AB273 To Help Homeowners Going Through Foreclosures
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- Created on Friday, 14 October 2011 16:58
Las Vegas, Nev. – AB273 takes a huge step in protecting Nevada homeowners, as well as local homebuilders. AB273, which was introduced in the Assembly on Mar. 15, 2011, revises the amount that lenders of second mortgages can recover in a civil action. The bill, pending signature by Governor Brian Sandoval, prohibits lenders with second mortgages on certain residential properties from bringing civil action in some circumstances and revises the amount of deficiency judgments after foreclosures.
“The Nevada Legislature got it right when passing AB273,” said Local Attorney and Shareholder Frank M. Flansburg of Marquis Aurbach Coffing. “The bill levels the playing field for homeowners with second mortgages and for our local homebuilders against national homebuilders masquerading as private equity firms.”
Flansburg said the new law will place homeowners with second mortgages in the same position as their first mortgages. No longer can second-mortgage holders, whose money helped finance the purchase of a home, wait for the economy to improve during the next six years. Flansburg added that the new law limits second-mortgage holders’ deficiency actions against homeowners for up to six months.
“More importantly, for local homebuilders, whose sweat and risk helped transform this city over the past decade, this new law will clarify and further protect guarantors,” said Flansburg. “In ‘sweetheart’ deals with the federal government, some national homebuilders have created private equity firms to purchase local entrepreneurs’ debt and property at distressed values at the expense of Nevada borrowers and their families.”
Flansburg said despite the steeply discounted acquisitions, note-buyers have foreclosed on properties and then sued for the full balance. “Putting an end to this double-dipping at the expense of our local developers, AB273 prohibits note-buyers from recovering the face value of the note and are restricted to the amount they paid for the note,” said Flansburg. “That means federally sponsored national homebuilders cannot profit at the expense of those Nevadans who had the courage to place their own personal assets at risk while transforming our city.”
Finally, Flansburg added, the new law will also prevent lenders from running an end-around the existing law by only suing the guarantors for full value of the debt by requiring the court to give the guarantors credit for the fair market value of the property securing the debt. While AB273 adds and clarifies very important protections for local homebuilders, it is likely to be challenged.
“Notwithstanding our State’s foresight to protect our own citizens, these federally sponsored private equity groups are already mounting challenges to our State’s laws, claiming that federal law trumps Nevada law on these issues,” said Flansburg. “In other words, these federally sponsored venture capitalists are challenging Nevada law in court on the basis that the federal government knows better than our local lawmakers. Our governor and legislature should rest assured that our local developers will fight to ensure that Nevadans are protected by Nevada law drafted by Nevadans.”
AB273 was enrolled and delivered to the Governor for signature on June 3, 2011.