RENO, NV - Starting Tuesday, a new Nevada bill will go into effect that gives homeowners some new protections.
Senate Bill 321, which passed the state Senate and Assembly unanimously, provides additional protections for homeowners who are facing foreclosure in our state.
According to RealtyTrac.com, one in about every 400 homes in Washoe County is in foreclosure. But it's not all bad news.
"We're seeing less strategic default," Kevin Sigstad, Treasurer for the Nevada Association of REALTORS, said. "It's shifted from a buyer's market to a seller's market."
"Obviously the market is improving; we've seen multiple gains the last year," State Senator Justion Jones (D) agreed.
"Though the market is improving, we're not out of the woods yet. "
"There's a lot to be concerned about," Sen. Jones said. "I know that there are still a lot of people facing foreclosure.
Sigstad says banks have learned lessons from the housing crisis.
"We know for sure that we're not going to see lending practices like we saw where people were getting 110% loans, 120% loans or coming in with little to no documentation."
But there are still some holes to fix, and legislators and realtors believe SB 321 is the solution.
To start, the bill bans the practice known as 'dual-tracking'.
"The bank would be working with you on one hand on a short sale and then pursuing foreclosure at the same time," Sen. Jones said.
Another benefit to this bill: banks are required to establish a single point of contact.
"We saw for years banks were giving the runaround. And it was just a difficult process. I think that really gives people a comfort that if they're dealing with their bank.. The bank has to deal with them in a fair and reasonable way."
Buit it's not just the banks that have new rules to follow. Homeowners also have new requirements.
"They have to respond to the bank within certain periods," Sigstad explains. "They have to decide if they are going to do a modification or a short sale and not do it serially. They have to pick an avenue and stick with it."
One very important thing to remember is the Debt Forgiveness Act, which allows you to do a short sale and not pay taxes on the mortgage that's forgiven; it expires this year. So if you plan on doing a short sale, you have a very limited window. The deal must be closed by December 31.