After studying the foreclosure issue for nearly four years, the Nevada Association of REALTORS® (NVAR) released its latest “Face of Foreclosure” report, offering recommendations for state lawmakers and discounting fears about a so-called “shadow inventory” of foreclosed homes.
NVAR President Patty Kelley said the issue has changed substantially since NVAR started researching its first “Face of Foreclosure” report in 2009.
NVAR has begun briefing Nevada lawmakers about the report and recommendations. They include amending language in a widely publicized state law passed in 2011 called AB284 to remove barriers that may be discouraging banks from foreclosing when such action is truly warranted. AB284, a law sought by Nevada Attorney General Catherine Cortez Masto primarily to curb “robo-signing” of foreclosure documents and similar abuses, has been blamed by critics for stalling or preventing foreclosures and reducing the number of homes available for sale.
“We’re suggesting some changes to AB284, but our report concludes that this law’s effect on our housing supply and overall housing market has been overstated by many of its critics,” Kelley said.
Another key recommendation from NVAR’s “Face of Foreclosure” report calls on lawmakers to clarify and limit the role of attorneys who have become increasingly involved in the real estate business, often encouraging homeowners to “walk away” from their mortgage, file bankruptcy and take other more drastic actions.
“In most cases, we think local homeowners are better served to work with their lenders, free counseling services and REALTORS® to seek a short sale,” Kelley added.
The 2012 edition of NVAR’s “Face of Foreclosure” report utilized public polling and other research, painting a picture of frustrated but oddly optimistic Nevadans who believe government generally failed to address the foreclosure crisis. They were divided over whether homeowners should “strategically default” on their mortgages. Forty-five percent of all Nevadans surveyed last year said “there is nothing wrong” with strategic default, or “walking away” from their mortgage, while an equal number disagreed, saying homeowners have a legal and ethical obligation to pay their mortgage if they can.
Since 2009, NVAR’s “Face of Foreclosure” reports urged lawmakers, lenders and others to work together to streamline and facilitate short sales, which are seen as a more beneficial alternative to foreclosure and occur when a lender agrees to sell a property for less than what the borrower owes on the mortgage.
Since then, Kelley said progress has been made and foreclosure rates have been falling. She cited recent statistics from the Greater Las Vegas Association of REALTORS® showing that short sales accounted for a record 45.8 percent of all existing local home sales in December. Foreclosures, which made up more than half of all sales a few years ago, accounted for only 9.5 percent of all Southern Nevada sales in December 2012.
In NVAR’s 2012 survey, Nevadans expressed a dim view of government programs designed to help homeowners. Only 9 percent of those experiencing foreclosure and 10 percent of all Nevadans surveyed last summer said foreclosure prevention programs have helped. Still, 55 percent of all Nevadans believed government has a role in addressing the problem.
Kelley said REALTORS® and researchers who worked on the project “are now getting the sense that most Nevadans are ready to turn the page and move past this foreclosure issue as best we can. They see home prices rising and foreclosure rates falling.”
Despite expressing frustration with the duration and reaction to the problem, NVAR’s 2012 survey showed Nevadans remained relatively optimistic about home ownership. In fact, 26 percent of those who’ve faced foreclosure said they are at least “somewhat likely” to buy another home within two years. NVAR’s research showed that 79 percent of those who faced foreclosure still believe owning a home is “part of the American dream.”
Kelley said NVAR hopes its “Face of Foreclosure” reports help government and industry leaders understand and find solutions to issues facing thousands of homeowners in Nevada, which has had one of the nation’s highest foreclosure rates in recent years.
The award-winning series of reports was commissioned by NVAR, utilizing information from Silver State Analytics and research conducted by national research firm SGS. SGS compiled data from leading sources, held focus groups and polled thousands of Nevadans, including those who had either experienced or narrowly avoided foreclosure.