What is The Nevada Homeowner’s Bill of Rights Law?
The Nevada Homeowner's Bill of Rights, SB321, became law after the State Senate and Assembly passed it unanimously. Originally put forth by state Senator Justin Jones, it was signed into law by Nevada Governor Brian Sandoval back on June 3rd, 2013.
It should be noted that this blog post is a (very) brief snapshot of the law. In essence what SB321 does is require the banks to take proper consideration for loan modifications prior to initiating foreclosure. One of the fundamental aspects of this newly enacted statute prohibits servicers from "Dual Tracking.” In other words, they are not allowed to attempt a foreclosure on a home while simultaneously working on a short sale with a property owner. By doing so, in theory, this should advocate short sales as a more constructive alternative for the distressed home owner.
Furthermore SB321 imposes additional restrictions on both borrowers and mortgage lenders. For example, SB321 provides distressed property owners "one bite at the apple" while seeking out different types of relief from the bank. If an initial request has been settled and all options exhausted, the mortgage lenders are then free to foreclose on the property. This is assuming a foreclosure is justified at that time. Likewise homeowners are required to respond to a lender's correspondence about foreclosure prevention within 14 days of receiving such a letter. If no answer is received the offer is considered rejected.
In addition, under this law banks are required to establish a primary point of contact when dealing with homeowners. This should help curb frustrations distressed property owners may have with the banks, while allowing Las Vegas real estate agents to work efficiently on their behalf. Prior to this, homeowners often had no primary contact and were shuffled around by their banks as they tried to keep their home. Not very nice.
This new law excludes financial institutions that have foreclosed on less than 100 properties in the state of Nevada. Furthermore banks that are already in compliance with the federal Consumer Financial Protection Bureau regulations are also exempt from this SB321.
Will this law slow down the rate of foreclosures in Las Vegas and elsewhere in Southern Nevada? It most certainly may and some believe it can substantially delay the foreclosure process altogether. Others are concerned that it will keep our inventory artificially low. As I write this however, inventory has grown a a bit and I anticipate it will continue to do so into 2015. Also, at this time, REOs make up a very small segment of our overall inventory. Because of this, I doubt it would make a substantial difference.
Ultimately though, the best way to accurately quantify the effects of this new law would be to examine the data in retrospect. In other words, guess we’ll have to wait and see.