Foreclosure mediation may not die after all

Nevada’s beleaguered homeowners who are still in danger of foreclosure despite rising home values will get some good news from the Nevada Legislature this week.

The Foreclosure Mediation Program, which was on the chopping block after a vote from the Legislature’s money committees, will be restored thanks to an appeal from Assembly Minority Leader Marilyn Kirkpatrick, D-North Las Vegas.

The program, which forces bank representatives to sit down with homeowners in foreclosure to review options and, in some cases, work out a way for people to keep their homes, was started in 2009 as the Great Recession hit Nevada harder than any other state.

But now, six years later, home values are rising, fewer people are using the program and its costs have increased. That prompted Republicans to suggest letting it expire. “While I appreciate the fact that we may be the slowest coming out [of the recession], the fact is we are coming out,” said Assemblyman Randy Kirner, R-Reno. “We’ve turned the corner on this one, and its time to move away from here and do something better with our money.”

The program is primarily funded by foreclosure settlement funds, fees paid by homeowners and fees paid by banks when they file foreclosure notices.

On the other hand, committee Democrats — primarily those from Southern Nevada — argued the program is still needed for some people struggling with house payments. “We are not out of the woods yet,” said Assemblywoman Heidi Swank, D-Las Vegas.

State Sen. Joyce Woodhouse, D-Henderson, agreed: “Things are getting a little bit better, but they’re not getting better very quickly.”

“It seems like we’re going through another round” of foreclosures, added Assemblywoman Maggie Carlton, D-Las Vegas. “I am very concerned about winding this down.”

Not only are there still plenty of homes underwater, but some people will face even higher payments as their home-equity lines of credit reset. As the Review-Journal’s Jennifer Robison reported Sunday, there are 46,047 home-equity credit lines in Nevada, and nearly 39,000 have negative equity, with the homeowner owing more than his or her house is worth. Most of those are in Clark County, and more than 11,000 will reset in 2016.

Kirkpatrick, for her part, told her colleagues that one in five homes in her North Las Vegas district are in foreclosure. “In Clark [County] we are far from out of [the recession],” she said. “This is real people’s lives.”

But committee Republicans were not persuaded; they voted to kill the program with Democrats voting in opposition. Kirkpatrick, however, wasn’t done lobbying: She said Tuesday that she’d managed to get commitments to restore the program’s funding, with a two-year sunset. This will keep the program alive through the next two-year budget cycle and allow the 2017 Legislature to decide its fate.

“I was able to make a very good case,” Kirkpatrick said when asked how she’d pulled it off. (During the committee’s meeting, she reminded her colleagues that she’d supported many other lawmakers’ pet projects in the budget-writing process. It’s a good bet she reminded more than one lawmaker of those instances.)

It would be a mistake, however, to think the program doesn’t have some Republican support, too. State Sen. Becky Harris, R-Las Vegas, has worked as a mediator and represented clients seeking foreclosure help. The program is the only way for homeowners to sit down with banks and try to mediate mortgage problems, she said. “It would be a mistake not to have this program in place,” she added.

In fact, Harris sponsored Senate Bill 321, which would allow homeowners who anticipate going into default to request mediation, provided a local housing counseling agency certifies they’re suffering from financial hardship. The bill would still have to pass to become effective, but had the program expired, those homeowners would have been without options.

But now, those options will still exist, at least for another two years. And that’s some rare good news for underwater Nevada homeowners.

Steve Sebelius is a Las Vegas Review-Journal political columnist who blogs at SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at 702-387-5276 or ssebelius@reviewjournal.com.