Donovan in Vegas to Boost Government Foreclosures Program

Housing and Urban Development Secretary Shaun Donovan visited Las Vegas, which has topped nationwide foreclosure charts, to promote the expansion of the federal government foreclosures program.

Donovan mentioned that the number of foreclosure actions filed in Las Vegas is higher than the national average by more than seven percent.

In the first quarter, the Las Vegas and Paradise area had more than 35,000 properties with foreclosure actions and one in every 159 houses in the area had a foreclosure filings. Foreclosure actions increased by nearly 104 percent compared to the first quarter of 2008.

According to Secretary Donovan, the government foreclosures program has expanded the loan refinancing scheme of the program by allowing borrowers whose homes are underwater by 125 percent to participate in the program. Previously, only homeowners whose mortgages were 105 percent underwater were allowed to apply for loan refinancing.

The new loan-to-value ratio means more homeowners can apply under the government foreclosures program. For example, a borrower holding a $375,000 home loan can apply for loan refinancing even if his house had gone down in value to $300,000.

Donovan chose Las Vegas as one of the cities he would visit to announce the expansion because an estimated 67 percent of homeowners in the city are staying in homes that have gone down in value substantially lower than their mortgage loans.

The Obama administration is trying its best to reach out to underwater borrowers under the government foreclosures program. But many borrowers are doubtful if the expansion can really help many homeowners in Las Vegas, where home prices have fallen to low levels.

An example is the price of a home on Pine Valley Road where a recently widowed woman has lived for 17 years. She said her house is not in foreclosure, but the homes of her neighbors are. She questioned how her neighbors can apply for refinancing when her own house, which was previously valued at $180,000 has gone down to $80,000.

However, Senator Harry Reid and Representative Dina Titus, who accompanied Secretary Donovan in a tour of lender and government foreclosures in southwest Las Vegas, hoped the expansion can help qualified borrowers.

Titus explained that the expansion is one proof that the federal government is listening to requests or suggestions from the public.

According to two federal government agencies, over 200,000 homeowners have received help under the government foreclosures program since the launching of the Making Home Affordable program.

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