Nothing is certain in Las Vegas but slow death at the gaming tables, low taxes - and a booming housing market.
A decade ago, this city - which earned its nicknames Glitter Gulch and Sin City with a history of gambling, quickie weddings, and 24-hour pawnshops - started drawing people from all over the country.
The number of single-family homes has skyrocketed since then - from 110,826 in 1986 to 201,191 in 1995. And the population is expected to double in the next 10 years.
Mortgage lenders in the area have been involved in a high-stakes, high- yield game since the boom began. But successful players warn that it is a tough market that demands a strong local presence and a high level of customer service.
Total mortgage originations for home purchases have almost doubled in the last five years - from $1.58 billion in 1991 to $3.01 billion in 1995, according to TRW Redi Property Data, Anaheim, Calif.
Now there are indications that the long boom in Las Vegas, far from running out of steam, will continue unabated. The city has been positioning itself fairly successfully as a place to bring the whole family for a vacation, thus providing more jobs and a more stable economy.
In a bid to keep the momentum going, it is now taking the next step, further recasting itself as a place where families can live, not just vacation. And the process has not gone unnoticed by lenders.
But lending in Las Vegas is not an easy game to play. It's a volatile business, where competitors certainly have got to play hard but must follow the community's rules to keep up, local mortgage people say.
"Every year since the market has increased, if you didn't get bigger, you got left behind," said Jerome Niedorf, manager of the realtor services division for Weyerhaeuser Mortgage Co. "You've got to keep up the pace."
California-based Weyerhaeuser has been the largest originator of purchase mortgages in Clark County, Nevada, for several years, according to TRW Redi. In 1995, the company made 2,297 such loans, for a total of $267 million. That gave it a market share of just under 9% and put it far ahead of the pack.
Recently, Weyerhaeuser stopped doing refinancings altogether. "We've just got too much origination business," said Mr. Niedorf. "Our realtors get upset if they have to wait to close a deal because we're backed up with refi volume."
In 1995, Norwest Mortgage Co. and Republic Mortgage Co. ranked second and third, respectively, behind Weyerhaeuser in purchase originations, according to TRW Redi. With Norwest's recent purchases of Primerit Bank, Las Vegas, and Directors Mortgage Loan Corp., Riverside, Calif., it may have a shot at displacing Weyerhaeuser as No. 1.
On a midweek afternoon, Weyerhaeuser's East Flamingo office is buzzing. Two receptionists answer constant phone calls, prospective homebuyers rush in and out the doors, and a real estate agent dressed in an all-black cowboy outfit - except for a white 10-gallon hat - leafs through magazines.
The company is trying to encourage homebuyers to get qualified for mortgage loans before shopping for a house. "Realtors are gun-shy, because a lot of people come here to start over. They want people counseled before putting them in their car and showing them homes," Mr. Niedorf said.
About 10% of the company's business starts with preapproving homebuyers, he noted.
As anyone in the housing business here will tell you, there are lessons to be learned about Las Vegas.
First and foremost, you don't build, buy, sell, or finance a house here like you do in most of the rest of the United States. It's a service- oriented town, and the mortgage business is no different. Lenders rarely compete on price. Instead, they boast about turnaround time and close relations with local real estate agents and builders.
"Even companies that are low-priced in other markets are right with us here, but it's a tough shop for service," said Mr. Nierdorf.
There are more than 40 builders in town, and all of them have a preferred corral of lenders. To encourage homebuyers to take out a mortgage with one of them, builders often will reduce rates or points on the loan.
Some 40% of Weyerhaeuser's mortgages are made on new construction. About half is originated through a real estate agent and the other half directly through the builder.
"Since 1988, I've been riding a roller coaster," said Rick Piette, vice president of Weyerhaeuser and manager of the company's builder mortgage division. That year, the company originated $15 million through builder links. In 1993, the volume was $350 million.
Veterans of the Vegas home-loan scene insist that it's vital to do the underwriting in town. "If your underwriting staff is sitting in Cleveland, they often think there is something kinky in a Las Vegas loan file," Mr. Niedorf said. "They still think of Las Vegas as Sin City. They don't realize that this is a young, growing city, and that these are good people."
One national lender that entered the market a few years ago was wiped out because it tried to underwrite Las Vegas loans outside the state and rejected too many of them, he said.
The new people in town tend to be "gunslingers, the entrepreneurs," said Mr. Piette of Weyerhaeuser.
The transplants tend to have lots of ambition but little cash, and are looking for a way to start over. Many of them - up to 70%, by some estimates, are former California residents, escaping the economic woes of the Golden State.
About 35% of Weyerhaeuser's business is in FHA and VA loans, Mr. Niedorf said, because the two government programs provide cash-poor buyers with the ability to get into homes, and their credit offices are more understanding than conventional lenders that follow the guidelines of secondary marketers Fannie Mae and Freddie Mac.
Less than a year ago, Weyerhaeuser opened a B-credit division, targeting homebuyers with credit problems. "In the past, if we had a loan that didn't work, we'd have to decline it and recommend the guy down the street," said Mr. Niedorf. "Now we can deal with it ourselves."
Another factor that makes business in Vegas different is a generous supply of the newly rich. The gambling capital of the world is also a land of get-rich-quick schemes, some of which actually work. Consequently, it is a city full of self-made men and women, who often ride the housing boom to the top.
A case in point is Mike Shustek, owner of nine real estate-related companies. Five years ago, Mr. Shustek, a California transplant, was a dealer in a casino. "Basically, I was almost homeless five years ago," he said. "Now, I don't mean to brag, but I've got more money than I know what to do with. I could retire right now, but this city is just going to keep on going."
His first step toward fortune five years ago was running a newspaper ad in which he sought an investor to help purchase a foreclosed house. He later sold the house for a $20,000 profit.
Shustek Investments now has more than 250 clients, and Mr. Shustek reigns over a network of mortgage, title, foreclosure, and construction finance companies.
Another difference: mortgage bankers here don't charge any "garbage" fees, as Mr. Niedorf calls them - no warehousing fees and no hidden origination costs. "That's just not done," he said. "Outside brokers that came into town tried to do that, and got wiped out."
One of the other crucial lessons for companies trying to do business here is that even though the city's population is now swelling above a million, Las Vegas still operates like a small town. "Everyone here knows everyone else," said Mr. Shustek. "You better make sure you don't say anything bad about anyone, or it'll come back to haunt you."
Although the good-old-boy network is no longer in full force, the lending business still runs on good realty-builder-lender relationships.
Ronnie and Neil Schwartz, touted by many mortgage lenders as the most successful husband and wife real estate broker team in town, arrived three years ago from the suburbs of Los Angeles.
"Basically, we just started over," said Mr. Schwartz over osso buco at a five-star Italian restaurant off the strip. While he and his wife eat, several waiters, the maitre d', and even the owner of the restaurant stop by to say hello.
The couple joined Coldwell-Banker in Las Vegas, because of its well- known name, and then started cold calling. Both acknowledge this was difficult. But they have carved themselves a niche selling midprice to high-end homes. Their average sales price is $225,000, compared with a county average of $128,000.
"We were used to doing that or higher in California," Mr. Schwartz added. "And there, we never saw FHA or VA loans."
Without a doubt, Mr. and Ms. Schwartz have lenders they prefer to deal with - the ones that turn over loans quickly, and come through with financing when they say they will. Weyerhaeuser is a favorite, as is Countrywide Home Loans Inc.
For mortgage lenders hoping to hop on the bandwagon, said Tom Jurbala, president of Delmar Mortgage, Mr. Shustek's lending arm, has some words of advice: Attract employees familiar with the market, eliminate miscellaneous loan fees, price yourself with the competition, and "realize that 244 mortgage bankers got here before you."