A new law intended to make it harder for banks to foreclose on Nevada homes continued to weigh down the state’s default market in November.
Irvine, Calif., research firm RealtyTrac reported Wednesday that foreclosure activity fell across the Silver State in November. Statewide, 1,351 homes experienced foreclosure-related motion or action in November, for a foreclosure rate of one in every 859 homes. That was about half the rate in October, when one in every 407 homes saw activity. It was also a 55.1 percent decline from the rate in November 2012.
Nationally, one in every 1,155 homes was in the foreclosure process. Nevada ranked No. 8 for foreclosure activity. States with higher rates included Florida, Delaware, Maryland, South Carolina and Illinois.
RealtyTrac also reported 315 foreclosure starts in Nevada, down nearly 82 percent from October and 76.6 percent from November 2012. There were 345 foreclosure completions, off 48.2 percent from a month earlier and 55 percent from a year ago.
Foreclosure starts fell 10 percent nationwide from October to November, while repossessions dropped 19 percent in the same period, albeit for different reasons than Nevada’s declines. RealtyTrac Vice President Daren Blomquist credited a seasonal slowdown in foreclosure activity, plus a broad housing recovery, for the nation’s foreclosure falloff.
Nevada’s statistics tell a different story, Blomquist said.
Nevada’s foreclosure rate took its first big, recent dive in October, when the state’s Homeowners’ Bill of Rights took effect. Local first-time notices of default plummeted from more than 3,500 in September to fewer than 200 in October, as the law put new limits on banks.
New regulations require banks to give homeowners 30 days’ notice before starting foreclosure, educate owners on alternatives to foreclosure and assign a single contact person to a household in default.
“There was a pullback across the nation as well, but it paled in comparison with the wild swings we saw in Nevada,” Blomquist said. “I really think, in the case of Nevada, that the major driver is the Homeowners’ Bill of Rights.”
Blomquist said Nevada can expect at least a few more months of slow foreclosure activity. In California, where a similar law took effect in January, default activity still hasn’t recovered, he said.
“It really is taking them longer than we expected to adjust, and I think that will probably be the case in Nevada, though because Nevada’s legislation is patterned after California’s, there may be a shorter learning curve after lenders learn what they’re doing in California.”
Blomquist said the law is “masking the true distress that’s still very much a part of Nevada’s housing market.”
RealtyTrac’s figures show that roughly half of the state’s homeowners with mortgages still owe more than their home is worth.
“Even as home prices increase, it’s going to be a matter of years before many of those homeowners dig their way out of the hole they’re in,” he said.
Contact reporter Jennifer Robison at firstname.lastname@example.org. Follow @J_Robison1 on Twitter.