Underwater homeowners in North Las Vegas are starting to wonder why they are sending good money to their mortgage holders after bad. Helens Pouroff Avenue, with 69 new homes sold at the top of the market in 2006, illustrates the boom and now bust in the Las Vegas valley. Dayna and Scott Merritt bought their 2,000 square foot home on that street for $385,000, but five years later it will only fetch $180,000 and the couple is wondering if they should keep paying for a house, that may never be a (net) asset.
“We’ve stuck it out. But there’s been no ‘attaboy,’” Dayna Merritt, 43, a substitute teacher told the USAToday. ”We’re paying on something that seems like it won’t work out for us.”
The Merritts put $80,000 down, and still Scott’s father has determined that the couple will remain underwater until 2020. ”Every month,” Dayna Merritt says, “I ask myself, ‘Why are we paying this?’”
USAToday’s Julie Schmitt writes,
Last year, Helens Pouroff saw just one new notice of default after 17 were filed in 2009, according to public records tracked by researcher ForeclosureRadar. This year, four homeowners who bought in 2006 have defaulted, public records show. “There’s two types of people,” says Dave Peterson, 38, a former Helens Pouroff homeowner. “People who see it coming and do something right away, and people who try to hold on until something forces them to let go.”
Peterson bailed on his Helens Pouroff home and the $3,000 monthly payment in 2008, declared bankruptcy, and moved on. His father can him irresponsible, and he had trouble finding a landlord who would rent to him with his poor post-BK credit score in the 500s.
But now his credit score of 680 is close to A paper territory. “I think we’re in a good place now,” Peterson says. To have stayed on Helens Pouroff, he says, “would’ve felt like prison.”
Tamara Lemmon also walked from her home in ’08 and filed Chapter 7 bankruptcy. Defaulting still nags her, but leaving Helens Pouroff “was absolutely the best financial decision.” Her only regret is that she didn’t do it sooner.
Those that just walk run the risk that creditors will pursue judgments against them years into the future. However, Schmitt writes,
Nationwide, lenders have not been aggressive in pursuing foreclosure losses on a broad basis, real estate attorneys say. But they still have time, and many will likely sell such cases to debt collection agencies, says Florida foreclosure defense attorney Roy Oppenheim.
Belinda and William Haag put $82,000 down on their on their Helens Pouroff street home. The couple pays over $2,000 a month on the mortgage. They could rent the same house for half that. The Haags are hoping to short sell, but will walk if the lender won’t cooperate.
Some analysts believe that the number of strategic defaults has peeked, but these stories tell the real story. Those who are paying are wearing down; financially, mentally and emotionally.
Real estate service Zillow says 85 percent of Las Vegas homeowners are underwater. CoreLogic believes 66 percent of Nevada homeowners owe more than their homes are worth.
“I do have concern because as the prices go down further, it might provide more incentive for people to strategically default,” Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV told VegasInc. “They still owe the same amount of money to the banks, but I think it’s getting bad enough that the ethical issues become less important to people.”
And the market continues to worsen. Financial services firm Fiserv, which produces the Case-Shiller Indexes, has predicted a 20.9 decline in Las Vegas home prices combined in 2011 and 2012, leading broker Frank Nason to worry,
Friends and associates that would have never considered walking away a year ago to 18 months ago are. It’s about the dismal outlook going forward. They see it’s going to take a decade before there is any daylight in their house.
Richard Plaster, the president of Las Vegas homebuilding company Signature Homes, and a leading advocate for people to walk away from their homes, says when people see corporations walking away, the idea is more palatable.
“I don’t think people can stay stupid forever,” says Plaster. “It is definitely going to go up if prices are going down. People who keep paying on their mortgage are going to lose.”