BluefoxToday blog : Creative mortgage lending to help Palms Place

Creative mortgage lending to help Palms Place

Luxury high-rise condos and condo-hotels were all the rage in Las Vegas only a few short years ago. Developers couldn't put them up fast enough on the Strip and elsewhere in town to satisfy all the demand. And of course there was all sorts of mortgage money available to grab a unit or two for one's portfolio. Life was good then.

Today that rosy picture has seen a tragic makeover. Demand for the product has waned, mortgage funding has practically dried up and hundreds of units sit out there vacant.

Palms Place, a 599-unit luxury tower, obviously lost its patience in waiting for the real estate market to turn around and decided to do something to get its unsold condos closed. It worked out a deal with the same group of banks that funded the project itself to participate in seller-backed financing. Buyers who have put down at least 20% will be eligible for this program and based on the size of the down payment will get a mortgage interest rate between 4.25-7.00%. If the plan works out well, it conceivably will be expanded to help other buyers to close on their condo-hotel units.

This type of an arrangement could be something that other troubled high-rise projects in Las Vegas could take a closer look at. Let's be honest, the market is largely at a standstill. It would give the lenders that have financed these towers a chance to get a decent chunk of their money back. It might not happen in a short time frame, but at least something is being done to get them there one of these days. It's very probable that the luxury condo segment in Southern Nevada, as over-built as it is, will take quite a bit longer to recover than for instance the single-family product.

Being creative in finding mortgage money just might be a better solution than foreclosing on these gleaming high-rise glass structures

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Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 6 commentsEsko Kiuru • June 13 2009 07:09PM

Comments

Well this is a step in the right direction!  I am seriously wondering how the city center condos are going to close.

Everyone is banking on city center to get our employment back on track but if we can't fill our hotels and we can't finance our condos then no one (I should say "not too many are") is going to walk into city center and therefore the retail space and jobs will be non-existent!

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) about 9 years ago

Jeff, you have to do what you have to do to, at least they are trying something.  As a famous quote goes "better to have tried and failed then to have never tried at all".

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 9 years ago

Esko, it is good to see some creative thinking out there.  I thought it had all but vanished from America!  I hope that it works and causes others to relook there practices.

Posted by Tim and Pam Cash, Real Estate Professionals - Clarksville TN (Crye-Leike (Sango)) about 9 years ago

Renee,

MGM Mirage's CityCenter should look into this kind of an arrangement.

Posted by Esko Kiuru about 9 years ago

George,

Let's see how it works out for Palms Place.

Posted by Esko Kiuru about 9 years ago

Tim and Pam,

It's a great idea in this depressed real estate market.

Posted by Esko Kiuru about 9 years ago

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