A few weeks back we mentioned an article in the RGJ that purported one reason behind the then sudden spike in Washoe County notices of default. [See RGJ Special Report: Spike in Washoe County default notices raises eyebrows]
The theory presented in the report was that banks were attempting to beat stricter foreclosure laws that were to take effect on October 1st. Namely, these new laws, part of AB284, require lenders to show documented proof of ownership before performing foreclosure sales.
Well, AB284 became effective statewide October 1st. What has been the effect? No less than astounding. Take a look at the daily number of NODs filed in Washoe and Clark Counties for the month of September compared to the number of NODs filed thus far in October.
Click on the charts to enlarge*
As of October 21, only eight NODs had been filed in Washoe County for the month. Compare that to the 394 NODs filed during September. That is a 98 percent decrease!
And the same decrease can be observed in Clark County.
How long will it take the banks to meet the new requirements? Will they ever be able to meet the new requirements? In the meantime, what effect will these new requirements have on shadow inventory? And if the foreclosure properties stop hitting the market will sale prices begin to rise?
Would love to hear your thoughts on this.
*Thank you to our friends at Ticor Title for providing the data in the charts above.