Consumers showing frugality, but housing pain persists

Consumers have changed their spending behavior during the economic downturn, saving more and reducing credit card debt, but that hasn’t resolved their housing situations, a Las Vegas financial adviser said Thursday.

Michele Johnson still sees 400 to 500 people a week coming to Consumer Credit Counseling Services, which has changed its name to Financial Guidance Center to better reflect the broad range of services offered by the HUD-approved, nonprofit United Way member agency.

The previous name was too vague, Johnson said at a celebration of the agency’s 40th anniversary. When people thought of Consumer Credit Counseling Services, they thought of credit card debt, which is only one component of services offered.

Debt management was the agency’s foundation, but housing is now the major concern for just about everybody in Las Vegas, the president and chief executive officer said.

Her agency has provided more than $3.5 million in down payment assistance for first-time home buyers, and helps homeowners navigate the complex and often frustrating road to loan modification and foreclosure alternatives.

Financial Guidance Center is marketing its services and programs to thousands of Nevadans who continue to struggle under the incredible strain the economy has placed on the state, Johnson said at Stan Fulton International Gaming Institute at University of Nevada, Las Vegas.

“The Great Recession that’s still going on … it’s different for us than other parts of the country,” Johnson said. “I’m hopeful that we learned to save for that rainy day and inevitably it comes. Everyone thought we were recession-proof, and that’s proven not to be true.”

Since the financial crisis emerged in 2008, U.S. household debt has fallen by $584 billion, or 15 percent relative to disposable income, which is more than in any other country, according to a report from McKinsey Global Institute.

At this pace, Americans could reach sustainable debt levels by the middle of 2013, the report concluded.

“They haven’t been spending the same way,” Johnson said. “I think people have been very cautious. They’re not sure about their jobs. Savings are up and spending is down.”

Over 40 years, Consumer Credit Counseling Services assisted nearly 500,000 individuals and households with financial counseling and education. It brought back $18.3 million in tax returns for more than 17,000 households through an eight-year partnership with AARP and the Internal Revenue Service.

Nevada Attorney General Catherine Cortez Masto said the agency has been instrumental in dealing with the housing crisis.

“We’ve seen foreclosure scams go through the roof,” she said. “People are seeking a loan modification and can’t get the banks to work with them. They need help understanding the foreclosure process, and scammers come in and take their deed of trust.”

During a video presentation of client testimonials, Casey Eckels of Las Vegas talked about how the recession had taken a toll on the tips he earned as a service worker in the casino industry.

Eckels said he didn’t want to “walk away” from his house where he and his wife were raising two children.

He had heard about people getting burned by “fly-by-night” loan modification companies, so he contacted Consumer Credit Counseling Services because it was HUD-approved. The agency was able to work out an agreement with his lender that lowered his mortgage payment from $2,400 a month to $1,100 a month and would reduce the principal by $60,000 over three years if payments were made on time.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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