A Nevada law that went into effect in October 2011 with the intent of helping to stabilize the housing market has had the opposite effect, some critics say. The new law makes it a felony for lenders to foreclose on properties without first proving that they own the mortgage.
Passed in the wake of last year’s robo-signing foreclosure scandal, in which several major mortgage lenders were accused of foreclosing on homes without verifying the necessary paperwork, Nevada lawmakers hoped the new measure would revitalize the housing market by reassuring buyers that they would have clear title upon purchasing a foreclosed home. However, because the law adds new steps to the foreclosure process, it has also significantly increased the time it takes to complete a foreclosure in Nevada, potentially contributing to stagnation in the housing market.
According to a recent report by ForeclosureRadar, the average foreclosure in Nevada now takes about 464 days, an increase of 37 percent since the law went into effect last fall. While some observers speculate that increasing foreclosure processing times may slow Nevada’s recovery from the foreclosure crisis, others believe it will help stabilize the market by preventing wrongful foreclosures and helping people to stay in their homes.
Alternatives to Foreclosure in Nevada
For distressed homeowners in Nevada, the prolonged foreclosure process provides extra time to seek out alternatives to foreclosure. Depending on the lender and the homeowner’s individual circumstances, several alternatives may be available to help prevent foreclosure. Potential options may include:
- Refinancing: Creates a brand new mortgage with different terms
- Repayment plan: Spreads delinquent payments out over several months to bring the borrower’s account back up to date
- Loan modification: Adjusts the terms of the mortgage, such as payment amount, loan duration or interest rate
- Partial claim: Repays past-due balances with a loan from the federal government
- Forbearance: Temporarily reduces or suspends payments in cases of extreme financial hardship
When facing the possibility of foreclosure, it can be helpful to discuss the situation with an expert in the field of foreclosure prevention. However, because foreclosure prevention scams are extremely common, it is important to be aware of the warning signs of foreclosure fraud and seek help only from legitimate professionals. For more information about your legal rights and option when facing the loss of your home, contact an attorney with experience helping clients avoid foreclosure.