Legislation mandating mediation before a home can be foreclosed on was given unanimous approval by the Assembly on Tuesday.
Prime sponsor of AB149, Assembly Speaker Barbara Buckley, D-Las Vegas, said the legislation was necessary because of the "creative financing which fueled the real estate boom we enjoyed in the 2000s."
Artificially low interest rates and "exotic" mortgage schemes lured thousands of buyers into the housing market, said Buckley.
"It all came crashing down as these loans began to reset to their above-market rates," she told fellow Assembly members.
Foreclosures on those homes began to devastate neighborhoods, hurting the values of homes financed through conventional mortgages and leaving "Nevada caught in a downward economic spiral," said Buckley.
Nevada has the nation's highest foreclosure rate. AB149 requires that, before a non-judicial foreclosure can occur, the borrower and owner of the mortgage must sit down and try reach agreement on how to keep the homeowner in the house.
The Nevada Supreme Court will administer the program which Buckley said on which more than 100 lawyers and all senior judges in the state have agreed to serve. She said they will get the necessary training to become mortgage mediators and to handle those cases for a maximum of $300.
According to Buckley, mediation could prevent an estimated 17,700 foreclosures in Nevada, saving more than $1.6 billion in lost tax collections.
"We can help stabilize neighborhood real estate values, keep Nevadans in their homes and stem lender losses that are drying up access to credit," she said.
AB149 goes to the Senate.