Change in deficiency-judgment law lauded


When historians look back at Nevada's 2011 Legislature, they'll identify Assembly Bill 273 as one of the most significant bills passed for Nevada homeowners, a lobbyist for the Nevada Association of Realtors said Friday.

It changed the law on deficiency judgments relative to short sales of homes, or lender-approved sales for less than the principal mortgage balance, particularly how much time the second-lien holder has to pursue the judgment.

Another significant bill that came out of the session forces banks to respond to short-sale offers within 90 days and to state the exact amount of any deficiency judgment, said Rocky Finseth, government affairs director for Carrera Nevada.

Bills that failed are equally important, Finseth said Friday at the Greater Las Vegas Association of Realtors' monthly luncheon.

One of them would have established a 1 percent sales tax for services.

"This is the fourth session we beat back the tax on services," Finseth told about 300 real estate professionals at the Gold Coast. "The proponents of this tax have now decided to take it to the ballot box, so expect a question on ballot in 2012 to enact a sales tax on services."

Nevada Association of Realtors President Mike Young said short sales are a way for people to get their lives back together after defaulting on their mortgage. About one-fourth of home sales in Las Vegas are short sales, which are considered more palatable than foreclosure.

AB 273 reduces the time second-lien holders can pursue a deficiency judgment from six years to six months, the same as primary lienholders. It also prevents banks from "double-dipping," or going after borrowers for the full amount of the deficiency they owe on their mortgage when lenders have received compensation from other sources.

"They still want to collect on liens they sold for 10 cents on the dollar," Young said. "This says you can't sell it or collect from the homeowner more than the price you bought the loan for, plus normal interest. The big thing is it takes the pressure off the borrower."

Another winner for Nevada homeowners was Assembly Bill 271, a law prohibiting private transfer fees, Young said. It was signed into law May 20.

Also called reconveyance fees, capital recovery fees or private transfer taxes, the fees are generally attached to a property as a covenant that requires payment to a private entity every time the property changes hands for as long as 99 years.

They create last-minute title and lending complications that can keep a home sale from closing, Young said. Twenty-nine states now have laws addressing these fees, or are working to address them.

Another win for homeowners came when Gov. Brian Sandoval signed into law AB 432, which requires energy auditors to be licensed and repeals a requirement that home sellers complete an energy consumption form.

It eliminates the need for the form that most homeowners and real estate agents deemed confusing and burdensome. Sellers may still, if they wish, seek energy audits of their homes.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.