State Legislation Playing a Huge Role (Las Vegas)
State legislation has played a huge role in the quick recovery. AB284, which was passed by the Nevada State Legislature in October 2011, requires that a lender provide proof through a notarized affidavit that it actually owns the loan before it can foreclose. Failure to comply with AB 284 brings with it the potential risk of felony charges! How can a bank ask an employee to take that risk, especially since the mortgage industry has become so complex? As one of our clients told us:
AB284 has virtually stopped the NOD to foreclosure market. The buying public is now feeling it. The news has started to catch on. We are building new product as quickly as we can to accommodate and capture sales.
According to RealtyTrac, foreclosure activity in Las Vegas dropped 26% between the fourth quarter 2011 and the first quarter 2012. The number of foreclosure filings fell 61% compared to last year.
The Future
The bears believe that Las Vegas home prices will crash again because of the overwhelming number of underwater homeowners, many of whom have not made a mortgage payment in a long time. They claim that AB284 will simply delay another downturn in Las Vegas. However, we don't believe this will occur because:
Foreclosure Process Will Take Years: As lenders figure out how to complete their paperwork and reinitiate the REO process, it will take years to process them all.
Investor Interest Puts a Floor on Home Prices: We identified 16 investor groups that have purchased more than 30 distressed homes in Las Vegas in the last 18 months, and the dollars devoted to this industry have increased substantially in the last few months.
Tremendous Affordability: We do not believe that mortgage payments will permanently stay below rental rates. As long as rates remain this low, prices should rise.
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