Buckley bill aims to slow foreclosures

CARSON CITY -- Assembly Speaker Barbara Buckley introduced a bill Monday that she estimates could reduce the number of foreclosures of owner-occupied homes in Nevada by about 12,970.

Under Assembly Bill 149, the bank or other lender would be required to make a "good faith" effort in a mediation hearing to work on a new loan agreement with the borrower to avoid foreclosure.

The Las Vegas Democrat said that too often, borrowers end up speaking with the person who services their home mortgage, not with the lender. Typically, their original mortgage company sells the mortgage, and they have problems even locating who owns their loan, she said.

Buckley said the person who services the loan generally has no financial interest in trying to make new loan arrangements with the borrower.

In contrast, she said, the lender has good reasons to work out new loan arrangements because if the home ends up in foreclosure, the selling price probably will be far less.

"It will cost the lender more if they take the home back and then they have to sell it at a reduced price," Buckley said. "In the end, studies have shown it will save them money to keep the owner in the home."

The Senate and Assembly commerce and labor committees plan Wednesday to discuss Buckley's bill and other bills designed to head off foreclosures.

Assemblyman Marcus Conklin, D-Las Vegas, said a hearing will be held Feb. 25 on bills to help renters who must give up their homes in foreclosure cases.

Buckley based her 12,970 estimate on the number of homes that would be saved under a Center for Responsible Lending analysis. It estimated that 51,881 homes in Nevada will be foreclosed on in 2008-09.

Under the bill, the court system would ensure that lenders participate in mediation with buyers in danger of losing their homes. Lenders would be required to identify a person with authority to negotiate loan modifications.

Most Assembly members signed on in support of Buckley's bill, including some Republicans.

Assembly Minority Leader Heidi Gansert, R-Reno, said she had a cursory look at the bill and did not think it contains the needed deadlines for the lenders to act. She said Republicans eventually might support the bill.

During a news conference, Democrats said 48 percent of Nevada homeowners now have mortgages on which they owe more than their homes are worth. Other homes in neighborhoods with foreclosures have dropped in value by $11,730, they said.

Conklin said that one in 11 homes in Nevada faces foreclosure and that the effects of the problem are far-reaching.

"It is the reason we face shortfalls in our budget," he said.

Buckley said that if the borrower is working and cannot afford an adjustable-rate mortgage but could pay a fixed-rate one, the lender probably would agree to the change.

"The bank or lender loses money every time they take back another home," she said. "A lot of times the homeowner cannot get anybody to work with them. If they can find somebody to work out an agreement, we think many of these foreclosures would stop."

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.