June home sales in Southern Nevada up - median price down

Las Vegas homeowners and real estate observers have been looking for clear direction the local housing market could be happy about but it's refusing to cooperate. It seems to have settled on a typically erratic path that markets display when they reach the bottom on a downward cycle - or are very near it - and just can't decide how to shake the gloominess off and embark on a climb out for better days. Last month's real estate statistics reflect that rather well.

GLVAR, or Greater Las Vegas Association of Realtors, recounts for its rapt audience that 3,360 resale homes were closed in June, a nice 16.5% uptick from May. That reverses two consecutive months of modest declines. However, it's about an 11% drop from June of 2009, a cause for some concern.

Las Vegas homeowners are carefully monitoring price movement that has been so negatively aggressive in the valley, dragging scores of them underwater, an occasion where property value dips below the underlying mortgage balance. The median price in June parked at $140,000, a $2,000 retreat from May, and the same as it was in May of 2009. For now it appears that prices have stabilized, giving the disappointed Sin City homeowners some hope of sunnier days ahead.

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Foreclosure filings drop - short sales incrrease - mortgage distress lumbers on

Real estate market observers have mixed feelings about RealtyTrac's Midyear 2010 Foreclosure Report. It says that 1,654,634 homeowners were sent at least one mortgage foreclosure filing from January through June. That translates to over 3,000,000 by the end of the year and RealtyTrac forecasts that over 1 million of them will eventually become repossessions, or REOs - real estate owned. The number by itself is of course alarming, but the current six month number actually is a drop of 5% from the second half of last year. Ordinarily in any housing enterprise that would be something to feel upbeat about.

On closer look the mortgage picture isn't all sweet grapes and chocolate treats after all. Home loan lenders and servicers have lately changed course to give a short sale a chance to work before filing foreclosure notices. The government has aggressively promoted its mortgage loan modification programs that have had a preventive impact despite the private sector's reluctance to get fully engaged. Yet, these initiatives have been a disappointment when measured by their originally announced goals. Moreover, mortgage lenders often are disorganized and undermanned to handle the torrent of foreclosures and their workforces seem to lack the necessary training to be effective, therefore foreclosure action can be delayed for months.

These factors have shifted the emphasis away from mortgage foreclosure statistics and are obviously responsible for the 5% decrease. In the meantime distressed properties continue to saturate unabated the landscape from Las Vegas to the shores of Florida. A great many are underwater and are hard-pressed to find any meaningful relief in the near future. The job situation is slowly improving at least in some regions but still isn't strong enough to decisively begin lifting struggling homeowners to their feet.

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Washington's control of real estate market disturbing

The housing industry is relying heavily on government-backed mortgage organizations like Fannie Mae, Freddie Mac and FHA for supplying financing to home buyers, filling a gaping void left by the private home loan sector still applying remedial salve to its festering wounds. Without them the real estate arena would be uniquely anemic. And the government is slowly gaining even more control over housing in a different but quite influential capacity, whether it likes it or not.

As mortgage foreclosures keep steadily spilling onto the ravaged real estate market, GSEs - Fannie Mae's and Freddie Mac's official designation - and its federal cousins like FHA and VA pick up repossessed homes by the thousands. Radar Logic - a real estate research boutique - reports that the government now holds about 46% of all U.S. REO inventory, a large share that has been continually growing over the past several years.

What's alarming is that it's going to increase from there for the foreseeable future. 2.3 million homeowners are currently 30-90 days behind on their mortgages, as Zillow and Lender Processing Services have figured out. Radar Logic calculates that 69% of these home loans are guaranteed or owned by the various government agencies. The situation is worse than that, though. About 5 million mortgage borrowers are either 90 days past due or are already in the foreclosure pipeline. The Treasury reports that 56% of these are in some shape or form under the government's umbrella. Radar Logic estimates that roughly 35% of mortgages in these two categories will avoid foreclosure via modification efforts or short sales.

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Angle Park Golf Glub in the picture.

Appraisal changes made by mortgage lenders get closer scrutiny from Fannie Mae

The real estate market meltdown has exposed many painful and game-changing weaknesses in how business was conducted in the years past. In the quest to make as much money as possible scores of mortgage files were pushed through with incomplete or doctored information. Now, with foreclosures the topic of the day, mortgage lenders are receiving growing demands from investors like Fannie Mae and Freddie Mac to buy back loans they originated haphazardly. That can be devastating to the bottom line.

To deal with the costly buyback menace many mortgage shops have commenced tinkering with appraisals, of all things. As an appraisal comes in some home loan providers will run an electronic valuation model based on public records - it involves no actual physical inspection - to see how close the two numbers are. They are double checking on the appraiser's work, is what they are doing. If the appraiser's report is higher the underwriter can randomly cut back on the value, so that the lender can't be blamed for using inflated figures should the loan go bad. Of course, many a deal has blown up into many little pieces as a result. This likely happens more in the hard-hit areas - Las Vegas comes to mind, as does Arizona, California and Florida - where values have eroded the most and where all the mortgage foreclosures and short sales can seriously trample with the price structure.

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