Default Research, Inc., (www.defaultresearch.com) one of the nation’s foremost aggregators of pre foreclosure data, reports that Las Vegas – a real estate market starving for good news – in October 2011 experienced one of the largest year-over-year drops in Notice of Default recordings since the company began tracking the Las Vegas housing market nearly a decade ago. Rather than a real estate market on the rebound, the numbers instead show a market recoiling as a result of new state laws which went into effect October 1, 2011.
Las Vegas recorded just 171 Notices of Default in October, down from 1,728 in October 2010 – a reduction of 90%. Burt Cooper, Vice-President of Default research, Inc., a leading aggregator of pre foreclosure listings in 34 real estate markets in 5 states, doesn’t believe these numbers are indicative of a market on the rebound, but rather are the result of lender fear.
“These new laws have some real teeth. The state of Nevada is taking a no-nonsense approach to robo-signing and other lender misbehavior. Instead of hitting financial firms in the wallet, these new laws have the potential to send offenders to jail, the one place executives have no interest in going,” said Cooper.
“The law requires foreclosing parties to put their money where their proverbial mouths are by signing an affidavit certifying that they have the legal authority to foreclose. State regulators and prosecutors will be watching, just waiting for the chance to pounce on anyone who takes advantage of Nevada property owners. Lenders are running scared, and the numbers prove it.”
Cooper points to other legislative action like California’s Mortgage Foreclosure Prevention Act and changes to U.S. Bankruptcy law, to show that government can sometimes cause positive, albeit short-lived results. And Cooper warns that the new laws won’t fix a badly broken real estate market because property owners in default are unable to get current with delinquent mortgage payments.
Cooper points out that the coming months will be crucial to determining the law’s real impact on the Las Vegas foreclosure market. “While it’s painful to admit, this law will have little lasting impact on the foreclosure market. Yes, Notices of Default recordings are way down,” Cooper said.
“But the reality is, the potential exists for thousands of underwater property owners to lose their homes. This law will force lenders to be certain of the details before initiating foreclosure actions, but they’ll eventually get their acts together. When they do, Notices of Default will skyrocket.”