The foreclosure wave that was predicted to hit Las Vegas is starting to look more like a drought, a report from ForeclosureRadar.com showed Tuesday.
Foreclosure starts in Clark County dropped to 977 in February, down 77 percent from the same month a year ago, the Discovery Bay, Calif.-based online listing service reported. Notices of trustee sales decreased 59 percent to 1,826 in February.
The substantial drop in new foreclosure filings in Nevada, California and Washington eliminates any possibility of a foreclosure wave for months to come, ForeclosureRadar Chief Executive Officer Sean O’Toole said.
Nevada remains far below the average number of foreclosure starts. Dramatic changes to the state’s foreclosure laws will likely drag out the foreclosure process for years to come, O’Toole said.
“Government intervention into the foreclosure crisis has clearly succeeded in slowing foreclosures,” he said. “Unfortunately, it has also largely failed to deal with the real problem: negative equity. While principal balance reductions and short sales are friendlier than foreclosures for eliminating negative equity, foreclosures are an extremely effective, if perhaps crude, cure as well.”
O’Toole said banks should be strongly encouraged to work with homeowners who fall behind, though there will be uncooperative homeowners. Enacting laws to essentially eliminate foreclosures, as Nevada has done, is likely to do more harm than good, he added.
“The pendulum of regulation is once again swinging too far,” O’Toole said. “In six months, it’s going to get really ugly.”
ForeclosureRadar reported 1,026 cancellation of trustee sales in February, down 77 percent from the same month a year ago; 712 sales back to the bank, down 38.3 percent; and 580 sales to third parties, typically investors, a 54.7 percent increase.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.