Comments (16) | Add a comment
New state law slows banks from starting foreclosures
Tools
LAS VEGAS REVIEW-JOURNAL
A new Nevada law that took effect in October has slowed banks from initiating foreclosures, resulting in just 116 notices of default filed in the first three weeks of October, compared with 3,649 filings in September, a spokesman for ForeclosureRadar.com said Thursday.
"We have seen a huge drop-off from September to October in regards to notices of default filed in Clark County," said Mike Daniel, marketing director for ForeclosureRadar, a Discovery Bay, Calif.-based listing service. "It's a shocking hit."
That will choke off bank-owned inventory in coming months and spark the kind of "knee-jerk reaction" that created the housing bubble in the first place, foreclosure investor Zolt Szorenyi said.
Typically, about half of notices of default are cleared up, usually by people catching up on delinquent mortgages, while 1,700 to 1,900 go to foreclosure, he said. About 200 a month are sold to third parties at trustee auctions.
Roughly half of existing home sales in Las Vegas are real-estate-owned, or bank-owned properties. With a current REO inventory of 10,000 homes, it will take four to six months to absorb that inventory, Szorenyi said.
"People are going to see this and have a knee-jerk reaction. They're going to make offers without appraisals, just like they did five years ago," said Szorenyi, president of Lenders Clearing House Las Vegas, a company that works with banks in selling REO properties.
"With this constant interference from the government, they are putting shackles on the banks and holding everything back and then releasing the shackles," he said. "That artificially jerks the market around. Banks have a huge bottleneck to deal with. They'll just cut prices left and right because they're just competing with themselves,"
Assembly Bill 284 requires a lender seeking to foreclose in Nevada to record a notarized affidavit of authority to foreclose that includes information showing that they have the legal right to exercise the power of sale.
The new law protects homeowners from improper foreclosures and protects the integrity of the homeownership system, Nevada Attorney General Catherine Cortez Masto said. It was crafted largely in response to the robo-signing scandal that surfaced last year. Servicers of mortgage loans will be fined $5,000 if robo-signing fraud is detected.
The law also gives Nevada homeowners access to data on companies that hold their mortgages by requiring that documents used in foreclosure be recorded in the county where the property is located, a challenge to the Mortgage Electronic Registration System, or MERS.
No one knows what will happen if foreclosures are halted or slowed materially, broker Frank Nason of Residential Resources said. He thinks investors would abandon the market except for select properties.
"Could it increase prices? Possibly, but it could stop the absorption of all product types until it became clear what the ultimate disposition of the distressed inventory was," Nason said. "Just because foreclosures were halted for legal reasons doesn't fix the underlying problem -- underwater houses and people losing their jobs or other life events that require a sale or walk-away."
Foreclosure filings in Clark County topped 6,000 in July, August and September last year, retreating into the 4,000 to 5,000 range for most of this year, according to ForeclosureRadar.
Nevada Bankers Association President Bill Uffelman said affidavit requirements from the new law are tripping up title companies.
"The reality is because of past allegations of robo-singing, what all the financial institutions are doing now is revalidating, if you will, everything in the foreclosure process, dotting the i's and crossing the t's and checking everything a second time because you don't want to suffer the consequences," he said.
"OK, it'll take one or two more months, but it'll return," he added. "What everyone loses track of is the individual not paying their mortgage. At some time, the banks have to foreclose. You can't sit in a house and not pay anyone."
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
Comments
Terms & Conditions
The following comments are provided by readers and are the sole responsiblity of the authors. The Review-Journal does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please use the Report Abuse button.
Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 24 hours. Please do not submit a comment more than once.
Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.
RSS
Twitter
Facebook
Good golly! Why should banks have to follow laws? Can't they just keep using FRAUD to foreclose on homes? What is the problem in not having legal standing to foreclose on homes? It is just people after all. We need to protect the big banks from the little people who still think laws matter. Just because the "servicer" has no legal right to foreclose shouldn't matter, right? The banks need to get the home back for free as they sold the loan in the beginning! Why shouldn't the banks steal homes? Laws are for suckers after all and big banks don't need to follow the laws in America....until the Nevada AG stepped up!
Refinance mortgage rates going to go up for sure. Any body still thinking should just make use of the low rates. Do not wait and regret it is not that difficult to make it happen. Online is very easy check out either "Official Refinance" before you check with the "major banks"
You got to love the lawyers and legislators!!! Craft and pass a bill that further bottlenecks one of the worst housing markets in the country. Give the lenders another reason not to lend!!! Why would anyone short-sale their home when they can live rent free for at least 18 months and not give a crap about the house because they're eventually walking anyway. At least the investors are fixing up the houses, paying the HOA's current and selling them to folks that are truly vested in the property. In addition to the Bill further deteriorating the housing market, it will also have a significant impact on industry related jobs. The investors will head to AZ and we can let the houses stay vacant to be vandalized, occupied by squatters or even worse, let the homeowner that used their house as an ATM machines be rewarded by living rent free for a couple years; justifying it by blaming the lenders that forced them to borrow and spend the money. If the homeowners wants protection from an improper foreclosure, make your mortgage payment and you won't have to worry about technicalities of the foreclosure process... For most, unless the mortgage was short refinanced, they don't want the property anyway, but hell, 18 months of free rent, why not!!!
seems to me that the current owners of the defaulting mortgage will be adversely affected, financially, if the repo process is extended. like the car "buyer" that knows the car is in the repo process stops checking the oil. the collateral becomes worth less. the mortgage contract was purchased by the investor with a given set of procedures in place, in case of default. the solution of course would be that those legislators that approved this added cost to the investor/mortgagor must get their own, personal checkbooks out to "make whole" the investors. the loss the result of that "change" in regulation creates, "after the fact". that's only fair. aren't those legislators..."fair" ?
Here ye, Here Ye! Now is the time to stop paying your mortage and go into default. you will now be able to live RENT free for the next year or more! Then, right before they record the Notice of Sale, declare BK. I swear, Nevada has made it possible to live rent free in your home for up to 2 years!
That being said, Nevada Law Makers are trying to make Nevada a Judicial Foreclosure State. Which is Fantastic for the homeowner. It would take about 2 to 3 years to foreclose, THEN you can live in your home for 2 years while the right of redemption continues. LOVE IT!
extending the repo time is the same as a "buyer" taking home a new car and never paying for it. why should the "buyer" be allowed to drive the car, run miles off it, not bother to buy insurance or to check the oil, the free ride ? as to borrowing some high percentage of value on anything is the same as "betting on the come" in the dice game. at least nevada citizens gotta know better.
@army vet....You're exactly right...no one forced people to take out these loans. However, let me fill you in on how the loan stuff worked back in the day. The mortgage brokers, loan officers and other fringers MADE MORE MONEY by putting families into these loans. The ARM loan was the only product they advertised and when you walked into their office they pushed these loan products like a pimp would a ho. If you asked them to show you the rates for a fixed 30 year traditional loan they may have sent you to someone else because they didn't get paid as much. And, since the public who was so enamoured with the appreciation percentage, low payment and couple that with the fact these loan officers would promise them they could re-fi out of it when the rate reset, it was irresitable to most consumers. Mr. Vet you had the ability to buy a home with your VA voucher, miminal closing costs and the rate was fixed so I can see why you might have some frustration with the masses. But, there's two sides to every story....
Szorenyi and many of you below are missing the point. This law makes sure that they can legally take the house. The mortgage community jacked up the system so much that some lenders foreclosed on homeowners even when they were not the legal owners to the note. this law requires that banks complete due diligence to ensure they do in fact own the paper and have the legal authority to foreclose. As for Szorenyi, his attitude is one of the reasons we are all in this mess. As long as he is making money- screw the rest of us.
Bankers were gambling and so was congress with their knee-jerk response. I could see underestimating 10-15% on a home being mortgaged and used for collateral, but not 60%. The deal was to finance the home for 15,20 & 30 years by both parties not dump 100,000 homes on the market for cash only.
Those bad banks, forcing those homeowners to buy a house and taking a loan out to do so (and all the while making sure that the loan met the standards FannieMae and FreddyMac put out using the US Government standards). Yes, people lose their jobs and can't pay for a home any longer. That is why there is a foreclosure and bankruptcy process. I just watched two homes become vacated because the owners didn't like that they bought a home that decreased in value. So both of them stopped paying the mortgage, stayed in the house for free, and used the money they saved to buy new cars. Now they have walked away. And both are still working the same jobs they had when they took the loans. So don't tell me that the banks are the only problem. Some of it is just people that don't like the deal THEY MADE. No one forced them to do anything.