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This Time Around, Homeowners Are Better Positioned To Weather a Recession

This Time Around, Homeowners Are Better Positioned To Weather a Recession

Though fears of an oncoming recession remain potent, Las Vegas mortgage experts say existing and aspiring homeowners shouldn’t worry about a housing market crisis to rival that of the late 2000s.

Mortgage providers are much more well-equipped to face economic calamity than they were in 2008, and homeowners just need to know how to ask for help if they need it, said Andrew Leavitt, president of the Nevada Mortgage Lenders Association’s board of directors.

“Even though we’re going to go into a recession, the only time that housing values dipped as much as they did was ’08, and that was because of fraud,” Leavitt said. “And if you look at all of our prior recessions in U.S. history, housing values usually remain resilient and do not increase during a recession because it’s a tangible asset.”

Homeowners who are not familiar with the mortgage industry might be easily spooked by notices of foreclosure or short sale, Leavitt said, without realizing the number of options available to keep their home—such as federal COVID-19 relief or flex modifications that can lower their payment amount in times of hardship or uncertain employment.

Homeowners struggling to pay their mortgage can also reach out to the CARES Housing Assistance Program (CHAP), he said, which allocates up to $20,000 toward owed payments.

“And where these funds come from is actually from 2008,” Leavitt said. “Las Vegas was the hardest-hit city in the entire nation as far as the client property values, and there were bills that were passed … that gave us what’s called the Hardest Hit Fund.”

Financial hardships in paying mortgages haven’t necessarily increased, but rising rates of debt in other areas can affect one’s ability to make a payment, said Ryan Erekson, a loan officer at Guild Mortgage.

“So a lot of questions I’m getting are around just managing debt, or people asking if there’s any way for them to skip payments or lower payments to help with other debts they have,” Erekson said. “And then when those conversations come up, there’s a few different conversations we kind of work through to try to find solutions for them.”

Wells Fargo is encouraging customers to take advantage of the Homeowner Assistance Fund—both federally and at the state level—which can provide thousands of dollars in aid to those feeling the lingering effects of COVID-19 or who may make their mortgage payment but, as a result, struggle to pay property insurance and similar expenses.

“They’re putting their mortgage first,” said Martin Sanchez, Wells Fargo vice president of mortgage sustainability in the western region. “But we want to ensure our customers are comfortable with making their mortgage payment—not a hiccup or flat tire away from really not being able to make it or sincerely struggling.”

Though the Nevada Homeowner Assistance Fund primarily began as a response to the pandemic, it’s since been adjusted to reflect recurrent, relevant financial hardships, according to Rumaldo Chaidez, housing and education coordinator for Chicanos Por La Causa, a nonprofit that has supported Las Vegas homeowners for more than a decade.

Fears of widespread foreclosures following the pandemic have not come to fruition, Chaidez said, though his organization has seen a lot of need when it comes to homeowners paying their mortgages, particularly due to decreased employment or unemployment.

Applications for assistance have steadily increased recently, he said, and Chicanos Por La Causa partners with the Homeowner Assistance Fund to act as a middleman for people seeking aid.

“Our job is to do outreach to these folks, and get them in the door,” Chaidez said, noting that some homeowners might not seek assistance due to technological barriers. “People tend to start the application and kind of let it go, but that’s what we’re here for. We’re here to walk them through the process and complete that application to either get the approval or the denial.”

Most providers are willing to listen to a plea to postpone a forced sale while homeowners seek assistance, he said, and the worst they can do is say no. “It is never too late to ask for help,” Chaidez said.

All mortgage companies have a hardship hotline for customers, with options ready for assistance, Erekson said. The primary way customers can face financial hardship or prepare for it is by openly communicating with their mortgage companies, he said, and seeking help when they need it.

“Mortgage companies honestly don’t want to foreclose on people,” he said. “They want them to stay in their homes, they want them to make payments and they’re more than willing to try to help.”

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