LAS VEGAS -- Nevada foreclosure starts reached a 17-month high in February, providing more evidence that banks have begun figuring out how to navigate around a 2011 state law that made it tougher for mortgage lenders to initiate foreclosure proceedings.
ReatyTrac.com, which provides real estate analysis, reported Wednesday night that filing of default notices in Nevada rose 333.7 percent last month compared to the same month in 2012. Nevada also remained the state with the nation's second highest foreclosure rate behind Florida for the fifth month in a row.
RealtyTrac, based in Irvine, Calif., reported that Nevada in February had one foreclosure filing for every 320 housing units, more than twice the national average. Among metropolitan areas, Las Vegas had the nation's sixth highest foreclosure rate with one filing for every 283 housing units.
Foreclosure filings include notices of default, notices of pending trustee sales and repossessions by banks.
"At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," RealtyTrac vice president Daren Blomquist said. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year."
Nevada had 753 bank repossessions last month, 58.7 percent fewer than in February 2012. The decline in such repossessions has been attributed largely to Assembly Bill 284, the 2011 law that requires lenders to do more to prove that they have the authority to foreclose on a home when the owner has defaulted on mortgage payments.
But the spike in default notices last month -- 1,995 were filed in Nevada -- could translate to a sharp increase in bank repossessions later this year. That means more foreclosed homes could hit the market at a time when sale prices have risen due to a tight supply of available residential units.