(MCT)—For years, the housing news in Nevada has been unrelentingly bleak: Nearly 3 in 5 homeowners, and even the state’s attorney general, are underwater on their home loans. In Las Vegas, home prices have tumbled further than in any U.S. metropolitan region.
So when market researcher RealtyTrac announced a 75 percent drop in the number of Nevada homes entering foreclosure in October, even as those numbers surged elsewhere in the country, things seemed finally to be looking up in the Silver State.
That news, though, did not result from a reversal of fortune in the Nevada housing market. It was spawned by a new Nevada law that plays hardball with companies doing the foreclosing.
Assembly Bill 284, which took effect in October, requires those foreclosing on a home to file an affidavit proving they have the right to bring the action—and it increases civil and criminal penalties for using fraudulent documents in a foreclosure.
The new law was an attempt “to close any loopholes that a criminal element likes to find,” Nevada Attorney General Catherine Cortez Masto said. But it also has forced banks and other companies in the foreclosure business to back off, at least temporarily.
Weeks after the new law went into effect, Masto announced what may be the first criminal charges to result from widespread revelations last year that banks used faulty means to foreclose on delinquent borrowers.
A Clark County grand jury in November indicted two Southern California title officers on a combined 606 felony and misdemeanor counts, alleging the two headed a vast “robo-signing” operation in which tens of thousands of foreclosure documents were fraudulently filed in the Las Vegas area.
“This is real important stuff because it asserts that bank employees and companies that work for banks actually have to follow the law, and if they break the law, they can be indicted,” said Kurt Eggert, a Chapman University law professor.
Nevada has been one of the states hit hardest by the housing bust.
Las Vegas residents have seen the worst home-price declines of any major metro area in the nation; prices are down 60 percent from the August 2006 peak, according to the Standard & Poor’s/Case-Shiller index. Vegas also had the highest foreclosure rate of any major U.S. city for 22 months until October.
About 58 percent of Nevada homeowners are underwater on their homes, which means they owe more on their mortgages than the current values of their property. That is the highest percentage nationwide, according to CoreLogic, a Santa Ana, Calif., mortgage data tracker.
“I understand the frustration,” said Masto, who is part of that group.
The 75 percent month-over-month decline in Nevada foreclosure activity was in notices of default, the first step taken by a lender seeking to repossess a house.
The latest figures also show that Las Vegas now ranks below Stockton, Modesto, the Vallejo-Fairfield area in Northern California and the Inland Empire—all regions in California—for the highest foreclosure rate, measured by the number of total foreclosure filings per housing unit in the area.
The Las Vegas housing market still is far from healthy.
In the Vegas suburb of Henderson, Clayton Wight was among the first in 2007 to buy in the upscale Inspirada development, an experiment in new urbanist design with broad sidewalks, homes with porches and walkable parks. Developers left it unfinished after the market crashed.
The computer analyst said he thought the home was a good investment for $240,000 but now feels trapped: The home could fetch about $160,000 by his estimate. Many neighbors have lost homes to foreclosures, and he is skeptical that the end of the crisis is in sight.
“There doesn’t seem to be anybody with any answers,” said Wight, 59, walking his dog on a recent morning.
Times at www.latimes.com
Distributed by MCT Information Services.