New bill seeks to improve foreclosure process
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The foreclosure process in Nevada may now run more smoothly for homeowners and lenders.
This week the Homeowner's Bill of Rights is taking effect. It's legislation passed in this last session to iron out some of the problems faced by the more than 330,00 Nevadans whose homes are underwater. Nevada still has the highest underwater rate in the nation.
Kevin Sigstad is the Treasurer of the Nevada Association of Realtors, which advocated for the legislation. He says oftentimes homeowners would be working on a short sale. As they were negotiating with their lender, another arm of the bank would be going forward with the foreclosure process.
"So the homeowner would get a buyer and would be negotiating with a bank on the short sale terms and would be close to getting that transaction closed, only to find out that the bank had just foreclosed on it."
Now, under the bill, banks are forbidden from negotiating a short sale or mortgage modification at the same time they're trying to foreclose on that borrower. Lenders must inform homeowners of alternatives to foreclosure and warn them 30 days in advance of filing a notice of default, which is the first step in the foreclosure process.
Many of the terms in the state legislation mirror those in the National Mortgage Settlement, which was made with the five largest banks in the country. Sigstad says this bill covers the remaining 40 percent of banks in the state.
He says lenders have stricter timelines for foreclosure, but so do homeowners, as well.
"They have to engage the bank and they can't just drag their feet and say, 'Geeze, if I stretch this out maybe I can stay in my house for a year or two."
Sigstad says the process could improve Nevada's shortage of homes for sale, but many in the industry are still unsure of how the new regulations will ultimately impact the housing market.