Foreclosure Crisis: The Winners and Losers

LAS VEGAS -- The meltdown in the housing market has focused media, public, and government attention on those who lost - be it a job, a home, or savings accounts. However, not everyone was a loser during the crisis and associated recession. In fact, some individuals, corporations and even certain types of retailers have benefited from windfalls or basic shifts in consumer spending.


Former Wall Street executives Angelo Mozilo, Charles Prince and Stanley O'Neal
In 2008 all three were named in a Time magazine top 10 list of individuals who received the biggest golden parachutes in recent U.S. corporate history, even though they guided companies that got hammered by the subprime mortgage loan bubble. Mozilo had been the CEO and chairman of Countrywide Financial Corp., by far the biggest residential mortgage lender in Southern Nevada in 2005 and 2006, with $28.6 billion in loan volume when housing prices peaked. But when massive numbers of homeowners began defaulting on loans in 2007 it nearly drove Countrywide into bankruptcy. Countrywide was eventually purchased by Bank of America, but Mozilo walked away with $184 million, including Countrywide stock he sold off before the Bank of America acquisition. Prince was CEO and chairman of Citigroup, which was the sixth largest residential lender in the Las Vegas metro area from 2005 through 2008 with $7.4 billion in loan volume. Citigroup also took heavy losses from the subprime debacle but when Prince resigned in 2007 he left with $99 million in pension and company stock on top of the $53 million he collected in salary and bonuses over the previous four years. O'Neal, former chairman and CEO of Merrill Lynch & Co., pocketed $161.5 million when he left the company in 2007, even though it came at a time when Merrill Lynch suffered historic financial losses.  

The Wall Street Journal reported that Mozilo was the third highest paid corporate executive in the country from 2003 through 2008, receiving $470.7 million in cash and stock proceeds. Others who made the list were former Bank of America CEO and Chairman Kenneth Lewis, $81 million in cash and stock proceeds, and former Wells Fargo CEO and Chairman Richard Kovacevich, who took in $96 million in cash and stock proceeds. Bank of America and Wells Fargo were Southern Nevada's second and third largest home mortgage lenders during the tenures of Lewis and Kovacevich.

Goldman Sachs
In December 2007 the Wall Street Journal declared that investment banking and securities company Goldman Sachs was one of the biggest winners of the subprime mortgage crisis. The newspaper reported that the company generated nearly $4 billion in profits in 2007 by betting that securities backed by risky home loans would fail.

Banking Industry
While individual banks took a big hit from subprime loans that went sour the industry was bailed out by the Troubled Asset Relief Program, which was signed into law in 2008 by President George W. Bush. Though billed as a way to stabilize the financial sector of the economy, the program was roundly criticized by many politicians who oppose bailouts and by underwater homeowners who felt it was unfair that they weren't also being bailed out. In March the Congressional Budget Office estimated that TARP would disburse $432 billion, well below the initial $700 billion estimate.
Bubble Sellers
Homeowners in Southern Nevada who sold their homes in 2006, when prices peaked, benefited from the "sell high" adage.

Bottom Feeders
Individuals and other investors who snapped up Southern Nevada homes at rock bottom prices this year benefited from the "buy low" adage, though it is too early to tell whether home prices have bottomed out. But they're getting great bargains. Of the bank auctioned homes sold in Clark County in September the average amount owed by the prior owner was $303,000 but the average sales price at auction was only $168,000, according to

Bankruptcy Lawyers
Many area law firms have beefed up their bankruptcy law sections to take advantage of the flood of bankruptcy filings in Clark County. There's plenty of work to be had in Nevada, which leads the nation in bankruptcy filings per capita. Bankruptcy filings in Clark County more than doubled from 12,124 in fiscal 2008 to 25,303 in fiscal 2010 before tailing off somewhat last fiscal year.

Credit Card Relief Companies
Companies that specialize in credit card debt consolidation or credit counseling have aggressively gone after the growing market of consumers with poor credit ratings. Nevada is fertile territory because it has the nation's second lowest average credit scores, exceeding only Texas, according to  

Clothing Retailers, Restaurants and Bars
Going back to fiscal 2005, clothing retailers in Clark County have seen taxable sales climb 65.7 percent from $1.78 billion to $2.95 billion in fiscal 2011, which ended in June. Restaurants, bars, food caterers and places that provide lodging for travelers collectively saw a more modest 16.6 percent increase in taxable sales from $6.73 billion in fiscal 2005 to $7.85 billion in fiscal 2011.


Underwater Homeowners
That covers 63.3 percent of the mortgaged homes in the Las Vegas metro area, tops in the nation among big cities. As of June 269,560 homes in the metro area were underwater. Las Vegans with mortgages also owed $14.1 billion more than their property was worth that month, by far the nation's poorest debt-to-value ratio. That translated to $1.20 in mortgage debt for every $1 in home value.

Bubble Buyers
The hardest-hit homeowners are those who bought homes in or near the spring of 2006, when Southern Nevada prices peaked. From June 2006 through June 2011, home prices in Nevada fell 58.14 percent, tops in the nation according to the Federal Housing Finance Agency.

State of Nevada
Already faced with severe belt-tightening when the battered economy drained tax revenues, the state found itself confronted with another big dilemma -- skyrocketing demand for taxpayer-supported welfare programs. Medicaid caseloads rose 66.8 percent from fiscal 2007 to fiscal 2011, according to the Nevada Division of Welfare and Supportive Services. The Child Health Assurance Program, which provides Medicaid to children and pregnant woman, experienced a 176.3 percent caseload increase over the same time frame while the Supplemental Nutrition Assistance Program, which provides food assistance, had a 169 percent increase.

Clark County and Cities
The county, which collected $383.1 million in property taxes in fiscal 2009, expects only $275 million this year, a 28.2 percent plunge. If current budget projections come true, North Las Vegas will have been hardest hit, with the city expecting property tax revenue to be 42 percent lower this year than in fiscal 2009, compared with a 31.8 percent decline in Las Vegas and 26.3 percent drop in Henderson. North Las Vegas in September also had a bankruptcy filing for every 53 housing units, roughly twice as much foreclosure activity per capita as in the county, Las Vegas and Henderson, according to Shrinking property tax revenue, caused by homes that have lost considerable value since the housing bubble burst, translates to laid off city and county employees and fewer government services.

Apartment Complexes
Multi-family housing units in Clark County had an 11.5 percent vacancy rate in 2010, compared with a 6.4 percent vacancy rate in 2005. With investors snapping up homes at bargain prices and looking to rent them out, many potential apartment dwellers are finding they can get more space in a home than in an apartment for about the same rent.

Zip Code 89031
This North Las Vegas zip code had the valley's highest inventory of housing units with notices of default (1,723) and bank-owned residences (581) as of September, according to The zip code is bordered by Craig Road to the south, Decatur Boulevard to the west, Centennial Parkway to the north and N. 5th Street to the east.

Construction workers
In the Las Vegas metro area the number of construction jobs fell from 109,800 in September 2006 to an estimated 41,900 this September, a 61.8 percent decline. Other private sectors hit hard were manufacturing, which shed 33.5 percent of its jobs, and financial activities, with 30.1 percent fewer workers.

Furniture, Building Material and Auto Retailers
Furniture stores in Clark County saw taxable sales nosedive 72.7 percent from $1.98 billion in fiscal 2005 to $540 million in fiscal 2011. Also hard hit were businesses that sold building material or garden equipment, down 57.2 percent, and motor vehicle and parts dealers, who suffered a 42.9 percent decline.

Federal Loan Modification Programs
Though there were 269,560 homes in the Las Vegas metro area with mortgages underwater as of June, according to real estate analytics firm CoreLogic of Santa Ana. Calif., relatively few Southern Nevadans have received help from federal programs intended to keep struggling homeowners in their homes. One of the most highly publicized federal housing programs, the Home Affordable Modification Program, had resulted in only 14,327 permanent loan modifications in the Las Vegas area through August, with 2,455 others participating in the program on a trial basis. 

MGM Resorts International
Clark County's largest property taxpayer, MGM Resorts International, saw its property value plummet 34.5 percent from $13.3 billion in fiscal 2008 to $8.7 billion this fiscal year. Other gaming companies also suffered considerable losses in property values, including Caesars Entertainment Corp., down 33.4 percent from $6.2 billion to $4.1 billion, and Boyd Gaming Corp., down 46.7 percent from $2.1 billion to $1.1 billion.

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