The new laws in Nevada just got passed only last month and it has miraculous effect already on our rapid foreclosure. New default notices were way down last month in Las Vegas (116 or so) and foreclosure filings in Nevada plunged in October during the first month of a new state law. Only more than 600 default notices were filed against homeowners through Oct. 25 in the state’s two most-populous counties, Las Vegas’s Clark County and Reno’s Washoe County. That was down from 5,360 in September, or an 88% drop, according to data tracked by ForeclosureRadar.com, a real-estate website that tracks such filings.
As you may know, Nevada’s state Assembly passed a measure that took effect on Oct. 1, 2011 designed to crack down on “robo-signing,” where bank employees signed off on huge numbers of legal filings while falsely claiming to have personally reviewed each case. This new law makes it a felony—and threatens to hold people criminally liable—for making false representations concerning real estate title. There are civil penalties of $5,000 for each violation. The good thing is that the new legislation has almost stopped foreclosure.
The bad thing is that the banks would have glut of homes which it cannot dispose off easily. The surplus homes would create problem for everyone including the banks, homeowners, and of course the local economy. The continuous auctioning of these properties were a capitalistic action which should not be stopped for any convenience. Again, if banks are at fault, the homeowners have not done justice with their contracts as well. Many of the delinquencies are deliberate and intentional. These “walks-aways” should be punished. Everyone should be made responsible for their actions or inactions. Furthermore, it may tempt many people to be intentionally delinquent on their homes. They may avoid taking care of these homes because they had no attachment. Possibly, they may not pay the HOA dues. Now, we have homeowners living in these homes, and still not taking care of their property. The problem with delinquency, and dependency (as you may see with immigrants coming from Communist countries, who get government housing, ration, jobs etc) that they do not strive enough to make their justified living when they come to US. Unfortunately, this dependency is taught in USA creating road blocks to the capitalistic system. We are unfortunately heading towards a socialistic economy. We should not forget that we live in a capitalistic society and should not help greedy and needlessly protect greedy and non law-abiding people. Of course, we are creating a massive delinquent homeowners society who had scant regard of their promissory notes, contracts, and ethical agreements. These folks always shift the accusation on someone else. They have not done anything wrong according to them. All the wrongs were done by their lenders, servicers. This is a very bad way to handle the recovery on homes. This would create the height of lack of accountability. Even though we had supported homeowners (and always would do) but the unintended result of this law would have a terrible effect on the banks and the general restoration of our economy.
What should have been done?
A simple solution which of course would not need the congressional approval (as they have the tendency to mess up everything) would be to encourage banks to refinance the mortgage of everyone regardless of the appraisal or the FICO score. Come on! FICO cannot be upright, everyone’s credit had taken too many hits in this struggling economy. It is difficult to keep your heads above water. So the basic solution is following:
1. Give refinance to every homeowner or at least the choice of it on the current interest rate. No one should be denied
2. No penalties, or fines of any kind.
3. Ignore FICO
4. Ignore appraisal. It is gimmick. (May be a drive by appraisal can be used)
4. This refinancing would generate plenty of business for lenders, brokers, loan agents, appraisers, home construction specialists etc. It would rejuvenate our markets. Every one would be busy and make money. This is the only solution towards restoration of our economy. I hope Mr. Obama would be listening. Mr. Obama can also fire his treasury secretary along with housing secretary. They have proven to be nincompoop. I personally think these folks are playing the same role what Dan Quayle had done for George Bush’s (Sr.) in his relection campaign. (he was the biggest hurdle in his reelection)