Republicans back Buckley’s foreclosure plan

CARSON CITY -- Conservative Republicans, banks and almost everyone else expressed tentative support Wednesday for Assembly Speaker Barbara Buckley's bill to lessen the foreclosure crisis in Nevada.

Under her Assembly Bill 149, banks and other lenders would be required to participate in court-ordered mediation hearings at which loan modification agreements might be developed that would keep the home buyers in their homes.

The Las Vegas Democrat estimated that 17,000 home buyers would keep their homes if they could secure better financing during such mediation hearings. Nevada leads the nation in its rate of foreclosures, with about 70,000 people expected to lose their homes to foreclosure this year.

Buckley spoke during a joint meeting of the Senate and Assembly commerce and labor committees.

Under the bill, which could go into effect July 1, people facing foreclosure could apply to the Administrative Office of the Courts, in the Supreme Court, and request a mediation hearing.

Lenders would be required to send a representative with the power to renegotiate loans to the hearings. Judges, retired judges and hearing masters would conduct the hearings.

"We recognize the importance of this issue to the citizens of the state," Chief Justice Jim Hardesty said. "This is an all-hands-on-deck crisis."

He asked legislators to give judges a lot of flexibility in working out solutions because they have plenty of experience in arbitration and mediation.

The state would allocate additional funds to pay for mediators. The cost has not been estimated.

"This bill is not going to be the cure-all," Buckley said. "The judge isn't just going to order the lender to reduce the loan by 20 percent. That isn't in the bill. They will come together and see if a resolution can be made."

Several Republicans gave their tentative support.

"This bill represents intervention into the private sector that I would generally be uncomfortable with," said Sen. Warren Hardy, R-Las Vegas. "But these are not normal circumstances, and I want to be part of the solution."

Assemblyman James Settelmeyer, R-Gardnerville, said his research shows similar efforts to stop foreclosures were made in the Depression and upheld by the courts.

"It has such potential to help out all our constituencies," added Settelmeyer, who suggested lawmakers add a date on which to end the program if the economy improves.

Representatives for most major banks present at the hearing endorsed the proposal. Only one person, the owner of a lending company in Las Vegas, testified against it.

Buckley appointed her and other banking representatives to a group that will consider amendments to the bill.

Buckley said she hopes the bill can be approved in time for people to seek loan modifications before they are forced to default on home mortgage payments.

She also expressed concern that as a result of such a new law, 10,000 or more people might file immediately for mediation hearings and overburden the court system.

"We want to make sure we have adequate judges available to mediate, especially in the beginning when we will have a ton of people requesting help," she said.

Hardy questioned why more lenders on their own are not already trying to work on loan modifications to keep people in their homes.

Buckley said some are, but most are not.

In her private job as executive director of Clark County Legal Services, Buckley said, people come into her office seeking help because they cannot locate their lender. Some want to renegotiate their loans at new rates they can pay, she said.

Too often, banks sell their loans to other companies, she said, and the only person available to home buyers is someone who services the loan who has no financial incentive to work on a loan modification.

The high foreclosure rate has caused a "free fall" in the value of homes in neighborhoods with foreclosures, Buckley said.

Today, 48 percent of homes in Las Vegas are valued at less than what their buyers owe on their mortgage.

"We don't see the bottom yet," Buckley said. "I have to update the figures, and every month it is worse."

Lenders never are going to recoup their investments if they simply allow homes to go into foreclosure when other options are available, she said.

They will go without payments for months, the home won't be kept up, and the foreclosure sale price will be low, she said.

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