Will Nevada's AB284 be Amended in 2013?

Question

http://www.lasvegassun.com/news/2012/dec/09/banks-press-changes-strict-2011-foreclosure-law/
This article was published in the Las Vegas Sun today.  Nevada's part time legislature meets again in 2013, but will addressing the consequences of AB284 be a top priority?  I know many investors and people involved in the real estate industry hope for changes to the law in order to solve the artificial shortage caused by the law.  However, I'm not sure there is political will to make that happen yet. Supporters of the law will argue it's benefitted Nevada home owners by increasing sale prices. What do you think?

Robert Adams · Answer

Jeff S the lack of foreclosures due to AB 284 has had a direct and dramatic affect on the inventory. We went from having over 5,000 REO's hitting the market each month to under 500. There is no denying that this decrease in supply is a direct result of AB 284.

There are thousands of vacant or abandoned homes that will have to get foreclosed on as the owners have walked for various reasons. We will see an increase in foreclosures due to this as well as many other factors.

The market will soften but I believe it is necessary to return our market back to healthy appreciation and a more balanced market. Last year some neighborhoods saw appreciation as high as 25%. This is not healthy and they are numbers that we have not heard since the bubble days.

I think the new demand being way higher than a few years ago with help absorb these new properties as they become available so we don't see another dip in prices. But I also hope it softens the market enough to do away with these bidding wars that are driving up prices and making it difficult to find good deals.

Jeff S. · Answer

There was a related question regarding California’s Homeowner's Bill of Rights here.  If there’s a relationship between the number of foreclosures and inventory for sale on the market, I don’t see it.

Whether the banks are now able to foreclose more easily or not, they've been pretty clear they would rather work privately with homeowners through workout agreements, short sales, and the like.  It’s better public relations.  In fact, some months ago the largest REO brokers in southern California were explicitly told by the major banks to fold up the tent.  As we now know, this wasn't a bluff.

It’s been 10 or 12 months since the dramatic drop in inventories and the subsequent rise in prices out here (and I assume Nevada).  I’m not sure if this is a coincidence with the increase in foreign and hedge fund demand or brilliant market manipulation by the banks, but recent price increases have certainly reduced short sale losses.  Plus, the banks clearly got bloody noses in the court of public opinion due to foreclosing’s and they know it.  Hence, HBoR and AB284.

Just because it's easier for banks to foreclose if the AB284 is rescinded, doesn't mean they will.  And if they will, history shows it doesn't mean they’ll release the inventory to investors anyway.

I’d file this under the same wishful thinking where everyone thought there’d be a landslide of properties released after the 1st of the year.

Jeff

Robert Adams · Answer

AB284 is up for reconsideration right now (Feb 2013).

We are experiencing low inventory here in Las Vegas. The decrease is a direct result from AB284 that has caused banks to stop foreclosing. Since it was passed in Oct. of 2011, REO inventory has decreased dramatically. The bill is up for reconsideration (possibly adding some amendments to allow some types of foreclosures to resume) when the Legislature meets again in Feb. 2013. It will be interesting to see the new affects on the market once additional inventory is reintroduced. I for one think the market will soften slightly but not free fall like it was before. Right now, with inventory being as low as it is, buyers are in bidding wars often times competing with more than a dozen offers. With that being said people are paying above appraisal value and homes are appreciating again at a temporary rate that is way higher than it should be. A new wave of inventory would return the Vegas market back to healthy growth with perhaps 2 or 3 offers on each property, not a dozen.

Marc Bodinger · Answer

Wow 42 new officials for the state, that's a lot of new voices. Who has the majority now in NV's state government?

With so many changes this piece of legislation might take a while to get done in either direction.

Tiger M. · Answer

The rumor spread my way also about the number of NOD's that are filed but not moved forward, 50-60,000 is what is being stated by the Nevada Legal News. Almost sounds like stocking inventory for the hedge funds we were talking about over here http://www.biggerpockets.com/forums/56/topics/79566-pay-attention-if-you-are-in-the-real-estate-market

Tiger M. · Answer

Link broke- here it is again

http://tradewindvegas.wordpress.com/?p=403&preview=true

Tiger M. · Answer

This may help, AB283 and 284 are both in litigation and we will need to see that outcome. Our state legislature is in a transition due to term limits that expired. I believe there are 42 newbies with sizable learning curves. [/url]http://tradewindvegas.wordpress.com/?p=403&preview=true[url]

Phillip Dwyer · Answer

Marc Bodinger  Harry is a Senator for the federal government from Nevada.  He's not a state government Senator.  However, I'm sure he still has a lot of sway.  
The Las Vegas metro is a nation leader in mortgage loan delinquency, so we're talking big numbers.  Tens of thousands of homes.  Some reports say as many as 50,000-75,000.

Xing Zhu · Answer

I am certainly worried about it. But sooner or later, it will happen.
A WSJ article is saying that white house is going to replace Demarco 
because he is blocking the principal deduction advocated by the administration. If the administration can get the massive principal deduction going next year,  it will be a reasonable timing for AB284 to be relaxed.

Marc Bodinger · Answer

The only politician I know in NV is Harry Reid, has he made in case for either side of this legislation. I just went through the article a second time and do you know how many properties or dollar value of the real estate that may be affected?