Lenders who secure loans with real property and their foreclosing trustees should be aware of important changes to the Nevada Revised Statutes regarding non-judicial foreclosures that went into effect on June 1, 2013. These changes affect the "affidavit of authority" that must accompany a notice of breach and election to sell that is recorded against the collateral to commence a non-judicial foreclosure.
The original version of an affidavit of authority—which was added in 2011 by Nevada’s AB 284—required someone with personal knowledge of the original loan documents and assignments to verify, under penalty of perjury, certain facts relating to loan assignments and the corresponding amounts due. The most significant change under a new state law, AB 300, recognizes that loan documents and deeds of trust can be commercial instruments, and identifying such instruments as business records is a nod to established commercial law.
Another significant change is the requirement that a toll-free or local number be available for the borrower to call for information. Complying with this requirement may require that the entity enforcing the deed of trust coordinates with the special servicer or master servicer, or the entity that enforces the deed of trust must take on customer service obligations of the beneficiary of the deed of trust.
Below is a more detailed summary of important changes:
Information in the affidavit can be obtained by the affiant’s review of the business records of the beneficiary of the deed of trust.
Certain information in the affidavit can be obtained by the affiant’s review of the records of the recorder of the county in which the property is located or the title guaranty or title insurance issued by a title insurer or title agent authorized to do business in Nevada.
The entity enforcing the deed of trust need not be in actual or constructive possession of the promissory note it secures; recognizing established law governing commercial instruments, the affidavit can identify that the deed of trust is being enforced by any of the following parties:
- A beneficiary, its successor in interest, or its trustee, as long as any of them are the holder of the instrument
- A non-holder in possession of the instrument who has the rights of the holder
- A person who is entitled to enforce the instrument pursuant to a court order
The affidavit must state that the person enforcing the deed of trust sent a letter to the borrower identifying the amount of payment required to make good the deficiency in performance or payment, the amount of the default, the principal amount of the debt secured by the deed of trust, the amount of interest and accrued charges, and a good faith estimate of all fees imposed.
The letter required by the affidavit, and the affidavit itself, must list a local or toll-free telephone number that the borrower can call to get the most current amounts due.
Lenders and holders of debt should take care to make sure that their foreclosing trustees update their non-judicial foreclosure procedures and implement these legislative changes immediately.