Foreclosure games

A handful of major financial institutions are temporarily halting foreclosures, which is really good news -- if you're not paying your mortgage.

For the vast majority of Nevadans who are still making their house payments on time every month -- even if they're hopelessly underwater -- foreclosure moratoriums mean they'll have to wait even longer for any kind of improvement in the value of their homes.

That's the worst kind of news.

The halt to default and foreclosure proceedings is rooted in the legal process banks must execute to claim a property. Basically, Bank of America and other lenders were running foreclosure sweatshops, never having anyone read the documents before employees signed them.

Because so many mortgages were sold and bundled as securities, many lenders have no idea who actually holds title on properties being foreclosed. In some cases, the banks might lack the legal authority to foreclose. Such sloppy and complicated practices further shake the public's confidence in banks and home ownership. If investors and other prospective buyers don't have faith in the legality of foreclosure proceedings, they won't take the risk of buying one.

All this comes just as Southern Nevada foreclosure purchases were starting to keep up with the flow of new foreclosures put on the resale market.

Lawyers can slug out the details of each particular default, but what's not at issue is the need for initiating foreclosures: Someone's not paying the mortgage.

This paperwork morass, banks' suspension of foreclosures and the call from state attorneys general -- including Nevada's Catherine Cortez Masto -- to halt all foreclosures could provide homeowners on the edge with just enough incentive to finally walk away from their houses. It's nuts.

At this point, anything that stalls the much-needed churning of the housing market, especially in Nevada, needs to be worked out ASAP before things get worse again. Banks and politicians alike must stop incentivizing bad behavior and keep moving toward the day when foreclosures are the exception in the resale market, not the price-sinking norm.