In 2012, Representative Joe Heck from Nevada introduced a bill to Congress that was designed to give his constituents a second shot at homeownership. The Las Vegas short sale and foreclosure numbers have been off the charts in the past few years compared to other parts of the country. This housing crash has destroyed the equity and the credit scores tens of thousands of hard-working people in Nevada.

Foreclosures are Down but Short Sales Are Still High

Even the strict foreclosure regulations passed in 2011 haven’t stemmed the tide that much. According to, although the number of foreclosures was cut in half, Nevada homeowners are still in big trouble: “After five consecutive years with the highest state foreclosure rate, Nevada dropped to No. 2 on the list in 2012 thanks to a 57 percent drop in foreclosure activity from 2011. A total of 31,658 Nevada properties had a foreclosure filing during the year…”

At the same time, one out of three home sales in the state for 2012 was a short sale. This means the number of former homeowners with a troubled credit history is still at record highs. The bill sponsored by Heck (Second Chance at Homeownership Act of 2012) was introduced to give borrowers another shot at buying a home. It would have created a new program within the FHA to offer government-insured loans to qualifying buyers who had been burnt by the housing crisis. The loans in this program would have a 30 year term and monthly payments would not be permitted to exceed the borrowers monthly rent payments from the preceding 12 month period.

The Act Needs a Second Chance

Congress adjourned without passing the Act, and it has not yet been reintroduced. However, private lenders are already targeting Las Vegas short sale survivors with various second chance mortgage programs. These loans are funded by individual and institutional investors. They are designed to offer buyers with damaged credit from a foreclosure or short sale an opportunity to qualify for a home loan based on a less rigid approval process. It will be interesting to see how this new approach to lending works outside of the traditional banking structure. If this turns out to be a lucrative opportunity, will banks begin relaxing their own rules to give home buyers a second chance too?