New Nevada State Law Slows Down Mortgage Default Filings, For No - 8 News NOW

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New Nevada State Law Slows Down Mortgage Default Filings, For Now

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There was a significant decline in the number of mortgage default notices served on homeowners in the Las Vegas metro area and in Nevada in October, but not because of a sudden recovery in the housing market.

Instead it has to do with a new state law, Assembly Bill 284, which went into effect Oct. 1. The law requires the assignment of a mortgage or the beneficial interest in a deed of trust to be filed with the county recorder's office in the county where the home is located, rather than making this a voluntary option.

The law also requires any notices of default and election to sell real property to include an affidavit regarding the deed of trust, the amounts due, the possession of the note and deed of trust and the authority to foreclose. Failure to comply is subject to a civil penalty, and the penalty to make false representations concerning property title was increased from a gross misdemeanor to a category C felony.

The law has slowed mortgage lenders down in their bid to foreclose on homes by compelling them, in effect, to prove that they have the proper authority to instigate foreclosure actions. This has become a matter of dispute nationwide as criticism mounts against the unregulated Mortgage Electronic Registration Systems, which was set up by banks as a warehouse of mortgage-related documents. By using MERS instead of recorders' offices, banks have been accused of contributing to a muddled paper trail that calls into question who actually has beneficial interest in the mortgage loans as they get packaged and sold to third-party investors.

According to RealtyTrac.com, the new law contributed to a 34.5 percent decline in the number of foreclosure notices filed against Nevada homes in October versus September. Foreclosure filings include notices of default and trustee sales and properties repossessed by banks. That decline was caused mostly by a 75 percent decrease in default notices statewide.

Still, Nevada maintained the nation's highest foreclosure rate for the 58th straight month by having 180 housing units per filing, more than triple the national rate of 563 housing units per filing.

The Las Vegas metro area in October fell to fifth place among areas with at least 200,000 residents, after topping the list for 22 consecutive months. Las Vegas, with 162 housing units per filing, saw a 36.2 percent decrease in foreclosure filings in October versus September. But the metro area experienced an 80 percent drop in default notices.

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