When Reuters finally figures something out we should all sit up and take notice.
Reuters has discovered that the blizzard of foreclosure laws, which were intended to solve the foreclosure problem actually caused more harm than they did good.
Nevada’s AB 284 is the case in point. When AB 284 went into effect foreclosure action ground to a halt. The banks were fearful of doing what needed to be done. Consequently, the needed cure was delayed and the crisis was prolonged.
Notice of Default Filings
The government caused the foreclosure crisis. And now the government set out to fix the crisis. And whenever the government gets involved we can be sure that the government’s solution will be much worse than the original government induce problem.
When legislators attempt to protect the homeowner who hadn’t paid his bills they actually harm the lender and anyone that may want to get a loan in the future. Why would a lender make a loan where the legislature could just declare that the loan never needs to be repaid?
“Many state laws that stretch out the period for legitimate foreclosures result in no added benefit for the homeowner and produce harm to the housing finance system and to neighborhoods,” said Alfred Pollard, general counsel to the Federal Housing Finance Agency, at a House of Representatives oversight hearing in March.
Ricky Beach, a Reno real estate agent thinks the law killed the market in the Reno-Sparks area.
Ricky Beach, a real estate agent in Reno, Nevada, said the new law, AB 284, “has pretty much killed the market here.” The lack of foreclosure activity has led to a dearth of inventory, he said, with the number of homes for sale in the area down to 778 today from more than 1,700 in September.
“The bill did nothing to solve the crisis – it’s just prolonged it,” Beach said. “Sooner or later the banks will work out how to deal with the law. And then foreclosures will hit the market, and prices will crash back down.”
Malik Ahmad, a Las Vegas attorney agrees:
Malik Ahmad, a Las Vegas foreclosure defense lawyer who has spent the last six years trying to help vulnerable borrowers deal with unscrupulous banks, said the law had completely changed his view of the nature of the crisis.
“This law has become a mockery,” Ahmad said. “I am now turning down clients every day who I know have no intention of ever trying to pay their mortgage. They just want to stay in their homes for free. And that is a bad situation for everyone, lenders and homeowners.”
Read more here.
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