The number of initial foreclosure notices in Nevada spiked just before Oct. 1, the day a state law that adds more steps for lenders seeking to foreclose took effect.
Tracking website LVDefault.com counted more than 3,700 notices of default in Clark County in September alone, more than triple the 1,149 the site counted in August, according to the Las Vegas Review-Journal. Notices reached a one-day high Sept. 30, when they hit 934, and then dropped to 25 on Tuesday, when the Homeowner’s Bill of Rights was enacted.
“It’s been a roller coaster ride in Nevada,” said Daren Blomquist, spokesman at analytics firm RealtyTrac. His company is still finalizing its statewide data on September foreclosure filings but said there was a big upswing. “I think it creates uncertainly in the housing market, and uncertainty is bad for free markets in general.”
It isn’t the first time Nevada has seen peaks just before and drop-offs just after new state housing laws took effect. The same pattern showed up two years ago when the state enacted AB 284, which required lenders provide more documentation about a loan’s history before they foreclosed; and in June, when fixes to that bill took effect.
Proponents of the Homeowner’s Bill of Rights say the law is needed to prevent abuses by banks. The law requires 30 days’ notice before a lender files the first notice of foreclosure, and requires banks to inform troubled homeowners about alternatives that can avert the process.
It requires lenders designate a single point person for each mortgage, so homeowners don’t get the runaround when they call a bank. And it prevents “dual-tracking,” when banks pursue a foreclosure at the same time a homeowner is trying to negotiate a short sale.
But banks must adjust to the new provisions, and that takes time, according to Bill Uffelman of the Nevada Bankers Association.
Analysts, including Blomquist, said legislative interventions could end up drawing out the recovery and creating a “long tail on the foreclosure problem.”
“To be fair, there is some good intention behind the legislation. The banks have given fuel to the fire by some of the questionable practices they’ve employed,” Blomquist said. But “at a macro-market level, it could be detrimental to long-term activity.”