Facing a wave of foreclosures due to the housing bust, in 2009 the State of Nevada implemented a foreclosure mediation program to stem the tide. Superficially, it appears like a good idea because Nevada allows “nonjudicial” foreclosures, which means the lender can initiate a foreclosure proceeding without having a judge or other magistrate sign off on it. The Nevada judiciary has tracked the program’s participants and provides statistics on their outcomes from the period begin inning in July 2011 and ending in June 2012 (PDF). Here are some important findings:
(1) In the good news department, 425 cases settled prior to their scheduled mediation.
(2) Unfortunately, of the 4,803 mediations that were held, though, 3,803 (79 percent) did not result in an agreement.
(3) Of these, however, 2,162 failed because of the beneficiary (the lender) didn’t appear, lacked the authority to participate, failed to participate in good faith, or did not bring all the required documentation. The remaining 1,641 cases failed because the parties couldn’t reach an agreement. From this it’s clear that 45 percent of mediations fail because of the lender’s obstinacy.
(4) Although one percent of cases had an outcome classified as “other,” in 989 (21 percent) the parties reached an agreement. Of these, 547 (55 percent) homeowners retained their property, and in the other 442 cases (45 percent), they surrendered it.
(5) From this, it’s clear that 11 percent of people who participate in Nevada foreclosure mediation (547 out of 4,803) kept their homes as a result of a productive mediation. These are not good odds.
(6) The statistics also break down the outcomes of the 547 successful meditations:
a. 36% – Temporary mortgage modification
b. 17% – Permanent mortgage modification
c. 10% – Interest rate reduction
d. 9% – Participation in a government loan program
e. 5% – Principal reduction
f. 23% – “Various results” (amortization extensions, refinancing, principal forbearance, etc.)
(7) Similarly of the 442 cases that resulted in the homeowner surrendering the home, 80 percent opted for a short sale, 10 percent chose a deed in lieu of foreclosure, and 5 percent chose to voluntarily surrender their residences.
Whether foreclosure mediation resulted in a truly satisfactory result for the homeowners isn’t knowable. In particular that only half of one percent of homeowners obtained a principal reduction suggests that for those who are very much underwater on one or more of their mortgages, bankruptcy is probably a better option. However, a bankruptcy lawyer can help with foreclosure mediation as well.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.