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Panel gets earful of LV trouble
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LAS VEGAS REVIEW-JOURNAL
In testimony to a federal commission, homeowner Glenn Smith said Wednesday that bank officials tried to trick him on the eve of a mediation hearing for home mortgage modification.
Smith told his story to members of the Financial Crisis Inquiry Commission, which met at the University of Nevada, Las Vegas, to gather information for a report on the country's near financial meltdown.
A real estate agent for 25 years, Smith said he fell behind in payments on his mortgage while trying to learn a new profession in the wake of the Southern Nevada real estate crash.
Smith asked Chase Bank for a home loan modification, but the bank frustrated him with continual requests for additional copies of documents.
The night before he was to go into a required mortgage modification meeting last October, Chase officials notified him that he was approved for a permanent modification.
At the hearing the next day, however, Chase representatives were unprepared to negotiate. The bank has never granted him a permanent modification.
"That's criminal," William Thomas, vice chairman of the Financial Crisis Inquiry Commission, said.
Gary Kishner, a spokesman for Chase Bank, said he couldn't respond to Smith's claims without more information about the house or borrower.
The Las Vegas hearing is part of a series of public hearings around the country seeking testimony to deliver to Wall Street bankers and others "who have no real on-the-ground knowledge of the suffering that goes on in a number of areas," according to Vice Chairman Bill Thomas, a Republican former congressman from California.
U.S. Attorney Daniel Bogden testified Wednesday that his office has prosecuted 172 mortgage fraud defendants over the past 10 years. Between March 1 and June 17, a law enforcement task force charged 123 defendants with mortgage fraud through Operation Stolen Dreams. Bogden estimated that the defendants caused $246 million in losses.
"That is getting almost to an epidemic level here," he said.
Commissioner Brooksley Born, however, wondered why prosecutors focused on cases in which lenders were the victim, rather than cases in which borrowers were victims. Bogden said prosecutors are pursuing cases dictated by the evidence they find.
The U.S. attorney also noted, "We've tried to do the best we can with the resources we've got."
Jeremy Aguero, principal analyst with Applied Analysis, outlined for the panel the rise and fall of the Southern Nevada housing industry. Home prices in Southern Nevada skyrocketed during the boom days before recently falling to the levels of 2000.
"The state was overbuilt and some 100,000 jobs were predicated on a level of growth and consumer spending that seemed to evaporate almost overnight," he said.
About 50,000 to 60,000 housing units, including multifamily and single-family homes, in Las Vegas are vacant, he said.
The wave of commercial real estate foreclosures came about 18 months after residential foreclosures, he said. "Prices continue to fall as vacancies rise."
Aguero said the housing market collapse has cost Nevadans billions in real estate equity.
"I think that signs existed, and certainly I missed it," Aguero said. "There is little doubt whatsoever that this community got out in front of its skis."
By contrast, few loans went into default during the boom years before 2007 because real estate values were climbing so rapidly, said William Martin, chief executive officer of Service1st Bank.
"If you made a mistake in lending, wait six months and it would correct itself," Martin said.
After 20 years of prosperity, neither bankers nor bank regulators expected an economic crash in Las Vegas, he said.
The collapse in commercial realty prices is so severe even loans backed by large quantities of owner equity defaulted, Martin said. "It doesn't matter how cautious you were (at a bank)," he said.
Thomas, former chairman of the House Ways and Means Committee, suggested Las Vegas could have reined in commercial overbuilding with "modest planning" by local government. "In some states, a certificate is needed to build a hospital room," he said.
Pointing to the state's overreliance on casinos. Thomas said, "government basing its revenue on gambling is gambling."
In an interview, Thomas predicted that Nevada won't adopt a state income tax, but he said it should start taxing services to broaden its revenue sources.
Thomas compared Nevada to the Bakersfield, Calif., area which is a small part of a giant state. "You folks control your own destiny," he said.
Steve Hill, past chairman of the Las Vegas Chamber of Commerce, told the commission that Nevada leaders have decided to target several business sectors to diversify the economy and reduce reliance on tourism. Hill said Nevada leaders have not yet identified those sectors.
Hill, founder of Silver State Materials Corp., said Nevada needs three or four more industries to provide growth for the state. Martin, however, said people have tried to diversify Nevada's economy for decades but the number of jobs created in other industries have paled in comparison with casino openings.
"I'm not very sanguine about prospects for recovery in the short term," said Phil Satre, chairman of NV Energy and International Game Technology.
Nevada's casino-based economy must wait two or three years for consumers around the country to feel confident enough to spend money on vacations and gambling sprees.
Concluded Satre: "I think we'll be the last state to recover."
Contact reporter John G. Edwards at jedwards@ reviewjournal.com or 702-383-0420. The Associated Press contributed to this report.
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Big Julie wrote on September 09, 2010 02:48 PM:
This state is doomed! All you people better move back to California while you have a chance. The rest of us will muddle through the best we can. Proabably smoking a cigarette as we go.
Madashell wrote on September 09, 2010 02:06 PM: The HAMP program is a SCAM; promoted by Geithner as being,quote, "a very carefully designed program", its purpose is to allow the banks time (and taxpayer money) to clean up the books for better earnings---NOT to assist desperate homeowners ! Thus the delays, confusion, and lies, that lead to unnecessay foreclosures for innocent people. All similar to the 1930s in NAZI Germany, and a DISGRACE that our MEDIA and GOVERNMENT brings it to the USA ! Tina B wrote on September 09, 2010 01:41 PM: I dont think we will ever recover. Not to the extent that we saw in the past. Las Vegas was an awsome place to live, but then greed took over and now all of us are paying the price. When 500 people show up for 1 job opening, you know there is a problem. It's almost like when gas prices rose out of control from Corporate Greed, the people stood up and said No More! They quit driving, traveling ect, which of course did not help the economy, but gas prices are now fairly affordable. I think that is what has to happen here. WE the people need to band together to fight Big Government! Maybe these Tea-"Baggers" have a point. Independent wrote on September 09, 2010 11:22 AM: Gee. I'm so glad all those people gathered at UNLV to talk about our problems. I feel so much better. Big surprise, they recommended tax increases. That's nice, but if Las Vegas doesn't have any other industries besides gaming, how do you tax other industries besides gaming? Joel.Menschel wrote on September 09, 2010 08:29 AM: EVERYONE IN THIS STATE OF NEVADA SHOULD ALL STOP PAYING THEIR MORTAGE PAYMENT. TELL YOUR BANK TO STICK IT WHERE THE SUN DON'T SHINE. FORECLOSE ON THE WHOLE STATE. THIS WAY EVERYONE WOULD BE AT THE AUCTION BIDING ON THE HOMES FOR WHAT THEY ARE REALY WORTH Joel.Menschel wrote on September 09, 2010 08:24 AM: IT LOOKS LIKE SOMEONE WAS REAR ENDED. CALL 877-1500 William wrote on September 09, 2010 08:16 AM: Yeah, lets diversify our local ecomomy. 1. Invite the Pharmacutical industry to Nevada. (Oh yeah, our Las Vegas trial lawyers and judges just awarded a bogus $5 billion judgement against a major Pharmacutical company) 2. Invite High Tech Energy Company's. (Oh yeah, we just killed 2,500 high paying high tech energy jobs at Yucca Mountain). 3. Encourage New job creating Businesses to come to Nevada. (oops, doubled State business fees; anti business legislature, 25% fewer business filings). Well, maybe that diversification thing isn't the answer. But at least our hosuing is getting more affordable. Maybe some more Federal Government Stimulus is the answer. |
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