Dear banks: Don’t put any more foreclosed houses on the market for the next three years.
Sincerely , Oscar Goodman, mayor of Las Vegas.
That’s what he’d like to order banks to do, Goodman said this week, because he’s worried about the impact of more foreclosed properties on an already down market.
“We can’t absorb what we have now,” he said. “If they throw more on us, it’s just going to get worse and worse and worse.”
He tasked the city’s attorney with researching whether the state Legislature could stop banks from trying to sell foreclosed properties.
A real estate analyst, meanwhile, said Goodman is wrong about the current market and misguided in seeking state interference.
“I don’t think it’s a fear he should be having, or that his solution is a real solution,” said Larry Murphy, president of SalesTraq, which monitors the area’s real estate market. “You can’t legislate an economy.”
Southern Nevada should see 20,000 foreclosures this year, slightly less than 2009, he said.
“The market is absorbing those. They’re being sold,” Murphy said. “Prices have stabilized — they’re depressed, but they’re stabilized.
“I think the banks have acted responsibly.”
Nevada has the nation’s highest foreclosure rate, with one out of every 71 homes in foreclosure. Median home prices have dropped almost 60 percent.
Other numbers paint a bleak picture as well — a local unemployment rate of nearly 15 percent, for example, or the estimated 75 percent of homeowners who are upside down on their mortgage.
Goodman said he’s worried that releasing more foreclosed properties for sale would exacerbate an already bad situation.
Brad Jerbic, Las Vegas’ city attorney, said he has to see whether state-level legislation would be trumped by federal law.
“We’ll be looking into whether questions of pre-emption apply,” he said. “The mayor’s goal is to prevent them from dumping more homes into an already saturated market.”
State lawmakers can pass any law they want, noted Lorne Malkiewich, director of the Legislative Counsel Bureau, which provides legal advice and research for legislators.
That doesn’t mean the law will pass legal scrutiny, he said, and Goodman’s idea “is definitely something for the lawyers.”
Restrictions have been placed on the foreclosure process — notification requirements, for instance. But it’s possible to go too far.
“What comes to mind is the contract clause — if you’ve got a contract between the bank and the borrower, and whether you’re going to mar the contract,” Malkiewich said.
That probably wouldn’t be allowed, he said.
Councilman Stavros Anthony was also concerned when Goodman brought up the idea at Wednesday’s City Council meeting.
“I’m not sure about the constitutionality,” Anthony said.
“I don’t care,” quipped Goodman.
Contact reporter Alan Choate at email@example.com or 702-229-6435.