TRENDS IN DELINQUENCIES
AND FORECLOSURES IN
NEVADA
April 2009
Jan Bontrager, Community Development Department,
Federal Reserve Bank of San Francisco
Outline of Presentation

National Trends
 Rising
foreclosures
 House price declines
 Rising unemployment

Nevada
 Trends
in foreclosure
 Housing market softening
 Rising unemployment
 Scale of loan modifications still falls short of need
National Trends
National Trends

Foreclosures rose steadily in 2008, with wide
repercussions for US economy
 After
a slight decline in the national foreclosure rate in
the 3rd Quarter of 2008, rose again in 4th Quarter

Factors driving foreclosures nationally
 House
price declines
 Rising unemployment, coupled with turmoil in financial
and credit markets, may further influence foreclosure
rate going forward
National Foreclosure Starts Rose Slightly in 4th
Quarter of 2008
National Foreclosures Starts
Percent of All Loans
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2000
2002
2003
2004
2005
2006
Source: Mortgage Bankers Association, National Delinquency Survey, 4th Q 2008
2007
2008
Nationally, House Prices Continue to Decline
Case-Shiller National House Price Index
(2000 = 100, quarterly)
200
180
160
140
120
100
2000
2001
2002
2003
Source: Case - Shiller Home Price Index, 4th Q 2008
2004
2005
2006
2007
2008
Recession Marks Significant Jump in
Unemployment
U.S. Unemployment Rate
12
10
Unemployment Rate
8
6
4
2
0
1989
1993
1997
Recession
Source: Bureau of Labor Statistics
2001
Unemployment Rate
2005
2009
Nevada Trends
Nevada Has Highest Foreclosure Rate in the US
Foreclosure Starts (Percent of All Loans)
3
2.5
2
1.5
1
0.5
0
Alaska
Washington
Oregon
Utah
4Q 2005
Idaho
4Q 2006
Hawaii
4Q 2007
US
4Q 2008
Source: Mortgage Bankers Association, National Delinquency Survey, 4th Q 2008
California
Arizona
Nevada
Nevada Saw a Continued Increase in Foreclosure Starts
in 4th Quarter 2008
Nevada Foreclosure Starts
(Percent of All Loans)
Foreclosure Starts (Percent of Loans)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
2007
Source: Mortgage Bankers Association, National Delinquency Survey, 4th Q 2008
2008
Nevada’s House Prices Have Dropped
Significantly
FHFA House Price Index (formerly OFHEO)
(2000=100, quarterly)
240
Nevada
200
2000=100
FHFA House Price Index
220
180
United States
160
140
120
100
2000
2001
2002
2003
2004
2005
Source: Federal Housing Finance Agency (formerly OFHEO), 4th Quarter 2008
2006
2007
2008
Metropolitan Areas are Similarly
Experiencing Declines in House Prices
FHFA House Price Index (formerly OFHEO)
(2000=100, quarterly)
240
Carson City
200
2000=100
FHFA House Price Index
220
180
Reno
160
Las Vegas
140
120
100
2000
2001
2002
2003
2004
2005
Source: Federal Housing Finance Agency (formerly OFHEO), 4th Quarter 2008
2006
2007
2008
Foreclosures in Nevada Extending into All
Mortgage Products
Foreclosure Starts by Loan Type
10.0
9.0
Subprime ARM
8.0
Percent of Loans by Type
7.0
6.0
5.0
Subprime Fixed
4.0
Prime ARM
3.0
2.0
1.0
Prime Fixed
0.0
2005
2006
2007
Source: Mortgage Bankers Association, National Delinquency Survey, 4th Q 2008
2008
Nevada Saw High Rates of High-Cost Lending During
Subprime Boom, Above National Average
Percent of All Borrowers with High Interest Conventional Loans, 2005
35%
30%
27.3%
28.0%
28.1%
Arizona
Utah
29.2%
25.9%
25%
22.7%
23.1%
23.6%
Alaska
Oregon
Washington
24.3%
20.4%
20%
15%
10%
5%
0%
Hawaii
Source: Home Mortgage Disclosure Act Data, 2005
Idaho
California
USA
Nevada
High Cost Lending in Nevada More Prevalent
Among Minority Borrowers
High Cost Conventional Loans by Race, 2005
70%
60%
50%
40%
30%
20%
10%
0%
All borrowers
White borrowers
Asian/Pacific Islander
borrowers
Source: Home Mortgage Disclosure Act Data, 2005
Native American
borrowers
Black borrowers
Hispanic/Latino
borrowers
Unemployment Rate in Nevada also on the
Rise, Above US Average
Unemployment Rate
12.0
10.0
Nevada
8.0
6.0
United States
4.0
2.0
0.0
2000
2001
2002
2003
Source: Bureau of Labor Statistics, March 2009
2004
2005
2006
2007
2008
2009
Employment Trends by Industry in Nevada
Total Employed
(thousands)
Nevada
Total
Percent Change
Feb-09
1,217.7
1-mo.
-7.6
3-mo.
-7.5
12-mo.
-5.2
Leisure & Hospitality
Trade, Transportation &
Utilities
318.1
-7.2
-7.5
-6.2
226.2
-11.0
-5.8
-3.4
Government
Professional & Business Svcs.
160.8
145.1
-7.2
-7.9
-4.1
-9.6
0.4
-6.9
Construction
101.6
-18.1
-25.3
-17.9
Educational & Health Srvs.
97.1
3.8
3.8
3.1
Financial Activities
59.4
4.1
-3.3
-5.6
Manufacturing
45.8
-5.1
-10.6
-7.3
Other Services
Information
Natural Resources & Mining
36.8
14.3
12.4
-9.3
-14.6
-17.4
1.1
-9.4
-6.2
-0.8
-5.2
1.6
Source: Bureau of Labor Statistics, December 2008
Major Declines in Construction/Real Estate, But National
Recession Affecting Tourism Employment As Well
Industry Employment Growth: Leisure & Hospitality
(year-over-year, monthly)
10
8
6
United States
4
2
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
-2
Nevada
-4
-6
-8
Source: Bureau of Labor Statistics, March 2009
2009
Nevada Foreclosure Data Maps
Nevada Data Maps
Distribution of Lending Volumes
September 2007
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007
Nevada Data Maps
Areas Affected by Concentrated Foreclosures
September 2007
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007
Nevada Data Maps
Areas Affected by Concentrated Foreclosures
April 2008
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, April 2008
Nevada Data Maps
Areas Affected by Concentrated Foreclosures
November 2008
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008
Nevada Data Maps
Areas Affected by Concentrated Foreclosures
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Las Vegas Data Maps
Areas Affected by Concentrated Foreclosures
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Las Vegas Data Maps
Areas with Concentrations of REO Properties
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Las Vegas Data Maps
Areas at Risk of Additional Foreclosures
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Reno Data Maps
Areas Affected by Concentrated Foreclosures
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Reno Data Maps
Areas with Concentrations of REO Properties
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Reno Data Maps
Areas at Risk of Additional Foreclosures
February 2009
Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009
Loan Modifications and Repayment Plans Reach
Approximately 6,000 Distressed Borrowers a Quarter
Nevada Loan Workouts
4,000
Number (Adjusted for Hope Now Servicers)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Q3 2007
Q4 2007
Q1 2008
Repayment Plans
Source: Hope Now Alliance Servicing Data, 4th Quarter 2008
Q2 2008
Loan Modifications
Q3 2008
Q4 2008
Yet, Workouts Still Fall Short of Need
Foreclosure & Delinquencies v. Loan Workouts in Nevada
4th Quarter 2008
45,000
Number (Adjusted for Hope Now Servicers)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Serious Delinquencies
Foreclosure Starts
Foreclosure Sales
Source: Hope Now Alliance Servicing Data, 4th Quarter 2008
Repayment Plans
Loan Modifications
Conclusions
Conclusions


Multi-pronged strategy is needed to stem
foreclosure crisis
Continued foreclosure prevention efforts are critical
 Foreclosure
Prevention: Borrower Outreach, Refinance
and Loan Modification (including principal reduction)
 Reaching
these borrowers now may help to prevent
unnecessary foreclosures
 Encourage borrowers to contact the Hope Hotline by calling
(888) 995-HOPE or visiting www.995hope.org
Conclusions

Other strategies that can help to mitigate the
negative impacts of foreclosure on families and
neighborhoods
 Addressing
vacant properties: ensuring that servicers
maintain properties
 REO property disposition: return REO properties into
productive use, affordable housing
 Ensuring continued access to credit and homeownership:
credit repair, financial education, responsible lending
For More Information:
FRBSF Community Development Website



Links to other resources
and research on
foreclosure trends and
mitigation strategies
All publications,
presentations available on
our website
Conference materials also
posted shortly after
events
http://www.frbsf.org/community/