The Nevada Supreme Court held a public hearing on June 25, 2009, at the Las Vegas Justice Center regarding rules for the mandatory mediation program for homeowners in foreclosure. The program was made effective on July 1, 2009, and applies to owners of primary residences who receive a Notice of Default (NOD) from their lender beginning on that date. The recording of the NOD is the first step of the foreclosure process.
Chief Justice Hardesty stated that there would be future hearings regarding lenders acting in bad faith, and the sanctions to be imposed upon them. He also stated that the new law does provide two objective standards concerning lender good faith. The first is that the lender must be represented at the mediation by someone with authority to modify the loan; the second is that the representative must bring the required documents to the mediation. Barbara Buckley, the bill’s sponsor, was quoted as saying that “a lack of good faith on the lender’s part would result in a halt of the foreclosure process”. The mediator expressly has the authority to modify the loan if it is found a lender acted in bad faith.
There was a lengthy discussion concerning who will appear on behalf of the lender, and what authority they have. One Justice proposed that where an investor is involved the servicer must obtain a power of attorney in order to represent the investor. Buckley stated that it was the legislative intent that the investor who had the right to payment on the note be at the mediation hearing. The proposed rules do require that the lender provide copies of all note assignments. Buckley stated she wants to ensure that the homeowner is paying the true holder of the note, and not a servicer. Nevada legislation does not provide immunity to the servicer from the investor when negotiating a loan modification, unlike California law.
Buckley also stated that it was the legislative intent that the lender bring originals or court certified copies of the deed of trust and note. This elicited the observation that there was no way to obtain an official certified copy of the note since it not recorded. Buckley and other speakers emphasized the importance of the lender bringing their loan requirements to the hearing for the mediator’s evaluation. This was in response to a comment that lenders decline modifications for not meeting their guidelines, but will not disclose what those guidelines are.
A spirited discussion also occurred about the requirement of a recent appraisal for the evaluation of a short sale. What will be considered sufficiently recent period will be a topic for additional discussion.