Nevada foreclosure starts plummeted 81 percent in October in reaction to a new law that imposes stricter requirements on filing notices of default, online listing service ForeclosureRadar.com reported Tuesday.
The law appears to have specifically targeted ReconTrust, the trustee that handles all Bank of America and Countrywide foreclosures, said Sean O’Toole, chief executive officer of Discovery Bay, Calif.-based ForeclosureRadar.
It prohibits a trustee such as ReconTrust from being owned by the foreclosing lender.
“You have one paragraph in (Assembly Bill) 284 that specifically says the beneficiary can’t be the trustee. There’s no other reason to put that in, so yeah, I’d say they were targeted,” O’Toole said.
He finds it amazing that so many people believe that legislation and lawsuits targeting the foreclosure process are good for homeowners.
“The reality is these delays help the banks by allowing them to keep bad loans on their books at inflated values, while leaving in limbo the millions of homeowners that are already in default,” O’Toole said. “The housing market will not recover until we move beyond these delay tactics.”
ForeclosureRadar showed 1,025 notices of default for Nevada in October, down 81.5 percent from the previous month; 2,270 foreclosure sales, a 10.7 percent increase; and foreclosure time frame of 377 days, up 0.3 percent.
CLARK COUNTY NUMBERS
In Clark County, notices of default fell to 897 in October, compared with 4,656 in September and 5,417 in the same month a year ago. Notices of trustee sale declined to 3,296, a 7.5 percent decrease from the previous month and 30 percent decrease from a year ago.
Notices of default are the first step in the foreclosure process. Notices of trustee sale set the date and time of an auction and serve as the homeowner’s final notice before the sale.
Clark County’s inventory of real estate-owned, or bank-owned, homes declined to 11,081 in October, down from 11,589 in September and from 11,573 a year ago.
LAW AIMED AT ROBO-SIGNINGS
Assembly Bill 284, introduced by Assemblyman Marcus Conklin, D-Las Vegas, requires a lender seeking to foreclose in Nevada to record a notarized affidavit of authority to foreclose that includes information showing that they have the legal right to exercise the power of sale.
The new law protects homeowners from improper foreclosures and protects the integrity of the homeownership system, Nevada Attorney General Catherine Cortez Masto said. It was crafted largely in response to the robo-signing scandal that surfaced last year.
The law also gives Nevada homeowners access to data on companies that hold their mortgages by requiring that documents used in foreclosure be recorded in the county where the property is located, a challenge to the Mortgage Electronic Registration System, or MERS.
The foreclosure process needs to work its course, said Victor Joecks, communications director for Nevada Policy Research Institute. While he couldn’t address the specifics of AB 284, Joecks said Nevada’s mandatory foreclosure mediation and other forms of government intervention have only set the process back.
Homeowners who bought into the “bubble market” in Las Vegas and can no longer afford their mortgage payments are going to have to get out of those homes, Joecks said. Values will drop and eventually someone else buys the home, and only then will values start to increase again, he said.
‘JUST A SPEED BUMP’
“Some Realtors feel the world is coming to an end because the foreclosure process will take forever while others feel it’s just a speed bump and things will be fine in a month or so,” Tim Kelly Kiernan of Re/Max Extreme said. “I met with my Bank of America contacts and they say it’s also just a speed bump. Who knows? Patience is a virtue I guess.”
O’Toole said the intent of the Nevada law is that good and banks should be held accountable for their actions, but letting homeowners go without paying their mortgage won’t solve anything, he said; it will hurt their credit and hurt the overall economy in the long run.
“I’ve said a million times I understand why people are mad at the banks,” O’Toole said. “Unless politicians come up with a solution to fix negative equity, then adding more regulations and requirements will cause delays that do more harm than good.”
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