Sunday, April 18, 2010 | 2 a.m.
- Housing recovery at least a year away, analysts say (1-21-2010)
- Economists predict more struggles for Las Vegas housing market (1-20-2010)
- Median price of new homes falls under $200,000 (12-22-2009)
- Foreclosures drop sharply for second straight month (12-9-2009)
- Report: Investors buying up Las Vegas foreclosure homes (12-2-2009)
- Nevada’s foreclosure rate tops nation once again (2-12-2009)
William Palacios had nowhere to turn the day he walked into Democratic Rep. Dina Titus’ office in Las Vegas.
The bank was preparing to foreclose on his modest, three-bedroom home — a house he had bought for $250,000 four years before on a block where they were now selling for $90,000.
The office staff remembers the 43-year-old casino maintenance worker walking in, without an appointment, his 11-year-old son in tow.
He was distressed. His 40-hour workweek had been cut to less than 30 hours, and his mortgage forbearance period with the bank was coming to a close. He was in bankruptcy, he owed money he did not have and was being told he did not qualify for further help.
Even now, a month later, Palacios strains when he recalls how close he came to losing his house. His son, his only child, worried the family would be out on the streets.
“Every day he was crying,” Palacios said. “He didn’t want to be homeless.”
The foreclosure crisis remains the pounding hangover from the easy-credit building boom that propelled Las Vegas’ growth.
In a miserable market for housing, Titus’ 3rd Congressional District stands out: Among the nation’s top 50 ZIP codes for foreclosures, it is home to more than half a dozen.
The congresswoman understands that as much as her constituents need jobs to replace those lost in the bust, they also need immediate help to stop foreclosures.
Palacios is among the 832 homeowners in Southern Nevada whose mortgage problems have been brought to Titus’ doorstep since she took office in early 2009.
Titus has done what politicians typically do when tackling a top priority. She makes speeches in Congress. She writes legislation. She dashes off letters to President Barack Obama and his Cabinet secretaries, and bends their ears in brief meetings.
But Titus has also opened her office doors to hundreds of Southern Nevada families over the past year, directing her staff to get on the phones and fight with banks and mortgage lenders to help them keep their homes.
During a tele-town hall meeting early last month, a woman named Gloria told the congresswoman she was about to lose her home and was getting nowhere with the banks.
“The bank is not responding; they’re not really helping us,” the woman said. She explained that her husband lost his job last year and they had exhausted their savings trying to keep up with the mortgage payments.
“Come to my office,” Titus told Gloria and the other nearly 3,500 residents on the call. She paused for listeners to get something to write down the name of her housing staffer and the office telephone number.
“We’ll be glad to help you intervene with the banks,” Titus said. “That’s what we do.”
Titus did not set out to create a housing counseling center in her Las Vegas office. When the congresswoman first came to Washington, she devoted just a couple of staffers to the foreclosure problem. But by summer, as she launched her “Foreclosure Fighter” website, inviting residents to share their stories, it became clear she needed to divert more manpower.
Over the past year, her office estimates Titus has saved constituents $2.4 million, most of it by reworking mortgages. (Some of the savings is from unrelated help, including securing veterans’ or Social Security benefits.)
Five staffers in Titus’ district office in Las Vegas now handle housing problems, in addition to the jobs they were hired to do. They have no formal training in real estate or mortgage finance. Each carries about 100 cases at a time. One staffer has personally handled 300 cases.
The group started out rescuing homes from foreclosure in much the same way homeowners facing foreclosure do, dialing up the banks’ call centers and asking for help. They got put on hold, transferred, disconnected.
They learned by “trial and error.” Each time they found a bank staffer who seemed competent, they jotted down the name and number, and returned with new cases. They built relationships.
They also learned to speak the jargon of modification and refinancing.
And they learned to explain the problems in terms that lenders will understand — yes, the homeowner still has a job, but his casino tips are no longer what they once were.
They have learned to cry foul when the banks require repeat copies of paperwork they have sent.
By the time Palacios walked through the office doors, the staff had honed its skills. Within a few days they were able to negotiate a lower interest rate, which dropped Palacios’ monthly payment by several hundred dollars.
The case went more smoothly than most.
Titus’ spokesman Andrew Stoddard stresses that the congresswoman’s office cannot always save homes from foreclosure. What the staff can do is help homeowners navigate what many residents have found to be an unbearably impersonal system.
“We don’t guarantee anyone anything,” Stoddard said. “We’re going to help people get their materials together, get to their lender and get a fair hearing.”
Critics may scoff, and some have, at Titus helping homeowners who had no business buying homes they couldn’t afford in the first place.
Indeed, one family acknowledged they could afford no more than $800 a month when they bought their home in a gated community in Las Vegas with a loan that would cost them $1,200 monthly. The homeowners believed they could eventually refinance to a better rate. When bills piled up, they risked losing the house.
Julia Gordon, a senior policy counsel at the Center for Responsible Lending in Washington, said the question of whether such families should be helped is practically moot. “We’re past the decision point,” she said.
With so many homeowners facing foreclosure in Southern Nevada, the economic damage that would come to entire swaths of the community if such a high volume of homes are vacated would be worse than the cost of helping keep families in houses they could ill afford, Gordon said.
“Everyone’s in trouble: The borrower’s in trouble; the lender’s in trouble. How do we go through this with the least amount of damage?” she said. “Yes, that does mean that some families that should have never been in that house are going to stay in that house.”
Titus will likely face a difficult re-election this fall, as she seeks to keep her seat in a district she won in 2008 with less than 50 percent of the vote.
The freshman congresswoman knows her political fortunes are largely tied to the economic fortunes of her district. Yet Titus, a professor of political science for most of her adult life, also knows that a problem this big has no easy solution.
What perhaps most captures Titus’ increasingly detailed attention to the housing problem can be seen in the letters she has written over the past year, first to Treasury Secretary Timothy Geithner, to the banks and now to President Obama.
Shortly after taking office, Titus began the first of what would become a yearlong correspondence with Geithner, urging him to do more to help homeowners in hard-hit areas and hold lenders accountable to their customers.
In that first letter, she asked Geithner to apply unused Wall Street bailout money to help severely underwater homeowners — those who owed more than their homes were worth, as is the case for the great majority of homeowners in Southern Nevada. “I am worried that you see this problem as minor and that enough has been done to help homeowners with negative equity in their homes,” she wrote last April.
Last summer, Housing Secretary Shaun Donovan visited Las Vegas to announce that more severely underwater homeowners would become eligible for federal help.
By fall, Titus was telling Geithner that her new foreclosure website received 200 cases during its first two weeks of operation, and “almost every submission on my website details frustration due to lack of communication between the homeowners and their servicer … This lack of communication is simply unacceptable.”
Titus also recently scolded the big banks, in a letter to their top executives, for having “lost too much paperwork and returned too few calls” and urging them to send more staff to Nevada.
A Bank of America spokesman said the company had begun beefing up resources in the state.
This year, Titus took her concerns directly to Obama. On the 12th of each month, the congresswoman writes a letter to the president, pressing him to turn his attention to housing solutions.
She often offers Obama ideas for new programs. Last month’s letter suggested he push the banks to reduce principal, not just interest, on loans. Earlier she told Obama that in the time since she had last written, 7,100 more notices of homeowner default had been filed in Clark County.
A White House spokesman said the president receives more than 100 letters a month from lawmakers, and that they are typically passed along to the appropriate agencies for responses.
“The president values the leadership that Rep. Titus is providing to the homeowners of Southern Nevada and her tireless advocacy to help reduce the burden on so many in her state,” White House spokesman Adam Abrams said.
The White House notes that while visiting Las Vegas this year, Obama announced that Nevada would receive special funding — what others have said will be more than $100 million — through a new program for the five hardest-hit foreclosure states.
Palacios and his family are secure for now. He is still working fewer hours than he would like, and his wife’s part-time work as a casino porter is sporadic. But the Cuban immigrant is hopeful the jobs that drew his family to Las Vegas from Florida nearly 15 years ago will be available again.
Palacios is grateful for the help from the congresswoman’s office, and hopes he has a chance to meet her to tell her so.
“I would have lost the house,” he said. “I appreciate everything she did.”
In a district where the November election may be decided by a slim few votes, Titus just picked up one.