Nevada is among the hardest hit by the foreclosure crisis, with nearly 60 percent of homeowners underwater on their mortgage. A huge drop in home values and local economic turbulence sent too many Nevadans into mortgage debt. Homeowners and local government alike began combating the issues in attempt to save their housing market from hitting rock bottom. Recent news suggests that foreclosures have dropped by 75 percent, which suggested things may be looking up. However, deeper analysis shows that the drop in foreclosures is not really a sign of recovery, rather the result of a new law that plays hardball with lenders considering foreclosure.
Bill Of Hope
In October, Assembly Bill 284 took effect, which tightens the requirements for lenders foreclosing on a home. Lenders who plan to enter a home into foreclosure must file an affidavit proving they maintain the right to initiate the action. The idea is to increase civil responsibility and bring about penalties for fraudulent foreclosure actions. Nevada Attorney General, Catherine Cortez Masto, says the new law was an attempt “to close any loopholes that a criminal element likes to find.” So far, banks have complied and many have simply backed away from foreclosure proceedings altogether.
Since the new law, lenders know that they can be indicted on criminal charges for violating the requirement or any other fraudulent foreclosure actions. The aggressive efforts by Nevada’s new law have sent waves throughout the national real estate world. Other nonjudicial foreclosure states may soon see similar laws to circumvent the loophole allowing lenders to foreclose without a court order. By requiring, at minimum, a sworn affidavit lenders will be held more accountable for their actions.