A legislative subcommittee studying the housing and mortgage crisis was told Tuesday the state needs to make changes to protect renters who are too often the forgotten victims when a home is foreclosed.
Sen. Warren Hardy, R-Las Vegas, said most often renters get no notice the home they live in is in the process of being seized. In Nevada, a significant number of the property owners in financial trouble purchased the second home as a rental property.
"Additionally, there is some evidence of outright fraudulent behavior as homeowners knowingly continue to collect rent from a tenant while not making further mortgage payments because a foreclosure appears close at hand," Hardy noted in a report he and Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, presented.
He said most of the organizations contacted to discuss the issue - including the Mortgage Bankers Association, the Nevada Association of Realtors, the Nevada Rural Housing Authority and Nevada Legal Services - agreed tenants should be given notice of a pending foreclosure sale.
Most lenders felt financial institutions would do so voluntarily, but Hardy said Nevada Legal Services recommended going a step further, requiring notice and giving the tenant the option of breaking his lease once a foreclosure is pending.
John Sasser of Washoe Legal Services said the problem with providing notice too early is that the initial efforts are to get the owner back on track and making mortgage payments. Rent money provides a big part of those mortgage payments, he noted.
Sasser agreed, however, that tenants need more than the 30 days they get in eviction notices now.
He was joined in that plea by Gail Burks of the Nevada Fair Housing Center.
Hardy said one suggestion was legislation giving tenants the right to remain in their properties up to 180 days after a foreclosure sale. Often under current law, tenants have 30 days before they have to move out and seldom get back their deposits.
Kirkpatrick said she knows of one teacher who had to move from rentals four different times in six months because of foreclosures.
Hardy said constables, who serve the paperwork in foreclosure cases, suggested providing ways for the tenants to remain in a home by paying the lender directly after a foreclosure. He said some might be able to work out a deal where the tenant could actually purchase the property.
The subcommittee headed by Assemblyman Marcus Conklin, D-Las Vegas, is charged with finding ways to help homeowners, renters and others caught in the collapse of the residential housing market.
The idea is to keep people from losing their homes which, in turn, keeps renters from being forced out of the place where they live, Conklin said.
Conklin said the subcommittee's next meeting will focus on legislative proposals for the 2009 session.
• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.