Bill would enact Homeowner’s Bill of Rights

CARSON CITY — Struggling Nevada homeowners facing foreclosure would be given added protections and advised of ways to keep their homes under a bill heard Thursday by an Assembly committee.

Senate Bill 321, passed unanimously by the state Senate earlier, requires lenders to inform borrowers of possible alternatives before filing a notice of foreclosure.

The measure, known as the Homeowner’s Bill of Rights, would prevent lenders from initiating foreclosure proceedings while a loan modification is being considered, a practice known as “dual-tracking.”

Lenders also would have to decide whether a borrower qualifies for a loan modification before initiating foreclosure and act as a “single point of contact.”

In a state hard hit by the recession and having the nation’s highest foreclosure rate, bill sponsors concede the bill won’t help everyone.

“This bill will allow our residents to take the necessary steps to do everything they can to stay in their homes,” said Assemblyman James Healey, D-Las Vegas, a co-sponsor of the bill who told the Assembly Judiciary Committee of his own frustrations trying to dig out from an under a home that lost considerable value during the recession.

While trying to refinance, “I got the runaround,” he said.

“Every time I tried to call, I had to explain it to a different person ... again,” he said. “You call and get another person. And get nowhere.”

“This went on for more than year ... before they finally said, ‘Sorry, you don’t qualify to refinance.’ ”

Healey said on his lender’s advice that he stopped paying his mortgage, then opted for a short sale, which took nine months.

“These are the types of stories we as legislators should not stand for,” he said.

State Sen. Justin Jones, another sponsor, recalled trying to help his be­wildered grandparents who bought their retirement home in 1995, then fell on hard times and were unable to pay their mortgage.

Being a lawyer, the Las Vegas Democrat said he naively believed he could help them steer toward refinancing and keeping their home.

“The stress on my grandparents was enormous,” he said.

After receiving a notice of default, they elected to sell.

Some lawmakers and representatives of the banking and mortgage industry said a state law isn’t needed, given new lending rules issued by the federal Consumer Financial Protection Bureau and last year’s national settlement with the nation’s five top lenders.

George Ross, representing Bank of America, also cautioned that the bill, if enacted, would likely help only a fraction of distressed homeowners.

He said around half of borrowers who are able to renegotiate their loans still default.

“This is not going to keep everybody in their homes,” he said. “An awful lot of folks know they cannot make their payments.”

Bill sponsors concede this point.

But Jones said if it helps even a few, he’d “feel a little bit of solace for what I could not achieve for Nana Tai and Grandpa Paul.”

The committee took no action.