Readers seek clarification on Homeowner’s Bill of Rights

My recent column on a new state law called the Homeowner’s Bill of Rights sparked several follow-up questions. I’ll take my best shot at answering two of them below.

But first, here’s a recap of the state law that began its legislative life as Senate Bill 321 and took effect Oct. 1. You can find out more by visiting the Nevada Association of Realtors website at www.NVAR.org.

Our legislative experts think this law should help responsible local homeowners who are trying to work with their lender. It’s not intended to help those less responsible homeowners who may be trying to work the system to stay in their home longer without paying their mortgage.

This law prohibits banks from “dual-tracking,” or trying to foreclose on a home at the same time they are working with the homeowner toward a short sale.

By preventing “dual-tracking,” this law should promote short sales as a more beneficial alternative to foreclosure for many homeowners.

The law mostly mirrors the 2012 national mortgage settlement between the nation’s largest banks and states throughout the nation.

Under SB321, banks must establish a single point of contact when dealing with distressed homeowners. This helps homeowners, Realtors and others who are often frustrated when dealing with banks.

This law does not apply to credit unions or smaller community banks that have foreclosed on 100 or fewer properties in Nevada.

Major banks that are already complying with federal Consumer Financial Protection Bureau regulations are also exempt from SB321.

Q: Thank you for educating us regarding the new Homeowner’s Bill of Rights. I need more clarification on things the law will not do. My questions:

1. Is Chase Bank one of the major banks that is already complying with the Federal Consumer Financial Protection Bureau regulation (and is therefore) exempt from SB321?

2. I was approved for a loan modification this year, but want to know if this new law can help me reduce my principal balance? — Eric D.

A: Yes, Chase is one of the major banks already required to comply with federal Consumer Financial Protection Bureau regulations, so it is exempt from SB321.

As for your second question, I’m not sure this new law, by itself, will help you persuade your lender to reduce the principal amount you owe on your mortgage, especially after you say your lender already agreed to modify your loan. But it can’t hurt.

Several local nonprofit agencies offer free or low-cost help for distressed homeowners. Find them through Nevada’s Home Again program at www.HomeAgainNevada.gov or call 1-855-457-4638.

Q: Before Oct. 1, I went to (foreclosure) mediation. The bank rep did not have the note or the deed, and the foreclosure was rescinded for now. I would like to try for a (loan) modification but the bank does not have the paperwork to proceed. Thus, I’m getting deeper in debt with this house. Should I wait until the bank has the paperwork or start making payments again? Thanks. — Ken A.

A: I’m sorry to hear about your situation, but I generally advise homeowners to keep making their payments as long as they can.

You might also want to contact your lender and an experienced local Realtor to see if you can sell your home via a short sale, where the lender agrees to sell the property for less than what the borrower owes on the mortgage. A short sale is usually a more favorable option than foreclosure for everyone involved.

Dave Tina is the 2013 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 35 years. GLVAR has more than 11,000 members. Email questions to ask@glvar.org. For more information, visit www.lasvegasrealtor.com.