trust filters properties in target ZIP codes and sends e-mail lists to Pawlak. It also gets banks to give the county a “first look” at properties.

Using this system, in only two weeks, sellers have accepted offers on an additional five houses. Pawlak said working with the trust is the sort of tweak that may move the program closer to its goals, but he said the rate at which this occurs depends on how many banks work with the trust, and how many houses banks release onto the trust’s lists.

Kenny Young, senior assistant to North Las Vegas’ city manager, has also begun using the trust for his city’s $8.6 million program. North Las Vegas is close to closing on two houses. He has also run across properties in the city’s three target ZIP codes that are not listed with the trust. “There are properties listed with brokers, and the broker won’t want to deal with us,” he said.

Frustrated with the situation, Young allowed that “we’re not as far ahead as we wanted to be.”

Still, Pawlak remains optimistic about the impact the program could have on the gap-toothed habitation of the valley’s neighborhoods, empty houses dotting the landscape. He points out that local governments will first renovate houses in the program then counsel homebuyers before they purchase or rent those houses, two steps that should create more stability across the valley.

At the same time, he and other analysts said, they wish the program allowed more leeway in dealing with on-the-ground realities of the real estate crisis. For example, the county could help more people if it could use the federal money for helping homebuyers purchase houses through short sales, instead of waiting for them to go through foreclosure, he said.

Schultzman said there is some talk in Congress about extending the program’s deadlines, and of allowing governments to buy abandoned as well as foreclosed houses.

“Jurisdictions are not used to having this much money and being told to spend it so quickly,” she said. “If they didn’t have these statutory deadlines, they would be able to more effectively meet the program’s goals.”

Meanwhile, Eve Barrozo eagerly awaits for a family to move into the empty house across the street, the one with the flower pot out front that used to hold yellow pansies.

“It would be nice,” she said. “Right now, it’s so quiet around here.”

Discussion: 12 comments so far…

By retiredyoungster

11/8/09 at 3:40 a.m.

Suggest removal

Well finally gov't might see the problem with us local people trying to deal with the banks as well and also the low life investors, who just want to rent to anyone, rather than letting families buy homes and creating a neighborhood. Standard gov't program - half good idea, the other half, bogged down in rules, etc
By perry161492

11/8/09 at 7:13 a.m.

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county buy home for what why can't they help the people who live there now
By artie48

11/8/09 at 12:45 p.m.

Suggest removal

So to put things in perspective, banks have kicked had working families out of their $250,000 homes and now are letting investers (theives) and Government (theives that make the rules) take over these homes (devalued to $100,000 with Tax payer stimulus money) so low income people can rent them!

WOW! The American way! Maybe put illegals in these homes and give them free medical care, too!

Forget the edlerly taxpayer footing the bill for this Democratic Utopian Plan or the Veteran who fought in these Goverment created "wars" with buddy contractors providing inferior fighting tools because of the buddy system . . . I will give you contracts if you give me re-election money!

And they say communism is bad! Stalin and Lennin had nothing on O'Bama, Bush or Clinton!
By neiman1

11/8/09 at 2:14 p.m.

Suggest removal

Government in action. Slow, cumbersome, and not efficient. When will these people realize what sounds like a good program sitting around a conference room wont work out in the real world.
By mred

11/8/09 at 7:21 p.m.

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FHA VA Freddie mac Fannie Mae etc. Mortgage interest deduction FDIC, homesteads etc. the government has been involved in housing for 150 years, but the dittoheads think it is something new because eekk! there's a black gut in the white house.

When Bush was pushing his "ownership society" housing crap, where were all the insannitized dittoheads?
By Independent

11/8/09 at 11:33 p.m.

Suggest removal

The funds are supposed to be used to buy abandoned blighted homes that nobody else wants to buy. We do not currently have a supply of those homes in Clark County so instead the City and County are trying to buy up homes out from under First Time Homebuyers that finally have an opportunity to purchase a home for a payment they can afford.

This is Government against the People, not "for the People".
If they wanted to make a difference they would give money to small business start up's, small business that want to grow and expand, or small business' that needs an interest free loan to stay in business until the economy picks up. Or hey, here's an idea, give the money to Schools to keep teachers working and our future generations educated.

Tell you representative that you are an American and you stand for the "Made in the USA" way!
By Newsdawg

11/9/09 at 5:25 a.m.

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Here go the banks again, screwing public, and screwing the government.

THERE ARE 25,000 homes that the banks are sitting on! They are not releasing them! THE PROGRAMS SHOULD HAVE FIRST DIBS!

The banks are again manipulating the housing market. They should be forced to off the GLUT of homes they are sitting on to these programs.

The banks are now acting in a criminal fashion, and PROFITEERING which is a treasonable offense.

Let's get the courts and judicial system in the fight and force the banks to give it up.

Wells Fargo is one of the biggest criminals of the bunch!

Newsdawg!
By term25600

11/9/09 at 7:11 a.m.

Suggest removal

How about the county stay out of this whole arena. It simply doesnt know what it is doing. The county cant run itself, let alone figure out how to "stabilize" housing. It will stabilize when the demand for housing is there again.

That takes Las Vegas growing, which means tourism grows, or retired people move here for lower living costs.

How about a property tax holiday of 2 years for new residents to encourge immigration from other states.

How about legalizing prostitution and leaving the strip clubs alone to offer what they want. That would encourge tourism, maybe even increase convention business

How about some new thinking for a change, instead of the old "tax and spend' thinking of government.
By revtomperl

11/9/09 at 10:55 a.m.

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Mostly the government screws up housing programs, does ones that contribute nothing, does others that screw with the private market, and does still others that are run so incompetently that they make things worse. Wow, a trifecta - a perfect number (3) guaranteeing a pessimistic view of the future of the valley. Thanks to all the officials, Oscar, Rory, and all of your buddies!
By ghostcommander

11/9/09 at 12:34 p.m.

Suggest removal

The Cities and County government are at least trying to alleviate the problem and put a floor under declining home prices which helps the people who are still living in their homes. The more foreclosures in a neighborhood the greater the decline in home prices. I would not complain if my taxes were to increase by 1% if it helped someone stay in their home, or put a family in a home.
By Det__Munch

11/9/09 at 1:38 p.m.

Suggest removal

How about a property tax holiday of 2 years for new residents to encourge immigration from other states.

Sounds good, but jobs. Where are these people going to work? As Vegas has realized, you cannot depend on tourism dollars any longer.

They should offer those heading towards foreclosure this "tax holiday" so they can keep their homes, help stabilize home prices and keep the community A COMMUNITY, and not a renters' paradise, aka "transient central" which Las Vegas is going to become again.
By Green_Dragon_Regular

11/9/09 at 2:24 p.m.

Suggest removal

@artie48-

Please explain to me how someone who buys a property from a bank is a "thief". And you might want to watch "A Boy Named Charlie Brown" to sharpen up those spelling skills... It's a cartoon, you'll probably enjoy it.

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