Las Vegas real estate, mortgage, appraisal blog

According to a recent article in the Wall Street Journal the rash of defaulted mortgages that have cropped up have lenders poring over their paperwork and discovering that a good portion of them were not owner-occupied homes, despite being purchased as such. In quite a few of the situations it was lies on loan applications that enabled these borrowers to get more favorable terms for their loan. A study in defaulted loans that occured within 12 months of the loan, despite the owner having a good credit score, was done by Fitch Ratings and two thirds were cases of borrowers who said they intended to live on the property and never did.

It’s estimated that up to 60% of the foreclosures in this last year here in Las Vegas involved this same issue, non-owner occupied homes. That is a staggering statistic. If underwriters were not paying attention or turning a blind eye to this practice, certainly they won't be anymore now in light of these figures.  We all saw how important closing the deal was in the boom times of earlier this decade, but everyone is learning again that it's not the most important thing.

With investors more willing to walk away from their investment than home owners it may be that these same investors are the ones who made the boom and bust so much larger than they would have been otherwise. Once prices stopped rising, investors stopped buying.