Nevada Scrambles To Clear Up Confusion Over New Mortgage Law

State lawmakers, the Gibbons administration and the attorney general's office are scrambling to clear up confusion over fuzzy wording in a new law that's making it tougher for some qualified Nevadans to get home loans.

Some major lenders have said they may stop or have already stopped making "stated income" loans because of the wording in the new law, which is intended to ensure that a borrower is able to repay a loan.

"Stated income" loans account for a quarter of all home loans in the state, and about half of the loans in the Las Vegas area.

Such loans also have been called "liars' loans" by some critics who say they encourage people to overstate their income to get a better interest rate.

The problems with the new law come at a bad time with Nevada ranked No. 1 in the nation for foreclosure rates on home loans and experiencing a slowdown in home sales that mirrors a national pattern.

Joe Waltuch runs the state Mortgage Lending Division.

He says lenders have overreacted and what's needed is some common sense.

He says a "good faith" verification effort on the part of lenders will ensure compliance with the new law.

Brenda Erdoes, chief legislative counsel for state lawmakers, is writing an opinion that will support Waltuch's letter.

And the attorney general's office will follow the guidelines from Waltuch
and Erdoes.