Paperwork Hassles, Red Tape the Target of New Homeowner’s Bill of Rights

October 1, 2013
mortgage lending news

A Nevada law, effective Oct. 1, could help state homeowners better deal with their bank and avoid foreclosure. State Senate Bill 321, also called the Homeowner’s Bill of Rights, requires lenders to have one point of contact that can help struggling borrowers on foreclosure issues. The law, supported by the Nevada Association of Realtors, also forbids bankers from trying to seize the home of a borrower who is in the process of pursuing a short sale and requires lenders to provide homeowners with information such as foreclosure prevention options before seizing a house.

Additionally, SB 321 compels banks to give at least 30 days' notice before filing a notice of default against delinquent borrowers and makes it easier for distressed homeowners to short sell their property to a friend or relative and then repurchase it or rent it back -- a previously illegal practice. While the law does include exemptions and does not allow delinquent borrowers keep their homes forever, it could extend the foreclosure process and make it easier to avoid by renegotiating a loan or completing a short sale. Under the new law, homeowners must respond to a bank’s offers for foreclosure prevention within 14 days of receipt; otherwise, the offer is deemed rejected. SB321 also does not apply to Nevadans who are covered by last year's $25 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.

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