Nevada Attorney General Catherine Cortez Masto said she has no regrets about passing the robo-signing law that has virtually brought foreclosure filings to a standstill in the state, and that banks are simply using the law as a “scapegoat,” allowing people to live in their homes for free.
“It’s a changing environment right now, and repealing (Assembly Bill) 284 is not going to change the environment,” Masto said Wednesday at a panel discussion sponsored by the National Association of Hispanic Real Estate Professionals at the Gold Coast.
“I hear that because of AB 284, banks can’t foreclose. How is it that 284 is preventing a bank from foreclosing on someone not making their payment?” she asked the audience of about 300 real estate industry professionals. “There’s a reason banks aren’t foreclosing. I just haven’t figured it out yet.”
The law was enacted to address the robo-signing scandal that involved illegal signatures on foreclosure documents. It requires agents who sign those documents to have personal knowledge of the lender’s authority to foreclose.
Repealing the law is only going to bring back massive robo-signing, Masto said.
AB 284 is just one variable in today’s housing market, she said. Another variable is the $25 billion federal mortgage settlement reached in March with six major lenders.
Of that money, $17 billion is going to banks that promise to engage is some form of loan modification. Another $3 billion went to refinancing underwater homeowners who are not in default.
Nevada received $57 million in payments from the settlement, and an additional $30 million from a separate settlement with Bank of America, Masto said.
One audience member asked Masto why lenders haven’t foreclosed on abandoned, vacant homes in Las Vegas. Another asked about the “shadow inventory” of homes with mortgages more than 90 days delinquent that have yet to go to foreclosure.
“I hear that all of the time. I haven’t seen any data to indicate that,” she said. “Ultimately, at the end of the day, because our loan-to-value is 150 percent or more, when you’re a bank looking at that, your inclination is to say that’s going to be a foreclosure no matter what you do.”
Because of the mortgage settlement, banks are looking at how to work with homeowners to avoid foreclosure. Banks are approving more short sales, or homes sold for less than the principal mortgage, and they’re assisting displaced homeowners with relocation expenses up to $30,000.
What gets lost in the discussion about the robo-signing law and the national settlement is the servicing standards that have changed the way banks conduct business, Masto said. They have a time line to respond to short-sale offers, and that’s why Las Vegas has seen an increase in short sales over the last couple of months. Short sales now exceed foreclosure sales.
Candice Kelley, executive director of Nevada’s $194 million Hardest-Hit Fund, said thousands of Nevada homeowners have benefited from the program. Some have received mortgage payment assistance of up to $1,000 a month. It’s for unemployed or underemployed homeowners who’ve seen a 10 percent drop in household income over the last five years.
The most sought-after program is principal reduction, which can be as much as $50,000 on loans backed by Freddie Mac and Fannie Mae, she said.
The program also provides assistance for relocation after a short sale, and pays up to 60 cents on every dollar up to $8,500 for debt relief on second liens.
Contact reporter Hubble Smith at email@example.com or 702-383-0491.