Friday, October 15, 2010

How will the Foreclosure Moratorium affect Las Vegas?

Bank of America, Chase and GMAC, among others, have announced that they will be temporarily suspending new foreclosures in 23 states that use the judicial foreclosure process pending internal review of their paperwork. (Nevada uses non judicial foreclosure procedures.) In addition, Bank of America announced that they will extend their temporary moratorium to all 50 states. How will that affect Las Vegas foreclosures? The Las Vegas real estate market has been one of the hardest hit by foreclosures in the past few years, though things have seemed to stabilize over the past six months.

At first the rumors were flying that any bank owned foreclosures currently in escrow would be canceled and that many of the title companies would refuse to insure such transactions. Las Vegas real estate agents and their buyers were in a panic. Many buyers had already spent hundreds of dollars on inspections, appraisals and HOA documents that they feared would be lost, not to mention the trauma of not being able to move into their new homes.

I am delighted to report that these rumors are unfounded! While some deals may be canceled after review in the 23 states that use the judicial foreclosure process, it does not appear that transactions currently in escrow in Las Vegas will be affected. And though there are some title companies that have announced they will not be issuing title insurance on bank owned properties in the 23 states, it is not anticipated that this will occur in Las Vegas.

It does look like Bank of America will not be taking back any more Las Vegas homes through foreclosure during the next few months, however, at least until after the first of the year. Yet typically most banks suspend foreclosure proceedings during the holiday months anyway, so this is not expected to have much impact on the normal market. “Take your kids, your Christmas tree and get out,” is not considered good PR in the best of times. So even though a foreclosure moratorium SOUNDS like an earth shattering economic event, the current moratorium really shouldn’t affect the market all that much.

So if you are a homeowner that has been fearfully awaiting that final foreclosure notice - put up the decorations, bake your holiday pies and invite the family over. The chances are pretty good that you will able to stay in your home a few more months, at least until after January 1st of 2011.