Mediation system would help owners stay in homes

Legislative commerce committees on Wednesday began developing a mediation process that could stem the tide of home foreclosures in Nevada.

Nevada has the nation's highest rate of foreclosures, one out of 76 homes, with 77,693 in foreclosure and a projected 72,000 more in 2009.

Assembly Speaker Barbara Buckley, D-Las Vegas, said AB149 would provide for mediators in foreclosure cases who could make deals to keep owners in their homes.

Right now, she said, many people who want to keep their homes and make their payments can't get ahold of anyone to answer their questions.

The proposal would require lenders to provide the name of someone with the authority to renegotiate a loan modification and contact information for a housing counseling agency. Lenders also would have to inform the borrower of their right to ask for court mediation.

"We see people who are being foreclosed on and they can't get a lender on the phone," she told the joint Senate Commerce and Assembly Commerce and Labor committees.

AB149 sets up a mediation hearing where the lender must attend as well as the borrower.

"If the lender chooses not to participate in any way the mediator will have the ability to order relief," Buckley said.

If the borrower doesn't attend, the mediator can dismiss the hearing and allow foreclosure to proceed.

She said the Center for Responsible Lending estimates the program could save 17,700 homes in Nevada, saving $1.6 billion in value in the process.

And that saves more money, she said. Congressional researchers estimate the average cost of a foreclosure is $7,200 to the homeowner but $50,000 to the lender and $19,227 to the government in lost taxes and fees.

Sen. Warren Hardy, R-Las Vegas, said he was at first uncomfortable with what seems "an intervention into the private sector."

"But these aren't normal circumstances," he said.

He said he can support the plan "conceptually" while the details are worked out.

Buckley said the Supreme Court will develop the rules to apply the mediation process.

She was joined by Nevada Supreme Court Chief Justice Jim Hardesty, who said the court conducts a variety of mediation hearings and has former judges, lawyers and masters who are trained to handle them.

Bankers and legal aid representatives praised the proposal and said they would work with Buckley to flesh out the details of how the system should work.

- Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.