Nevada’s foreclosure logjam gave way in August as banks seemed to adjust to the state’s new repossession law.
A Wednesday report from Irvine, Calif., real estate research firm RealtyTrac showed notices of default, which start the foreclosure process, surging to 1,419 filings statewide, up 226 percent from July. Foreclosures in Clark County made up 1,125 of those filings, compared with 340 a month earlier.
The new numbers were a big reversal of trends in June and July, when first-time defaults plummeted after state foreclosure laws changed. Statewide notices of default passed the 2,000 mark in May, but fell to fewer than 100 in June, after a new law took effect. The law was designed to make foreclosing easier, but banks took a break from filings nonetheless, saying they needed time to digest the new rules.
They seemed to get over their jitters in August, when foreclosure filings of all kinds soared statewide. On top of the leap in notices of default, scheduled foreclosure auctions spiked 96 percent from July to August.
In all, Nevada had 3,236 properties with some foreclosure activity against them, up 104 percent from July and 11 percent from August 2012. One in every 359 housing units was in foreclosure. Nevada had the top rate in the nation, up from sixth in July, with a foreclosure rate that was more than two and a half times the national average.
Las Vegas had the country’s third-highest metropolitan foreclosure rate, at one out of every 323 housing units.
Craig King, chief operating officer of Chase International in Reno, said the jump in activity likely came from a combination of June’s more liberal foreclosure laws and the pending tightening of rules coming in October, when the state’s Homeowner’s Bill of Rights takes effect. That law will stretch out the process by requiring banks to send warning letters 30 days before filing a notice of default, and giving consumers options besides foreclosure.
Between the two laws, banks may be trying to file while they can. But with regulations changing so often and so quickly, expect “significant volatility in foreclosure-related activities,” King said.
Dennis Smith, president and CEO of Home Builders Research in Las Vegas, said “there is little doubt September will be a busy month,” as banks try to start repossessions before the Bill of Rights kicks in. But by October, odds are foreclosures will crawl to a virtual stop once again, perhaps dropping back under 100 a month, Smith predicted.
“Attorneys are saying they just got themselves another year and a half of business (with the Bill of Rights),” Smith said. “So we’ll just be slugging out this whole market situation for a while. Not much is going to change.”
Contact reporter Jennifer Robison at firstname.lastname@example.org or 702-380-4512. Follow @J_Robison1 on Twitter.