The Federal Housing Finance Agency has already filed a lawsuit to stop a similar ordinance in Chicago, and they are poised to do the same here in Vegas. Maybe our City Council should have waited to see how judges rule on that case before passing our own regulation. One interesting paragraph echoes one of my many concerns, emphasis added:

Namely, the opponents in Las Vegas say banks don’t truly own the properties until the foreclosure process is complete, meaning that in the months between a borrower leaving and the legal takeover by the lender, the bank doesn’t have the right to order work on the property.

Or, to put it simply, it requires bank representatives to trespass and break one law to follow another.

Don’t get me wrong. I don’t like the fact that the Feds are effectively preventing local governments from making banks shoulder their responsibilities for maintaining properties they own. It’s part of a trend of shielding big national banks from following state and local laws in general! However, this ill-considered ordinance will not solve our problems.

The California Attorney General has pulled out of the settlement talks and plans to run her own investigation! I wouldn’t be surprised if the New York Attorney General followed, since he‘s already talked about investigating on his own, and says he’s looking forward to talking with her.

For that matter, since Nevada‘s Attorney General has taken Bank of America to court for (allegedly) not abiding by a 2009 agreement on foreclosures and foreclosure fraud, it would make sense for her to join the party as well.

On an unrelated note, since we normal humans have to follow the law, remember that Nevada has 141 new laws today.

We had a little bit of real estate news over the weekend: There’s talk about offering the banks a deal to get them out of the robosigning mess, but the banks don’t like it because it doesn’t limit their liability enough (maybe they should have thought about liability before forging and/or falsely signing thousands of documents!); meanwhile, FHFA is suing 17 banks including J.P. Morgan and Bank of America over Mortgage Backed Securities, but J.P. Morgan actually has a bigger problem, a RICO case (that means the plaintiffs are alleging that the whole company is a criminal enterprise); and the Feds are mad because they’ve been left holding the bag on almost a quarter million foreclosures.

But much more important is a case that hit the Nevada Supreme Court last week, one of three major rulings about foreclosures and foreclosure mediation. First, the rule of law was upheld and the claims of some mortgage servicers demolished when they ruled that to foreclose, they must prove that they have the right to do so through something called “chain of title.” That’s a fancy way of saying they have to show where the loan came from and where it’s been in addition to showing they have it now.

That’s important enough, but it turns out there’s more! The court ruled — not once, but three times — that when it comes to our mediation program, banks must send someone with every page of the documents, that they must be able to sign off on an agreement, that they can’t say “oh but I have to run this past investors/managers!”, and they can’t pass off a Broker Price Opinion as an “appraisal.”

The moral of this story is simple. If you get a Notice of Default, go ahead and sign up for the foreclosure mediation program. It is your best bet for saving your home.

Judges all over the country are tired of the fact that Banks Always Make Their Own Rules — something I call “the BAMTOR Principle.” We’ve already had rulings in Kansas, Florida, New York, and Alabama. It has taken longer in Nevada because we don’t have “judicial foreclosure”: foreclosures cases are generally not heard by judges at all. But now, Nevada’s judges are seriously talking about what consequences need to be taken against banks that act against Nevada homeowners in bad faith.

I say start by throwing a few bank representatives in jail for contempt of court.

Granted, this is a speedbump rather than a roadblock in the long run; B of A can theoretically do foreclosures without ReconTrust. It does at least indicate that the courts are willing to enforce the law against banks!

In an unrelated case that is still well worth watching, a Vegas lawyer is suing B of A for misleading him about the possibility of a loan modification. It’s probably a bad idea to break the law when dealing with a lawyer.

CNBC is just getting wise to the idea that “robo-signing” and its variants may be at play in non-judicial states too. Way to tell us what most people have already figured out.

First of all, don’t forget to watch the latest Getting REAL (Estate) in Vegas for an overview of East side neighborhoods, condo financing criteria, and more!

Let’s tackle home sales and prices. Some experts expect prices nationally to drop another 8% from here, for a total 34% drop. Needless to say, Vegas prices have already dropped much more than that. Local experts in commercial properties think that particular sector is done going down. So if you are considering a commercial lease, you may want to strike while the iron is hot. As for local residential properties, experts noted the same slump in sales that I did, but fairly strong prices. The rate of home ownership is at it’s lowest level since 1999 (yes, that’s a picture of a man riding a horse down the street in a relatively rural part of Vegas; yes I can help you find a home that’s friendly for your horse). Not surprisingly if fewer people own their homes, market conditions for apartment complexes are improving. For a great summary of housing economics, you can’t beat Calculated Risk.

Now what you all want to know about: foreclosures. There are over 4.3 million loans that are more than 90 days past due or in the foreclosure process, even though the process itself is being slowed. Some state officials are being very aggressive about insisting that the law be followed (my inner cynic asks why bother now). There is more evidence that the failure of mortgage modification programs does lead to foreclosures. The IMF now believes that our current high unemployment rate is caused by underwater mortgages and foreclosures (you would think foreclosures at least would be caused by unemployment, not the other way around!)

If you’ve got a problem with defective drywall purchased at Lowe’s, there is an amended settlement agreement that you need to read up about.

And finally, it isn’t every week that a celebrity’s home sells. Danny Gans’s home sold for $9,000,000. It was a 10 year old, 3000 square foot home with a 20 car garage.

But B of A isn’t out of the woods yet. They may be forced to buy back $47,000,000,000 in non-performing mortgage backed securities. This is potentially just the beginning. Fannie Mae is looking into forcing lenders to buy back bad paper, and Freddie Mac is sure to follow; since Countrywide was one of the nation’s largest lenders, it’s logical to assume that Bank of America will be on the hook for some of that. B of A is trying to fling blame elsewhere by suing the FDIC for losses from fraud by Taylor Bean, a failed lender. From where I saw the action, this is hilariously revisionist. Remember that my theory is that the FDIC is already preparing to take over a “too large to fail” institution, and B of A seems the most likely target.

As if this is not enough, the federal government is now finally looking into whether or not what banks have done violates any criminal statutes. Certainly many people think they have. In fact if it’s true that banks sold the same securities to multiple parties while avoiding paying county recorder’s offices their fair share, and then trumping up fees to homeowners or dragging their feet on modifications to make foreclosure inevitable, while bribing robosigners to make sure documents got generated, some law was likely violated.

In the meantime, New York is making lawyers personally sign off that they have verified the facts of foreclosure cases they are representing. Wells Fargo is insisting that everything is fine with their paperwork. Title insurance company Fidelity National Financial is making bank officials sign off on a warranty that the properties they are selling were in fact foreclosed upon properly, essentially shifting the liability should something go wrong. Home sales are down, partly because we borrowed today’s buyers months ago with the home buyers tax credit, partly because the economy stinks, and partly because many people are nervous about what could happen with all these bank owned properties.

In any event, the system has failed. It’s time to stop pretending otherwise and do something to really fix it.