Panel: Time to end foreclosure aid program

Members of a legislative subcommittee voted on Wednesday to recommend the state end its foreclosure mediation program saying it did its job during the recession but is no longer needed.

“We’ve turned a corner and it’s time to move away from here and do something else with our money,” said Assemblyman Randy Kirner, R-Reno.

The program was created during the height of the foreclosure crisis to try keep people in their homes. At its peak, there were more than 82,000 notices of default filed in 2010 and the program provided mediators for 7,558 foreclosure proceedings in 2011. It successfully helped 26 percent of those owners to stay in their homes.

Kirner said, however, the number of defaults notices will be just 6,300 with mediations expected to drop to just 660 by 2017. At the same time, the cost per case has more than tripled and the success rate of resolving them fallen to just 15 percent. He said the program is no longer able to sustain itself financially.

Assemblyman Chris Edwards, R-Las Vegas, said the program has reached the point of diminishing returns with home prices rising dramatically again. He also said the cases now being handled are probably much more difficult situations to try to keep people actually in their homes.

Democrats Heidi Swank, Irene Bustamonte Adams and Sen. Joyce Woodhouse, all of Las Vegas, agreed the demand for foreclosure mediation is fading but urged the committee to continue funding it at least this coming biennium.

“I can’t justify it for the limited number of cases we’re seeing,” said subcommittee Chairman Pete Goicoechea, R-Eureka.

He took a motion to “wind down” the program over the next six months, feeding it just enough money to complete the cases already in process. He said the bottom line is that means the $2.7 million expected to be collected from the fee on filing notices of default can be used for something else.

The subcommittee also recommended pumping General Fund money into the specialty courts program to expand those services to an additional 800-900 participants. This will be the first time General Fund money has been used in the specialty courts program.

The specialty courts are diversion programs for people with drug, alcohol and other problems who commit crimes. The goal is to treat their issues and help them overcome addiction and other behavioral problems.

In addition, the panel of Assembly and Senate members voted to remove the sunset on a special fees imposed on those convicted of DUI that help support specialty courts. That fee has generated $478,308 so far this fiscal year.

In addition, the subcommittee recommended adding $1.38 million in General Fund money to the Administrative Office of the Courts budget to make up the projected shortfall in administrative assessments. Those assessments, imposed on top of the basic charge for tickets and other misdemeanor violations, have long been used to fund the judicial system in Nevada.

But Chief Justice Jim Hardesty told lawmakers at an earlier hearing those assessments have been declining significantly because of changes in law enforcement priorities that have led to police writing fewer tickets. As a result, the courts reduced its projected revenue from assessments from $26.4 million this coming biennium to $25.8 million, creating a shortfall.

The actions on the judicial bench budgets must now be approved by the full Senate Finance and Assembly Ways and Means committees.