Foreclosure inventory has been steadily declining in the last five years, even in the areas hit hardest by the recession. In CoreLogic's latest data released Tuesday, about 1.9 percent (approximately 729,000) of residential homes nationwide were in some stage of foreclosure, a decline of 25 percent from the previous March.
Nevada was one of the states affected most by the crisis. In response to the housing crash, back in 2009 the Nevada legislature created a Foreclosure Mediation Program. The members of a subcommittee of the Nevada Legislature recently voted to recommend the elimination of the program, however, after determining that the housing market has sufficiently recovered.
According to media reports, Nevada's Foreclosure Mediation Program resulted in more than 7,500 modifications for the fiscal year 2011, and 40 percent of those who utilized the program were able to keep their homes. The program, which was overseen by the Nevada Supreme Court, was funded by fees charged – each case charged a $45 fee to file a notice of default and $400 fee for mediation services.
Projected participation in the program has dwindled down to 662 by 2017, according to the reports, and the members of the subcommittee who voted in favor of discontinuing the program say the budget money could be put to better use.
"Since the Foreclosure Mediation Program was first initiated, the trend line for those that were served has consistently declined," Republican Assemblyman Randy Kirner said in an email to DS News. "Last year, for example, only 100 people went completely through the process at a cost of over $2 million. Fortunately, the Nevada economy is recovering, yet the demands on state general funds exceeds funds available. As a result, as legislators, we must make the tough decisions, set priorities, and in many ways 'divide the baby.' I believe there are other programs and opportunities that merit higher consideration for investment of state funds. That said, the full Ways & Means Committee has not yet concurred with the subcommittee recommendations, so we will see."
According to CoreLogic's data released on Tuesday, Nevada's foreclosure inventory rate (2.2 percent) and serious delinquency rate (5.2 percent) for March 2015 were higher than the national averages of 1.4 percent and 3.9 percent for the month even with the steady declines. But while foreclosure inventory is declining in Nevada, the state is still leading the pack in percentage of residential homes with negative equity. According to CoreLogic's Q4 2014 Equity Report, 24.2 percent of homes with a mortgage were underwater in Nevada, a full percentage point ahead of second-place Florida (23.2 percent).
Democrats on the subcommittee oppose the elimination of the Foreclosure Mediation Program, citing Nevada's high negative equity percentage as evidence that the program is still needed.
Nevada is not the only state recommending the elimination of loss mitigation processes, however. In Indiana, Attorney General Greg Zoeller made a bid in March to stop proposed legislation in the state that would eliminate "settlement conferences" – a homeowner's final recourse before their home goes to foreclosure. Lawmakers in favor of removing the settlement conferences say they are "duplicative" and "unnecessarily time consuming," since lenders are required by the Dodd-Frank Act to administrate loss mitigation efforts. Zoeller says the conferences are still necessary, since his office receives about 500 mortgage servicing-related complaints per year.