Foreclosure rate tops in nation, again
May 10, 2013
LAS VEGAS — After briefly falling from its long-held place as the nation's foreclosure king, Nevada chalked up the highest foreclosure rate in the country for the second straight month in April, a tracking firm said Thursday.
The rate could remain high if lawmakers pass a measure to loosen restrictions on lenders.
Statistics released by RealtyTrac show nearly 1,900 homes received an initial notice of default last month — a 40 percent increase from a year ago.
Meanwhile, a total of 3,227 homes received some sort of foreclosure-related filing in April, down 15 percent from March and down 17 percent from the year-ago period. In Carson, 242 homes are currently listed as being foreclosed.
A state Senate committee reviewed a bill on Thursday to ease requirements on lenders seeking to foreclose. The bill, Assembly Bill 300, unanimously passed the Assembly last month. No action was taken Thursday.
Current law says lenders must personally know the history of a home loan before they can foreclose on a property.
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Critics say that's an impossibly high standard because mortgages were bought and sold at such a rapid pace during the housing boom and the subsequent meltdown.
The strict rule was adopted as AB284 and aimed to curb robo-signing, the practice of lenders foreclosing on homes en masse without the legal right to do so. When the measure took effect in October 2011, the rate of homes entering foreclosure ground to a virtual halt.
There's debate over how big of a role the bill played in the slowdown, because other market-altering measures took place around the same time. But it was enough to prompt Nevada Attorney General Catherine Cortez Masto to launch a working group that included representatives from an array of housing-focused entities and fought for months before coming up with the fixes for AB284.
Realtors are eager to see the "clean-up" bill enacted. They have been battling with persistently low housing inventory that has helped push up prices by 31 percent year-over-year in the Las Vegas area while spurring fierce bidding wars between investors.
With only a five-week supply of sellable homes on the market, traditional buyers who want loans to finance homes must compete with cash-rich investors. More than 59 percent of existing homes sold in April were purchased with cash, according to the Greater Las Vegas Association of Realtors.
Meanwhile, an estimated 43,000 Nevada homes serviced by the three largest banks are in default and will be entering the market in the future, according to George Ross, a lobbyist representing Bank of America.
"At some point, economically, that market needs to be cleared," Ross said.
Realtors and bankers testified Thursday that because banks have largely held back from foreclosing in the past two years, some homeowners have stopped paying their mortgages but also failed to take advantage of mortgage relief programs. Bill advocates say AB300 could nudge homeowners to seek help or send their homes to the inventory-hungry market.
"A lot of people who are sitting back and waiting to see what happens," said Bill Uffelman, president of the Nevada Bankers Association. "The ability to file the (initial notice of default) will get things moving."
It's unclear how big of an impact the new inventory would have on the state's home prices. That depends on how quickly homes move through the foreclosure process and when banks decide to release them to the market.
"Will prices come down a bit? They would have to," said Keith Lynam of the Nevada Association of Realtors. "Drastically? In my opinion, no."