In the last blog post about Las Vegas real estate market in 2013 I discussed the big picture and forces that will shape our real estate market in at least the next year or two.
I promised that I will discuss 3 bills that are going to pass Nevada legislation that will be instrumental in our market.
The first bill is Nevada AB-300 which was to modify AB-284 which is erroneously blamed for lack of inventory in Vegas. Any effects this bill has will be wiped out by the next 2 bills.
Well the most important news about Las Vegas real estate market is that changes to Nevada AB-284 which is believed to be the reason for more than 80% decline in Las Vegas foreclosures since 1/1/2012 are imminent and WILL be passed shortly. What it does in a sentence is it replaces personal knowledge about a chain of mortgage ownership with personally reviewed. I have written about this change in my last blog post.
It is widely and wrongly believed that this change will result in a significant increase in the number of Las Vegas foreclosures. There may be a significant increase for a short period to scare delinquent borrowers into realistically marketing their Las Vegas homes instead of listing their home just to postpone foreclosure. Laymen also believe that the increase in the number of foreclosures will result in a 20% decline in today’s market values (not asking prices, values) and that is not going to happen, period. (I did not know about the next 2 bills when I wrote this.)
The number of notices of defaults has tripled in February, 2013 as compared to same month last year as headlined in news organizations. All it means is that banks have given notice to borrowers who have been living in their home, mortgage free for average of 28 months, saying hey guy, you are behind on your payments and are defaulting on your mortgage. Wow, what earth shattering news, like the borrower didn’t know. It is the notice of Trustee sale that counts.
However 2 bills have already passed the Nevada Senate and are waiting for the other chamber to pass in order to become law. So you will not hear about it for a while. These 2 bills are GAME CHANGERS and if become law, what you have seen so far is nothing, things will get much, much worse for buyers and investors and prices will shoot up significantly as they are right now. The worthless median price will show a big jump in June and July that reflect homes that have gone under contract in March and April.
2013 Nevada Legislative Session update:
SB321 Enacts a “Homeowner’s Bill of Rights.
This bill would provide for additional noticing requirements to homeowners by lenders prior to and during the Notice of Default period of foreclosure. The notices would advise homeowners of foreclosure prevention alternatives and the process by which to apply for such alternatives. It would also establish a requirement for a lender to provide a single point of contact with whom a homeowner can communicate through the course of the foreclosure proceeding.
SB321 passed the Senate already…our Lobbying Team will be meeting with the bill sponsor this week to address the sections that are troubling to the industry. Among the sections of the bill that appear to be problematic are sections 10, 11, 12, 13 (timelines) as well as sections prohibiting dual tracking, a no opt-out provision for homeowners and increased litigation risk for servicers.
This bill as currently written will substantially lengthen the already delayed foreclosure process in Nevada.
The bill is modeled after the CA Homeowner Bill of Rights – which when enacted in January 2013 resulted in thousands of properties in the short sale process canceled and has significantly slowed down foreclosure filings.
The California Homeowner Bill of Rights (HBR) is the main driving force behind the recent slowdown in foreclosure sales and short sales in the Golden State, according to a research report from Barclays
SB 424 – passed the senate
Follow the bill here:
The bill, in its original form, would provide that if a lender forecloses or purchases real property at the foreclosure sale or trustee’s sale, and intends to accept an offer to sell the real property for an amount less than the amount of the debt, the lender must afford the borrower a right of first refusal if:
- The real property is a single-family dwelling and the borrower was the owner of the real property;
- The borrower used the loan to purchase the real property; and
- The borrower occupied the real property continuously after obtaining the loan.
This means the long sought after cut in the principal is going to be possible. Now they say that is not going to happen as the borrower’s credit rating would be too bad to get a loan, but not really. If these owners had saved the mortgage that they did not pay for about 3 years and counting, they should have tens of thousands saved up and would be able to get a loan.
At any rate the way things are going 30% appreciation for homes priced below $300,000 in 2013 is very possible, prices will keep going up.