Mortgage lending still tight in Nevada

Q: I went through a short sale last October and was told that I have two years to wait until I may buy another home. I haven't checked my credit in a while. However, I know that it is still high enough to purchase a home now. The question in my mind is if so many people in Las Vegas are in the same situation and are renting, why do we have to wait so long to buy a home?

Homeowners do more for our city's economy than renters. I am frustrated because I will have a down payment saved by next October and I still will not be eligible to buy a home when these homes are in a price range that I can afford.

A: I'm not sure who advised you that you must wait two years after short selling your last home before you can obtain a mortgage to buy another home. But, like many things in today's housing market, it may not be that simple.

First, let me say that I'm not a mortgage professional. But since I deal with issues like yours daily, let me at least answer your question from the perspective of a Realtor.

Yes, you should expect your credit score to go down after a short sale or foreclosure. Mortgage lenders require time between a short sale or a foreclosure to assure that you are not putting the lender at risk and have re-established good credit.

No one can look to see what circumstances brought you to your short sale or foreclosure, such as a job loss, medical issues, payment increases or maybe just a strategic financial decision driven by the tough local economy. Since all borrowers must be looked at equally, guidelines are established and followed very strictly.

There is private money available in the market for people who've just gone through a foreclosure or a short sale to purchase another home, but the interest rates tend to be higher than normal market rates due to the increased risk lenders associate with such loans.

We, as Realtors, agree with you that this is an issue worth addressing. We have informed our local, state and national elected officials that current lending practices are so tight in Nevada that an average person still has trouble obtaining a mortgage loan. No one is calling for the kind of easy credit that fueled the mortgage meltdown of recent years. But we'd like to see a balance in the way banks evaluate borrowers.

To compound matters, we are now feeling the pinch of a very tight local housing inventory. As of last month, we have about a six-week supply of existing homes. I'm afraid that we may continue to see short sales and foreclosures dominate the housing market in Nevada for some time to come, especially now that the largest lenders have slowed their foreclosure processes to a relative snail's pace. The local foreclosure rate has fallen dramatically since Oct. 1, when a state law known as Assembly Bill 284 took effect and required lenders to provide additional documentation before beginning the foreclosure process.

Let's hope the current historically low mortgage interest rates will remain low so that when you are ready and able to buy another home, we will have enough homes on the market for you to find something suitable in your price range.

Now, we're seeing would-be buyers making multiple offers on most properties. Meanwhile, sales prices are sometimes exceeding the appraised value of the home, somewhat reminiscent of the housing boom we experienced in the past decade.

Kolleen Kelley is the 2012 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. GLVAR has nearly 11,000 members. To ask her a question, email her at ask@glvar.org. For more information, visit
www.lasvegasrealtor.com.