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Banks Look To Roll Back Nevada Law Preventing Foreclosure Fraud

By Pat Garofalo  

"Banks Look To Roll Back Nevada Law Preventing Foreclosure Fraud"

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In 2010, the nation’s biggest banks were caught systematically forging foreclosure documents in order to speed the foreclosure process along and unlawfully oust homeowners. The resulting scandal led to a $25 billion settlement between the federal government, state attorneys general, and the five biggest banks.

Nevada — arguably the epicenter of the foreclosure crisis — enacted a law (signed by its Republican governor) that forces banks to prove ownership of a home before a foreclosure, punishable with criminal penalties. Now, the state’s banks want to roll back that requirement:

Foreclosures in Nevada could spike next year if lawmakers and banks roll back a bill passed in 2011 that played a large role in stymieing banks’ attempts to retake homes from Nevadans, according to the state’s banking association president and housing analysts. [...]

At issue is Assembly Bill 284, a measure passed by the Nevada Legislature in 2011 and signed by Republican Gov. Brian Sandoval that forces banks to prove they have the legal right to foreclose on a particular home before they take action. Most important, the law requires bank workers to sign an affidavit that they have personal knowledge of a property’s document history, or they will face criminal or civil penalties.

One Democratic state senator responded to the proposal by saying “if banks can’t foreclose, it’s their own fault for losing track of the paperwork.” “If it comes down to a homeowner who had a mortgage, or a bank — who has the right to be there? I’ll go with the homeowner,” said State Sen. Tick Segerblom. “I’m not worried about the banks. They made their beds. They can sleep in it.”

At the federal level, big banks have been gaming the foreclosure fraud settlement, while many states have siphoned off settlement funds meant to aid homeowners to use for other purposes.

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