Las Vegas attorneys build business by telling homeowners to stop paying mortgages
Your neighbors aren’t paying on their mortgages so why should you?
That provocative question is being posed by a Las Vegas law firm’s TV ad campaign, and the commercials are stirring debate.
The Haines & Krieger law firm’s spots, promising to show homeowners how to stay in their homes without paying on their mortgages, seem to be bringing in business, said a staffer for the law firm who asked not to be named.
But with the Las Vegas Valley being ground zero for foreclosures, some worry that encouraging more people to quit paying their mortgages could worsen the problem.
Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas, said the resulting mortgage defaults could hurt everyone.
“If (Haines & Krieger) are helping people modify their mortgages, then that is one thing,” Daneshvary said. “But if they are helping people get out of paying their mortgages who have the ability to pay, that will have an impact and cause more blight in the community.”
In the commercials, Haines & Krieger attorneys make a tempting offer: They promise to show people how to a stay in their homes without paying on their home loans — just like your neighbors and families are doing.
The law firm did not respond to repeated requests for interviews or more details.
Nevada Bankers Association President William Uffelman is not surprised at the ads. He said most lenders are resigned to the growing trend of people looking for a free ride on their mortgages.
Home loan defaults, however, do have a ripple effect.
“It drives down the price of housing, and at the same time drives up the cost of lending,” Uffelman said. “It also impacts the borrower’s credit.”
Some homeowner advocates also take exception to the Haines & Krieger commercials.
Barbara Buckley, executive director of the Legal Aid Center of Southern Nevada and former Nevada Assembly speaker, said the commercials may increase stereotypes of defaulting homeowners as freeloaders. The reality is often far different, she said.
Thousands of Nevadans simply can’t pay their bills.
“It’s the type of ad that makes me cringe,” Buckley said. “So many people in Nevada can’t find jobs and are hurting, and they can’t refinance their homes.”
While the ads are disturbing to some, they may very well be conforming to the State Bar of Nevada’s guidelines.
The bar prohibits false and misleading advertising, but doesn’t prevent attorneys from simply using distasteful ads, said Constance Akridge, state bar president.
“We just want to know (the client) can trust what this attorney says is true. That’s the rule,” she said. “It has to be transparent.”
A law firm has about two weeks to submit ads to the bar for approval after the advertising campaign begins.
Given the housing market, it seems plausible that Haines & Krieger can make good on its advertised promise. The law firm handles bankruptcies, mortgage modifications and short sales. Also, a 2009 Nevada law makes it mandatory for lenders to participate in the Nevada Supreme Court’s foreclosure mediation program, at the homeowner’s request.
Staying in your home for months — and even years — after entering the foreclosure process isn’t uncommon in Nevada or the rest of the country.
ForeclosureRadar.com said Wednesday the average number of days it takes to foreclose on a home in Nevada rose to 319 days, up from 239 days a year ago.
Lenders didn’t expect the avalanche of home loan defaults, said Buckley, who sponsored the foreclosure mediation legislation two years ago.
“It’s true, because of the state of lending in Nevada, banks can’t handle all the foreclosures and people are staying in their homes, but that won’t last forever,” she said.
Not everybody is critical of Haines & Krieger’s promotion of not paying, but still staying in your home.
Victor Joecks of the Nevada Policy Research Institute think tank said the state government’s own policies are at fault.
“Especially with the (establishment) of the foreclosure mediation program, this is just a natural effect of when government gets involved in the marketplace and tells lenders, ‘You have to mediate,’ ” he said. “But I don’t think anybody envisioned this type of commercial when they were drafting that legislation two and half years ago.”
Buckley countered by pointing to the program’s success rate: As of the end of 2010, about 3,900 of the 6,300 foreclosures mediated resulted in agreements.
But in 25 percent of total mediations, the lender did not bring the right documents or did not have the authority to do loan modifications or failed to participate in good faith, Buckley added.
Lenders are partially to blame for making the mortgage default ad so appealing, the former assembly speaker said.
“The statistics do not bear out that the homeowners are the problem.”
Contact reporter Valerie Miller at
vmiller@lvbusinesspress.com or 702-387-5286.
