A foreclosure report from the Nevada Association of Realtors recommends that legislators amend AB 284 to resolve unintended consequences from Nevada's robo-signing law.
Specifically, NVAR wants lawmakers to define the term "personal knowledge," address how trustees should handle foreclosed properties, and clear up discrepancies with the required affidavit of authority to foreclose.
"The big-picture item in the data is continued improvement in the overall economy, which tracks with declining delinquencies and foreclosures," said Joel Searby, vice president of Gainesville, Fla.-based Strategic Guidance Systems, who wrote the "Face of Foreclosure" report for NVAR.
"That leads us to believe that Nevada is ready to turn the page on foreclosures, but maybe not close the book," he said Wednesday at Trump Las Vegas.
There's still a lot of talk about the so-called "shadow inventory," which nobody has really defined, Searby said. Some people say the shadow inventory is coming from AB 284, the National Mortgage Settlement and banks not wanting to foreclose on delinquent borrowers.
"The data doesn't support that because you'd see delinquencies grow at a higher rate than foreclosures," Searby said.
"Everyone wants to talk on speculation. Let's look at what data we know. You see delinquencies decreasing, foreclosures decreasing and, guess what, the unemployment rate is decreasing."
One important issue is to establish a bona fide purchaser statute so that a buyer gains clear title to ownership, no matter what happened with the previous owner, said Keith Lynam, 2013 legislative chairman for NVAR. The concept refers to a good-faith party who purchases a property subject to AB 284 standards, without any notice of other parties' claims to title of that property.
Legislators should streamline the process for bringing abandoned properties back into the marketplace, the report recommends.
"We need paths to determine if houses are vacant or abandoned because there's a difference. If they're abandoned, if the seller's gone and not paying property taxes and HOA dues, we need a process to get that house back on the market," Lynam said.
Also prudent is defining who can be trustee and what are the trustee's duties in the foreclosure, said Michael Parra, chief operating officer of Rowan Real Estate in Las Vegas.
Strengthening the attorney general's enforcements tools is subject to debate, he said.
"Reason that, if the AG attempts to regulate the banks, that will further deter banks from lending money to Nevadans," Parra said. "Regarding a property owner's rights, is it the homeowner's right to live in a home rent and mortgage free?"
NVAR president Patty Kelley said Realtors are seeing a lot of demand, but they don't have much inventory to sell. The number of homes for sale on the Multiple Listing Service decreased 22 percent in the 12 months after AB 284 took effect in October 2011.
"We have a gentleman from New Mexico and he has six properties that fall into his parameters, and he's not leaving town until he gets one," Kelley said.
"He's a cash buyer and we're just trying to get him a property. It's not whether you have a loan or pay cash. We don't have inventory to sell."
Searby, who compiled a 300-page, district-by-district analysis of mortgage delinquency and foreclosures, said the approach is to let the free market work.
Even among people who went through foreclosure, 79 percent said homeownership is still part of the American dream, and 20 percent said they'll look for another home in the next two years, he said.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.