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VEGAS INC NEvadans 'ready to turn the page' on housing crash REALTORS, From page 1 from 2011. And foreclosures made up just 9.5 percent of all sales in the valley in December, down from more than 50 percent a few years ago. While AB 284 tops the Association of Realtors' agenda for the legislative session, association officials recently told VEGAS INC that the law has not been nearly as destructive as many people think. They said foreclosures are falling for a number of reasons, including the improved economy and last spring's $25 billion National Mortgage Settlement between the nation's five largest mortgage service companies, a coalition of federal agencies and 49 state attorneys general. Under the settlement, which sought to address lending and foreclosure abuses, the banks must offer at least $17 billion in homeowner relief and $3 billion to refinance underwater borrowers. As a result, the banks now have little incentive to seize homes because they get credit under the settlement for short sales and principal reductions, not foreclosures, association members said. Also on the agenda: The association, which has 15,000 members statewide, wants Carson City to adopt criteria this session to help define whether a house is vacant or abandoned. It cautioned against adopting a homeowners' bill of rights, saying a balance needs to be struck between consumer protection and banks' ability to lend money. And it wants lawmakers to more closely examine how real estate lawyers handle property transactions. According to members, many law firms have overstepped state statutes by "pushing clients into loan modifications or bankruptcy when, in reality, a short sale is the best step for the consumer." Short sales soared to record levels last year and now account for nearly half of all sales in the region. The association last July released its "Face of Foreclosure" survey that showed that Nevadans are divided on whether it's OK to willingly default on a mortgage loan. VEGAS INC recently sat down with association CEO Rob Wigton, Legislative Chairman Keith Lynam, lobbyist Rocky Finseth and Strategic Guidance Systems Vice President Joel Searby, whose Gainesville, Fla.-based firm conducted the "Face of Foreclosure" survey. AB 284 has been blamed for clogging up the pipeline of homes that could go into foreclosure. How would your changes help that? SEARBY: First, you have to take issue | 4 FEBRUARY 2013 20130204_VI01_F.indd 13 | leila navidi Market talk: From left, Keith Lynam, the Nevada Association of Realtors' 2013 legislative chair; Rob Wigton, the CEO of Nevada Association of Realtors; and Joel Searby, of Strategic Guidance Systems, discuss the Nevada Association of Realtors' "Face of Foreclosure" report at the Trump International Hotel in Las Vegas. with the idea that AB 284 has clogged the market. That is just not supported by the data. There certainly was a canyon of notices of default when 284 came along. Everyone had to stop and get their house in order to make sure they were compliant. But if you were to draw a trend line to where you would have expected those to go if 284 had not been in place, after a couple of weeks or at most a couple of months, it continued exactly where you would expect it to be. The decrease in foreclosures has tracked with the decrease in delinquencies, the improving economy, the decreasing unemployment rate and other trends. So why would you want to change the law? SEARBY: Well, it's more of a clarification; I don't know that any major changes are being recommended. It's simply to say, "Let's bring it back to the forefront and have a conversation about it so we can remind everybody that 284 was not initially a major problem. Let's clarify a few small pieces." I don't think it's a game-changing recommendation. LYMAN: The people you hear from are speaking from the standpoint of emotion, from not understanding the bigger picture. They just don't want to recognize that there are other things going on in the market and in the industry that caused the lack of REOs. You could repeal 284 today in its entirety and nothing will change. There will be no more REOs on the market than there are today. It doesn't benefit a bank to foreclose on a property. But if you want to change 284, you obviously see something wrong with it, unintended consequences. Why else would you want to change it? LYMAN: I don't know that I would term it as being "wrong" as much as I would say that we need to clarify. We don't need people in their homes today who get a knock on their door tomorrow and are faced with being booted because some paperwork that the financial institution screwed up in the first place was not in order. I think those things need to go. Also, there needs to be a reintroduction of the threat of foreclosure put back into the market. The banks aren't taking any action. What could that threat be? LYMAN: We need a motivating factor. Right now, homeowners are sitting in their houses, they haven't made their payments in "X" months, and the bank has done nothing. Of course they're not going to make their payments. Is it a matter of getting homeowners to pay or banks to crack down? LYMAN: If the homeowner were able to pay, that would be one thing. But I don't know that that's the case. At the end of the day, it's up to the banks to start gaining some control over what they're doing. They control the process. There's nothing that stands in their way today to foreclose on a home, other than their own financial wherewithal. WIGTON: Certainly the national settlement has disincentivized the banks to foreclose; they get no offsets from foreclosing. They get tremendous offsets for working with the home-seller to short sell it, to reduce their principal or even to take a deed-in-lieu. The banks are in no position to want to step up the foreclosure process. SEARBY: Also, you cannot make a direct correlation between AB 284 and some kind of reduction in the inventory. The data does not support that. There have been accusations that when AB 284 passed, there was nothing to sell because everybody just said, "Well, I can stay in my home as long as I want." If that were true, what you would see is an increase or at least a stabilizing of the delinquencies and a decrease in the foreclosure starts. That's not the case. There was no artificial, drastic change from 284. It's really a 13 1/31/13 2:58:19 PM