Only 17 (yes, 17) Nevada homeowners have been deemed candidates for Obama’s Making Home Affordable Refinance Plan passed into law last February. According to an article in the Las Vegas Sun, Democratic Rep. Dina Titus, who had asked the administration to address shortcomings of the program, welcomed the review as a chance to continue pressing her case for changes. “We always looked at the housing programs as works in progress and felt they would be modified and would be adjusted,” Titus said.
The reason Obama’s Refinance Plan won’t help Las Vegas is that it specifically excludes homeowners who are underwater (specifically, the amount due on the first mortgage must be less than 105% of the value of the home. Second mortgages do not necessarily negatively impact eligibility.) With 75% of the homeowners in Las Vegas currently underwater, only 25% could even think about utilizing the Plan. Of that 25%, only those with Fannie or Freddie owned homes need apply. Moreover, you must be current on your mortgage to qualify. Finally, homeowners will NOT be able to reduce the principal balance and will not be able to get cash to pay other debts. The law has too many exclusions to help the Vegas Valley recover.
Any mortgage plan designed to help the Valley’s housing troubles must include a provision requiring the banks to reduce the principle value of the loan, or it won’t work.