State legislators learned Monday that renters who paid for the first month, the last month of their lease and a security deposit can be evicted with three days notice and have no practical way of recovering money from a foreclosed landlord.
Some states are enacting laws to provide renters more protection, but Nevada probably will do nothing to deal with the problems until 2009 when the next session of the Legislature meets, lawmakers say.
“There is nothing we can do about (renter problems) in the short run,” said Assemblyman Marcus Conklin, D-Las Vegas, chairman of the Legislative Subcommittee to Study Mortgage Lending.
Gov. Jim Gibbons could call a special session to deal with the residential mortgage implosion, but observers know of no efforts to persuade the governor to do that.
State Sen. Bob Beers, R-Las Vegas, a subcommittee member, said Gibbons’ administration is making efforts to educate homeowners, but he believes that should be the limit of state involvement.
“I don’t know even if we were in session that we would do anything (to address the mortgage problems),” Beers said.
“This isn’t really a government problem,” Beers said. Historically, government intervention “just seems to delay the recovery” in the market, he said.
While offering no short-term solutions, Conklin said the Legislature could enact new laws to help renters the next time a residential crisis unfolds “because right now this is pretty devastating.”
Renters typically are first told that the house they occupy is in foreclosure when the lender gives them an eviction notice and tells them they must leave within three days.
“That’s true whether it’s month-to-month or a long-term lease,” said Jon Sasser, a representative of Nevada Legal Services in Reno.
A judge could extend the notice time by a maximum of 10 days, but he has no other option, Sasser said.
Some mortgage lenders voluntarily are giving tenants “cash for keys,” sometimes as much as $1,500 to not contest the eviction, Sasser said.
Tenants often are unable to recover their security deposits because the owner lives out of state, Sasser said.
Often out-of-state landlords file for bankruptcy after foreclosure, making it prohibitively expensive for renters to pursue their claims against the landlords, said Ernie Adler, a lawyer in Carson City.
Tenants typically lose $2,500, but “they can’t afford to hire an attorney in another state,” Adler said.
A bill is pending in the U.S. Senate that would require giving tenants three to six months notice of eviction, but only when a new loan is obtained after foreclosure, Sasser said. House Resolution 3915, the Mortgage Reform and Anti-Predatory Lending Act, passed the House and is pending before a Senate committee, Sasser said, but it would not apply to many foreclosed homes in Nevada.
Under an Illinois law that took effect on New Year’s Day, renters must be given 120 days of notice. Vermont requires that tenants be provided with a copy of the lawsuit to foreclose, Sasser said. Michigan requires 30 days notice before eviction of a tenant living in a foreclosed property.
In a letter to the Nevada subcommittee, Senate Majority Leader Harry Reid, D-Nev., said he hoped Congress would increase federal funding to provide for counseling for homeowners. Reid also favors a bill that would enable some subprime borrowers to obtain FHA refinancing. Third, he pointed to effort to lower down payment requirements and increase lending limits for mortgage loans from Fannie Mae and Freddie Mac, two government sponsored enterprises.
Contact reporter John G. Edwards at email@example.com or (702) 383-0420.