Friday, Nov. 27, 2009 | 3 a.m.
Foreclosure filings in Nevada fell 26 percent in October compared with the previous month, and the decline is being attributed to the state’s mediation program. As Brian Wargo reported in last week’s In Business Las Vegas, the program brings together homeowners and lenders to try to work out a deal to avoid foreclosure.
State law mandates that lenders offer mediation to homeowners before foreclosing on a property. The lenders are not required to modify a loan, but in a mediation, they must send someone with the authority to make a decision. The program started July 1 and quickly gained attention. The Nevada Supreme Court, which oversees the program, said 3,332 requests for mediation have been made as of Nov. 4.
Analysts say the program appears to be working, judging by the drop in the number of foreclosures. The question is whether the program will keep foreclosures down over the long run. Analysts say other states’ mediation programs have merely delayed foreclosures. RealtyTrac spokesman Daren Bloomquist said the Nevada program is showing signs of being more successful. Nevada encourages homeowners and lenders to negotiate to try to reach an agreement that would stave off foreclosure.
Robert Noggle, a Las Vegas real estate attorney with Black & LoBello, said the anecdotal evidence he has heard from mediators suggests that 60 percent of the mediations have resulted in deals that prevented foreclosure. Noggle said those deals have included principal reduction, lower interest rates or short sales.
“This program is really a game changer for homeowners in Nevada,” Noggle said. “I think this program will prove out over time.”
We are glad to see signs that the program is working and we hope Noggle’s assessment is correct. Foreclosures have taken a toll on our communities and our property values. Lenders should make every effort to work with homeowners to prevent more foreclosures.