The Nevada Legislature recently passed amendments to the Nevada Revised Statutes (NRS) that appear to be intended to ease the nonjudicial foreclosure process for lenders and provide meaningful disclosure of what borrowers need to pay to prevent foreclosure.
These legislative changes were contained in Assembly Bill 300 and signed into law by Governor Brian Sandoval effective as of June 1, 2013. Due to their complexity, this legal alert will provide only a brief summary of the revised law’s provisions.
Changes to the Content of Foreclosure Documents
The amendments change the content of various foreclosure documents.
The most notable change in the foreclosure law is that lenders are no longer required to attest to default and costs of foreclosure amounts under the penalty of perjury. Previously, the amount in default, the principal amount of the debt and a good faith estimate of all fees imposed in connection with foreclosure were required to be attested to in an affidavit of authority to exercise the power of sale (Affidavit), which was recorded with the notice of default and election to sell. Assembly Bill 300 provides that this information must instead be contained in a written statement to the borrower from the lender, servicer or an attorney representative, along with additional information including how to obtain the most current loan information and how to make a payment. By providing this information in a written statement rather than in the Affidavit, lenders may do so without being subject to the penalty of perjury while keeping borrowers accurately informed.
Under previous Nevada law, an Affidavit had to contain the name and business address of every prior known beneficiary, the trustee, and the servicers of the obligation or debt secured by the deed of trust. The revisions in Assembly Bill 300 clarify that only the name and business address of the current trustee and servicer are required and eliminate the need to list the name and business address of every prior known beneficiary.
Also, under previous Nevada law, an Affidavit was required to state that the beneficiary, the successor in interest of the beneficiary or the trustee was in actual or constructive possession of the note secured by the deed of trust. The revisions in Assembly Bill 300 alter this requirement to allow for non-noteholders who have the rights of a noteholder, or are entitled to enforce the instrument pursuant to a court order, to state that they are entitled to enforce the instrument.
Lastly, the revisions in Assembly Bill 300 add a requirement that an Affidavit must contain a local or toll-free telephone number that the borrower may call to obtain the most current amounts due under the loan and a recitation of the information contained in the Affidavit.
Clarity regarding the Personal Knowledge Requirement
The revisions in Assembly Bill 300 also clarify the personal knowledge language required in an Affidavit.
Under previous Nevada law, the Affidavit had to be based on personal knowledge of the affiant, under the penalty of perjury; however, the term “personal knowledge” remained undefined. Assembly Bill 300 clarifies that personal knowledge means either the direct, personal knowledge of the affiant or the personal knowledge acquired by the affiant by a review of business records of the beneficiary, its successor in interest, or the servicer of the debt secured by the deed of trust.
Furthermore, the personal knowledge requirement relating to prior assignments of the subject deed of trust is revised so that such personal knowledge may be based on records of the county recorder, the title guaranty or the title insurance.
These revisions are aimed at easing the nonjudicial foreclosure process for lenders, as the statements made under penalty of perjury in the Affidavit may be made in reliance on a review of business records, and in some cases, the records of the county recorder.