Mortgage help?


State officials envisioned last month's launch of the Nevada Foreclosure Mediation Program as a triumph of government intervention and bureaucratic compassion.

Assembly Speaker Barbara Buckley, D-Las Vegas, predicted during the 2009 Legislature that as many as 17,700 families who otherwise faced eviction might be able to stay in their homes if the state compelled lenders to work in good faith toward loan modifications. This summer, after helping draft program regulations, Supreme Court Chief Justice Jim Hardesty estimated that between 1,250 and 1,500 distressed homeowners per month would pay $200 to apply for mediation. And last week, more than 100 lawyers, ex-judges and mediators underwent training to handle the anticipated flood of requests for assistance under the new law.

Today, almost six weeks after the program's highly anticipated opening, the Nevada Foreclosure Mediation Program has scheduled hearings for a total of ... 10 homeowners.

"I recognize the program is just starting, but for all the hype, I would think there would have been a lot more," said Bill Uffelman, president and chief executive officer of the Nevada Bankers Association, which supported the creation of the mediation program.

This is not a case of the state doing a poor job marketing a new government service. Rather, it is a typically massive overestimation of public demand for said service and a classic example of what happens when politicians try to manipulate market forces to achieve a desired outcome.

Ms. Buckley and many in the state's political establishment remain convinced that the best way to reverse Nevada's crushing housing meltdown is to find ways to keep struggling mortgage holders in their homes. Meanwhile, a good portion of those homeowners apparently desire exactly the opposite -- they're so far underwater and so short of assets, they just want to walk away and start over.

Why on earth would the masses of people who owe $300,000 on a home now worth $150,000 want to get new terms on that loan, especially if they no longer have a job?

The quickest way to stabilize and eventually lift the region's -- and the country's -- depressed housing prices is to churn inventory. If someone is no longer able to make their mortgage payments, let them sell their home to someone who can. There is no shortage of eager buyers -- in June, the Greater Las Vegas Association of Realtors reported 4,702 sales of single-family homes, condominiums and townhomes, a single-month record.

If the Nevada Foreclosure Mediation Program were a business, it would close.

 

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