LAS VEGAS (AP) — Five years after the economic collapse began, Nevada's still on the injured list.
Thirty-nine percent of Nevada homes were underwater, almost one in 10 borrowers were 90 days behind on their payments or more, and an estimated 50,000 homes and condos in the Las Vegas area were thought to be vacant at the end of June — enough for the state Department of Business and Industry to give the market a D+ earlier this month on its housing stability index.
While trouble is still ahead for many homeowners, new laws taking effect Oct. 1 aim to ease the pain for those facing foreclosure and nudge along those who have been delaying the inevitable.
"There are people that are just too far in over their heads. They should've never been in the home they're in, and those are the people, unfortunately, that are going to have to face the foreclosure process," Assemblyman James Healey, D-Las Vegas, said at a recent panel discussion hosted by the southern Nevada chapter of the National Association of Hispanic Real Estate Professionals. "But there are many other families that don't need to go."
A new Homeowner's Bill of Rights, SB 321, aims to eliminate the runaround some homeowners got from banks by requiring lenders to assign homeowners a single person to contact. It bans dual-tracking, in which a bank pursues a foreclosure at the same time a homeowner is working on a short sale. And it eliminates "arm's length" rules, in which banks barred people from buying distressed properties from their relatives or other close associates.
The bill of rights also requires banks to provide 30 days' warning before filing the first notice that a loan is in default, and lenders must make several attempts to reach the homeowner by phone and mail to let them know about foreclosure alternative programs before filing.
That's just the first layer of the safety net.
A separate bill taking effect Oct. 1, AB 273, will automatically enroll a borrower in the state's Foreclosure Mediation Program if they end up receiving an initial notice of default. The program, which has been optional, brings banks and homeowners together to discuss alternatives to foreclosure.
"The fact that they're automatically enrolled — it's one less step that the homeowner has to do," said Verise Campbell, deputy director of the Foreclosure Mediation Program, in an interview with KSNV-TV. "If we can get people past taking that first step, then normally they're on a pathway to where they can deal with this."
In turn, the homeowner is held to certain deadlines, and needs to be opening their mail. If a borrower is offered a foreclosure alternative, they must accept it or reject it within 14 days, and a bank can foreclose if a homeowner doesn't respond or doesn't pay the $200 fee to enter mediation.
The measures are far from state lawmakers' first attempt to pad homeowners against the blows of Nevada's housing market, which claimed the nation's top foreclosure rate for five straight years and returned to the top once again in August.
Legislators launched a mediation program in 2009 that's worked with about 18,000 borrowers since its inception, according to Michael Sommermeyer, the program's quality assurance manager. About 15 percent of borrowers facing foreclosure are taking advantage of the program, although the automatic enrollment law could raise that number significantly.