Nevada’s Homeowner Bill of Rights is expected to throw another sharp curve into the state’s troubled housing market. The new law, which took effect last week, places more restrictions on the exercise of the power of sale. This comes just a few months after Assembly Bill 300 (AB 300), which eased bank foreclosure compliance by clarifying the "personal knowledge" requirement in the affidavit of authority needed to exercise the power of sale under a deed of trust. The amendment provides that certain information in the affidavit can be based on "direct, personal knowledge" obtained from reviewing business records of the beneficiary of the deed of trust and recorded information from the County Recorder.
While AB 300 intends to provide some relief for foreclosing entities, the Homeowner Bill of Rights adds new obligations. The latest rules include the following:
The mortgage servicer, mortgagee, or beneficiary must provide certain information to the borrower regarding the borrower’s account, the foreclosure prevention alternatives offered, and a statement of facts supporting the right to foreclose at least 30 days before recording a notice of default or commencing a judicial foreclosure action and at least 30 days after the borrower’s default.
The mortgage servicer must contact, or attempt to contact, the borrower before recording a notice of default or commencing a judicial foreclosure action.
Dual tracking, the practice of continuing the foreclosure process while a loss mitigation application is pending or while the borrower is current on his obligations under a foreclosure prevention alternative, is prohibited.
The mortgage servicer must provide a single point of contact for the borrower who requests loss mitigation options, and servicers must meet time limits for responding to completed applications.
Homeowners are provided a private right of action for violations.
Another new piece of legislation, Senate Bill 389, allows the borrower to submit a written request for a certified copy of the note. If the servicer does not provide the requested documents within 60 days, or if the documents show that the beneficiary does not have a lien on the property, the borrower may bring a quiet title action against the servicer or beneficiary. If the borrower prevails, the court must issue an order declaring the borrower as the owner of the property free and clear of any liens and award damages, including, without limitation, attorneys’ fees.
Nevada also recently revised its provisions of the Foreclosure Mediation Program, including those governing enrollment in the program. Assembly Bill 273 revises Assembly Bill 284, which originally allowed the borrower to elect foreclosure mediation. Now, under the new law, a borrower will be automatically enrolled in the Foreclosure Mediation Program unless the borrower waives mediation or fails to pay the required fees. In addition, the trustee must provide copies of the document containing information on the program separately from and with the notice of default. These and other new Foreclosure Mediation Program provisions took effect on October 1, 2013.
Based on the latest developments, it appears that Nevada continues to struggle to find an appropriate balance between protecting homeowners who are behind on their mortgage payments and promoting a speedy recovery of the state’s housing market.