Assembly speaker introduces bill to head off foreclosures

CARSON CITY — Assembly Speaker Barbara Buckley introduced a bill today that she estimates could reduce the number of foreclosures of owner-occupied homes in Nevada by about 12,970.

Under Assembly Bill 149, the bank or other lender would be required to make a “good faith” effort in a mediation hearing to work on a new loan agreement with the borrower to avoid foreclosure.

The Las Vegas Democrat said that too often borrowers end up speaking with the person who services their home mortgage, not with the actual lender. Typically their original mortgage company sells the mortgage and they have problems even locating who owns their loan.

Buckley said the person who services the loan generally has no financial interest in trying to make new loan arrangements with the borrower.

In contrast, she said the actual lender has good reasons to work out new loan arrangements because if the home ends up in foreclosure, the ultimate selling price probably will be far less.

“It will cost the lender more if they take the home back and then they have to sell it at a reduced price,” Buckley said. “In the end, studies have shown it will save them money to keep the owner in the home.”

The Senate and Assembly commerce and labor committees plan Wednesday to discuss Buckley’s bill and other bills designed to head off foreclosures.

Assemblyman Marcus Conklin, D-Las Vegas, said another hearing is set for Feb. 25 on bills to assist renters who must give up their homes in foreclosure cases.

Buckley based her 12,970 estimate on the number of homes that would be saved under a Center for Responsible Lending analysis. The firm estimated that 51,881 homes in Nevada will be foreclosed on in 2008-09.

Under the bill, the court system would ensure that lenders participate in mediation with buyers in danger of losing their homes. Lenders would be required to identify a person with authority to negotiate loan modifications with borrowers.

Most Assembly members signed on in support of Buckley’s bill, including some Republicans.

Assembly Minority Leader Heidi Gansert, R-Reno, said she had only a cursory look at the bill and did not believe it contains the needed deadlines for the lenders to act.

She said Republicans also might eventually support the bill.

During a news conference, Democrats said 48 percent of Nevada homeowners have mortgages on which they owe more than their homes are worth. Other homes in neighborhoods with foreclosures have dropped in value by $11,730, they said.

Conklin said one in 11 homes in Nevada faces foreclosure and the effects of this problem are far-reaching.

“It is the reason we face shortfalls in our budget,” he said.

Buckley said if the borrower is working and cannot afford an adjustable-rate mortgage, but could pay a fixed-rate one, the lender probably would agree to the change.

“The bank or lender loses money every time they take back another home,” she said.“ A lot of times the homeowner cannot get anybody to work with them. If they can find somebody to work out an agreement, we think many of these foreclosures would stop.”

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.