Article Library
Blog Home All Blogs
Search all posts for:   

 

View all (646) posts »
 

Nevada: Mediation Program Update

Posted By USFN, Tuesday, December 12, 2017
Updated: Tuesday, December 5, 2017

December 12, 2017

by Matthew D. Dayton, Esq.; Michael F. Bosco, Esq.; and Olivia A. Todd, Executive Director
Tiffany & Bosco, P.A. – USFN Member (Arizona, Nevada)

Residential foreclosures in Nevada came to a standstill on June 12, 2017, when Senate Bill 490 (SB 490) was signed by the governor. SB490 permanently established a foreclosure mediation program for residential properties that included a number of procedural changes which led to an immediate halt in the Nevada foreclosure process.

Perhaps the most significant of the new changes was the implementation of Home Means Nevada, Inc. (HMN) as the entity that will administer the mediation program in conjunction with the Nevada District Courts. HMN is a non‐profit organization that was launched by the Director of the Department of Business and Industry pursuant to NRS 23.520(4); HMN was originally established in 2013 from the national mortgage settlement proceeds to assist underwater mortgages for Nevadans.

However, at the time SB490 was signed in June 2017, HMN did not have a program administrator, a staff, an office, an email address, or a phone number for the foreclosure mediation process. As a result, foreclosures in Nevada became stagnant. Under the new legislation, HMN is responsible for providing trustees with a mandatory mediation form that must be mailed with all notices of default (NOD), detailing the new mediation alternatives. In addition, HMN is responsible for issuing the certificates of foreclosure that are required prior to scheduling a foreclosure sale.

In the intervening days since the passage of SB490, HMN hired an operations manager, Michelle Crumby. Further, on September 19, HMN moved into offices located at 3300 West Sahara Avenue, Suite 480, Las Vegas, Nevada 89102.

What’s Next?
HMN’s website (NOT the portal) is now operational. The website (http://homemeansnevada.gov/) has all of the documents and forms that lenders, servicers, and trustees need to resume recording NODs in Nevada. Additionally, HMN is processing and issuing certificate of foreclosure requests, but only on new NODs that were recorded after September 28, 2017, when the new foreclosure mediation form was made available by HMN. A foreclosure mediation form will need to be submitted for each property (separately) by the trustee requesting the issuance of the certificate of foreclosure. HMN provided a letter stating that HMN will not issue certificates of foreclosure on NODs recorded between December 2, 2016 and June 11, 2017 (these loans are commonly referred to as the “GAP Loans”). The letter did not explain the rationale behind the decision; however, one possibility is that HMN believes that it does not have the authority to issue certificates of foreclosure for NODs that were recorded prior to the effective date of SB490.

Be aware that there is an issue regarding the effect that NRS 107.550(2) (specifically the tolling provisions related to NODs and Notices of Sale under the Nevada Homeowners Bill of Rights) will have on NODs, which has been lingering during the interruption created by HMN. The concern stems from whether the 100-day period for HMN to become operational will be considered a “tolling” event. Although it has been impossible for lenders and/or servicers to request a certificate of foreclosure in order to proceed with scheduling a sale, and thereby avoid a lapse in setting a sale or going to sale, it is unclear how Nevada courts will interpret the statute.

As recently as November 28, 2017, most Nevada underwriters have advised that they will REQUIRE a recorded Certificate of Mediation on all GAP Loans where the property qualifies as owner-occupied housing. If a certificate of mediation is not recorded on an owner-occupied property on a GAP Loan, an exception will be listed in the commitment and only be removed on a case-by-case basis. The exception may be removed if the property is non-owner occupied or vacant; however, the Nevada underwriters will require an affidavit founded on inspections as acceptable proof that the property was not owner-occupied housing. Based on this determination, lenders and/or servicers may choose to proceed with scheduling sales on these non-owner occupied or vacant properties.

With HMN operational, lenders and trustees must begin navigating the new rules and procedures. For example, in order to elect mediation, a homeowner must file a petition in the District Court where the property is located. The trustees are required to file an answer to the homeowner’s petition. If there are issues related to eligibility to participate in the program, limitations of the foreclosure alternatives, or other circumstances related to a loan, it would be prudent to know the information as early in the process as possible. Under the previous foreclosure mediation program, the District Court’s involvement in the foreclosure mediation process was limited to a post‐foreclosure mediation review. Under the new rules, the risk of sanctions for noncompliance will increase as the District Court is now involved throughout the foreclosure mediation process.

A particular area of concern is a new document requirement, which mandates that beneficiaries produce “any document created in connection with a loan modification,” (FMR 12(1)(a)). The rules do not, however, specify what documents satisfy the requirement. If a loan modification (temporary or permanent) was previously offered to, or accepted by, a property owner, lenders and/or servicers should produce the documents under the new rules.

At the conclusion of the foreclosure mediation, the parties have 10 days to submit a “request for appropriate relief.” The new rules do not require the District Court to hold a hearing. The District Court may enter its order without a hearing, and the only remedy available to the parties is to proceed with a costlier appeal to the Nevada Court of Appeals. (Under the previous rules, the parties had 30 days to consider their options after receiving the mediator’s statement.)

In order to most effectively navigate the potential pitfalls that will likely arise due to the complexity of these new rules, consult with Nevada-experienced counsel.

© Copyright 2017 USFN. All rights reserved.
November/December e-Update

Note for consideration of the USFN Award of Excellence: This article is not a "Feature."

 

This post has not been tagged.

Share |
Permalink | Comments (0)
 
Membership Software Powered by YourMembership  ::  Legal