Obama’s Administration Fine Tuning Loan Modifcation Program

Frustrated with the slow and lazy pace (of course snail’s pace), the Obama administration is soon going to do some progressive changes in the HAMP program. Basically, the program announced in February, 2009, has not brought much needed change and upset the rising trends in foreclosure. Nevada is especially high on this trend. However, the good news is that there is widespread changes expected very soon in this program by the Obama administration.

http://money.cnn.com/2009/11/28/news/economy/Obama_mortgage_announcement/

The Obama Administration has added another weapon on its arsenal of programs and strategies to help millions of distressed homeowners save their properties from becoming foreclosed homes. Lately, there has been mixed result in its success. I have also posted another article on this blog about the mixed reviews this Obama Plan is getting from various sources.

The “Making Home Affordable” foreclosed homes relief plan is aimed at helping distressed homeowners reduce their monthly payments to allow them to stay current on their mortgages. I am sure now everyone has heard about this HAMP plan and already applied under it. It does not cover every situation but it does cover most of the hard pressed situation, and it is a best guarantee against foreclosure along with the Nevada Mediation program.

Here are some points that housing experts believed distressed homeowners should consider before applying for a foreclosed homes prevention plan: There are no magic bullets here. Just consistency, patient, and preparation is enough. I had given these timeless hints many times in my articles. I am dovetailing it once more.

Be patient. Always bear in mind that you are not the only distressed homeowner who want to save your property from becoming foreclosed homes. It is expected that mortgage lenders and servicers will be inundated with questions about the mortgage relief plan. There are some 100,000 calls only received by bank of American. There faxes are jammes, some time out of paper and some time their ink pads are over used. Again, many times the senders had not written their loan number on each and every page with the result that these faxes cannot be traced to the owners.

Most of these new hires are of course not fully trained. Most of them has only basic high school education, or if they have some experience, is not relative to this job. Do not expect mortgage lenders, real estate and finance experts to know every infinitesimal detail of the plan as it will take some time for lenders to sign agreements to participate in the federal government’s foreclosed homes prevention plan.
Be persistent. Continue making that calls to your mortgage lender to inquire on the status of your loan modification application. Please do not assume that your lenders had received your paperwork. Call to confirm.
Be aware of your financial status. Before meeting with your mortgage servicer, know first how much debt you owe, your monthly budget and mortgage payment. According to Americana Mortgage Group President Bob Moulton, most distressed homeowners who are not knowledgeable about their finances often make uninformed decisions that they would regret later.
Prepare Financial Documents. Ask for a list of financial documents that you would need to apply for a loan refinancing or modification under the foreclosed homes prevention plan.
Write your hardship letter. I have various hardship samples on this blog. You are welcome to copy them and craft according to your own situation. At least, I can provide this service free. The letter, which will be a part of your documents that you will submit to avail of a loan refinancing or modification, allows you to explain why you need to modify the terms of your loans to make them affordable and save your property from being added to the growing list of foreclosed homes.
Stay Away from Scam:
The U.S. government is cautioning distressed homeowners to avoid fee-based mortgage or financial counselors who may take advantage of their desperation to save their properties from foreclosures.

Obama Plan is Slow in Loan Modification and Increasing Foreclosure

The Obama Plan came with great fanfare and expectations. Of course, it had done a small dent but is not doing enough to turn the rapid rise in foreclosure especially in Nevada. Nevada is still on top of the foreclosure statistics throughout USA. The Obama Administration’s $75 billion loan modification was able to help only 9 percent of qualified borrower as of July, according to a report released by the U.S. Treasury Department as part of its strategy to force lenders to modify more troubled mortgage loans to trim the growing number of bank foreclosure homes in the country.

The report noted that 10 lenders did not successfully modify a single troubled loan. Leading the list of servicing companies with the most number of loan modifications is Saxon Mortgage Services, the mortgage servicing unit of Morgan Stanley. The unit was able to approve 25 percent of 21,000 of the total 84,000 eligible borrowers for trial modifications.

The report ranked participating servicing companies based on the volume of troubled loans they have modified as percentage of the total borrowers in their portfolio who were eligible for a mortgage modification. Eligible borrowers are those who were 2 months delayed on their mortgage payments and are on the brink of losing their properties to foreclosures.

Both JPMorganChase and GMAC Mortgage approved 20 percent of the eligible loans on their inventories for trial modifications. Wells Fargo trailed the list with just 4 percent completed loan modifications. However, Wells Fargo’s result does not include the loans changed by Wachovia Bank which it acquired in 2008. For its part, Wachovia modified only 2 percent of the loans on its portfolio.

Meanwhile, Bank of America modified 6 percent of loans, including those of Countrywide which it acquired in 2008. CitiMortgage, a unit of Citigroup approved almost 15 percent eligible loans for trial modifications. According to the Treasury report, 235,000 homeowners or 9 percent were approved for the Home Affordable Modification Program out of the 2.7 million borrowers who were deemed eligible for the foreclosure prevention initiative.

The report pointed out that servicing companies offered trial modifications to nearly 15 percent of eligible borrowers or about 400,000. In the case of JPMorgan Chase, it reported 394,000 delinquent home loans on its inventory and offered modification to 30 percent or 117,000. However, the bank was able to renegotiate only 20 percent or 79,000 of the troubled loans.

The Treasury released over $20 billion under the Troubled Asset Relief Program to servicing companies as part of the government’s subsidy for the cost of loan modification.

Why Servicers are Reluctant to Help Homeowners?

I just read an excellent article by a Harvard professor, and rather than giving you brief excerpts, I am providing the whole link to this wonderful article. Please read all the details why servicers and lenders are reluctant to help, and why despite widespread federal guidelines, still foreclosures is on the rise.

http://www.hlpronline.com/Levitin_HLPR_011909.pdf

Should You Keep The Undervalued Home?

I have been always asked this questions many many times, and I always is reluctant to answer it meaning cannot answer it straigt because it may come back and haunt me. This is a very difficult decision of whether to keep an undervalued home. It is painful to discuss the pros and cons of keeping a highly undervalued home in this crisis. However, in this short piece, I am going to attack this issue in my own peculiar ways. And please think, I am not alone. It is as usual not a legal advice. You are the final arbiter in your own complexity of issues.

Let me analyze my arguments and present it in an orderly way. I had very reluctantly said to the prospective clients, let the home go. Very little. Why? Becuase I am an optimist. I hate short selling or surrender of deeds. It is an anti American dream, and it perpetuates a bad economic cycle. The short selling should be stopped. It is an invention of real estate brokers to make money and make endlessly make money and capitalize out of the miseries of the people. They have always made money, and exploited every bad situations and they are doing it again. They are short sale expert. Who benefits most from short sale? Of course the real estate brokers and the banks. Because the like the pawn-shop value of your home. They want to erase this negative things on their books and start afresh. Would you be getting anything from this? Of course not. Who makes money? Of course not the homeowners. Not a single penny goes to their pockets. But what can you do when you have no equity in your home.

- Did you buy this home as a primary home?
If you bought this home as a primary home to spend times with your families, and you bought it because the school is close by, and your children can walk to school. The reasons are still valid even after the equity is lost. Your children can still walk to school and they have friends whom they spend quality time. They are building lifelong friendship.

-If you bought this home because of Tax Breaks from IRS?
The reasons are still valid. You are still getting tax breaks and you needed a shelter because you were making more money and giving it in the form of taxes to uncle Sam. So, you thought a house would give you the appropriate shelter. These reasons are still valid even after you have no equity in your home. Don’t you get few thousand dollars at the end of the year from uncle Sam? If so, that is the net benefit to you.

-This home you bought is because you love this home?
You fell in love with this home. The walls of this home is decorated with the pictures of your families, the sweet moments at or around the fire places, the healthy time spent in your living rooms, in the kitchens, the sweet aroma of food and fragrance coming from the newly embedded flowers, and of course the new garden you built with your own hands, making endless trips to the local nurseries. Your kids helped you with that waling path made of bricks and mortars. The window treatments, the pictures of your parents hung on the wall. These are still the valid reaons even after the depression in the housing market and loss of your equity.

-You still have to live somewhere? I have counseled clients to let their undervalued and expensive automobiles be returned, to save their cash flow. Yes, I had advised my clients, but to let the primary house go—Truthfully, I have been reluctant to give this advice. Make your own choice folks. I am not an anti American dream. I can’t tell you to live on trees or under the highway bridge. This is your home, protect it. Because, basically this is not a legal matter. It is an emotional matter, and let your emotion decide. What you want to eat today? This is your decision, and someone cannot force you. Telling their clients to abandon their home is counter intutive to me, it is like a stock guru who has his own TV finance shows, telling his audience, buy stock, buy stock, and all of a sudden shouts in one bad market day—sell your stocks. Truthfully, when DOW was dipped sometime ago, I seen myself a guru (much acknowledged) telling clients, Sell the Stock and Sell it Now, and that created a big panic in the market. Next day, he was in good morning America, and he apologized for his irrational exuberance. Do you know home. Watch him on MSNBC, he is the buy with his sleeves rolled high, and shouts like a circus clown everyday around 7 pm.

Let us call a spade a spade. The current economic crisis is not abating and as it relates to housing, will continue to press down on home values for 3 to 5 more years. The FEDS had done something, some half hearted measures, the lenders are not fully cooperative and hired lots of nincompoops, who does not how to add two plus two. Their math is wrong, their manners are rude, and they don’t want to learn from anything.

-Rental? Once you abandon your home, you need to find a rental, and the cheapest rental in Las Vegas for a family of 2 or 3 is in or around $1200. You don’t know what you gonna get, and where you going to live. You probably needs change of school for your children, your commute time shall be changed, and above all you don’t know who your neighbors will be. You were in that situation, and that is why you bought this home in the first place.

-Did you try loan modification.
That is the most important questions. Did you try lowering your payments by talking to your lender, talking to some other knowledgeable people, talking to some qualified attorney. Had you taken all of the steps and still can’t find a solution. Now you got enough material to think about. Would downsizing is an important factor. Again, you did not bought this home to sell right away, you wanted to sell say in 20 years from the date of purchase? What is so hurry? Had 20 years came yet?

Facing Foreclosure–Quick Tips How to Stop It

Nevada again is on top of the foreclosure statistics, and I really don’t feel the necessity of citing any sources. It is an open secret. Foreclosure is on the rise, and the tide has become uncontrollable. I like to mention briefly the tips to stop the foreclosure and also cite here an article published in LA Times on the same issues.

1. Please contact your lenders/servicers immediately
2. Open a dialog and tell them your situation.
3. Don’t be frustrated with the process
4. Most of the folks (newly hired)at your lenders and servicers are new folks, and learning the job as they go. Please be patient with them
5. Make record of every phone calls, write down the name, phone extension etc.
6. No need to lose your temper.
7. Send them whatever they want, resend the same things again. Don’t make a big deal about their demands.
8.Try to call the rep by their first name more often than one time during conversation. Try to build a bond between you and him/herself. Yelling, screaming would be totally unproductive. No need to tell them the horror stories, they know enough already. Try to be brief, and not very legalistic. You are not an attorney, you are consumer. Ask yourself one question, why I am behind? How many months I am behind? Why did not I pay them? Afterall, you signed the contract as well. Please stop having over expectations. No one is deliberatly harming you. Accept the fact that you could be wrong also, and you had made mistakes as well. Now, let us sit back and read this wonderful article.
9. Once you have been denied, explore other options.

10. If nothing works, walk out graciously from your home without destroying anything. Maybe try to get a cash deal for “keys”. Treat it as white elephant and balance your budget.

http://www.latimes.com/classified/realestate/news/la-fi-lew8-2009nov08,0,5612117.story

State Attorney Generals Are Planning to Sue Lenders

Enough is enough as lenders had their say and swayed of course in all loan modification programs and in preventing the foreclosures process. They have frustrated almost every program the government and the fed had announced. The latest of course was the Obama Plan, which was launched with great fanfare, and of course it had helped the deterioraing foreclosure situations little bit but not enough–it has not stopped tremendous homeowners and their foreclosures. Banks had frustrated all these efforts, and are determined to do their nitpicking on every small issues. We agree with the analysts that the Obama Plan had no teeth in it when it comes to enforcement. Also, the 31 percent limitation of loan modification is not rationale. Again, it had not addressed the principals reduction which is a core issue in this crisis and bring it to the latest market values. Lately, the state top prosecutors are agreeing to seek the judicial remedy again, and are thinking of taking the lenders back to the judicial process. In our view, they are late. A judicial remedy is best, and of course quite expensive for the lenders, who had lately again been giving the despicable bonuses to their executives for doing nothing. When are they going to learn a lesson in this regard. Please read the following links to a very important news item.

http://www.nytimes.com/2009/11/03/business/03suits.html

More Foreclosure Coming?

New York Times has published an editorial highlighting the gloomy homeownership situation and with a prediction that more homes are going to foreclosure. This is unfortunate true in Nevada which is continuously on the top of the foreclosure statistics of all kinds, throughout USA. The Obama Plan is slow, has no teeth, and give no protection to homeowners. Only 625,000 or close to that loans have been modified, and that again is mostly trial loan modifications. Meanwhile banks are still reaping lots of profts as their Toxic waste has been shed away and they have taken fresh start with new books which of course present a very rosy picture. It is shameful that people are losing their homes in droves and there is no predictable solution. Banks have not learnt their lesson even though some improvement was done in their phones, customers services and some other fine tuning. But basically, they still have the old rotten mentality.

http://www.nytimes.com/2009/11/12/opinion/12thu2.html?_r=1&scp=2&sq=foreclosures&st=cse

Has Time Came for Commercial Real Estate to Go Bust?

I drive to work from Summerlin (my home) to my office on Sahara and Buffalo, and see signs after signs of lease and rental ads, and it saddens me to see many empty places even spaces which was formerly occupied by big grocery stores like Smith, are empty. Similarly, too much office space is available for rent. The space which was available for at least $2.50 square feet is available easily for $1.00 and sometimes even less. The leasing agent is even agreeable to sign a lease with few months of free spaces. Here, is an article projecting a flood of real estate going bust. Unfortunately, the signs are already very visible. There are “cracks” every where. Here, is the latest link which I found in one of the financial paper.

http://www.msnbc.msn.com/id/33404369/ns/business-personal_finance/

Is Nevada Mediation Plan Working?

First of all, let us agree that it was a great piece of legislation and promulgated with the best of hope. According to this mediation program, homes in Nevada cannot be foreclosed unless homeowners are offered mediation if there are homes are defaulted for non payment after July 1, 2009. So far, it has not done a full blockage to the rapidly rising foreclosure. Only very short numbers of mediators have been assigned and trained. Of course, we have a full time director of mediation hired and fully functional at this time. Mediation, is still governed under the Obama Plan (HAMP). But mediation, by nature is slow, and cumbersome process. Please read my other article on mediation in this blog. Somehow, it is not bringing full result as was expected.

http://www.lvrj.com/business/mediation-plan-blamed-for-delays-64197732.html

Housing Market–Is It Recovering?

Much forecast has been made by pundits of all sorts on the housing market. I wish the statistics could have been otherwise. However, the latest trends and data is proving it otherwise. It was few weeks ago Moody report which said that it would take 10 years for the housing market to fully recover. Following is another news item supporting this doom and gloom scenario.

http://www.lvrj.com/business/housing-recovery-isnt-as-close-to-reality-as-some-statistics-suggest-63955137.html

Nevada Landlord/Tenant Laws

Quite often we get calls from our clients and potential clients about tenancy situations in Nevada and where a home has been foreclosed, and the tenants are seeking a remedy. Here, we are posting this section which clealry spells the Nevada laws. Again, our job is to provide the source directly without giving any legal opinion. Of course, we can provide specific opinions to our clients as well.

http://www.leg.state.nv.us/NRS/NRS-118A.html

Details of Obama Plan’s Underwriting Guidelines

July 30, 2009 MORTGAGEE LETTER 2009-23

TO: ALL APPROVED MORTGAGEES
SUBJECT: Making Home Affordable Program:
FHA’s Home Affordable Modification Loss Mitigation Option

On May 20, 2009, the President signed the “Helping Families Save Their Homes Act of 2009.” This new law provides the Federal Housing Administration (FHA) with additional loss mitigation authority to assist FHA mortgagors under the Making Home Affordable Program (MHA). The MHA Program is designed to help homeowners retain their homes and to prevent the destructive impact of foreclosures on families and communities.

One key component of MHA provides homeowners the opportunity to reduce their mortgage payments by the use of a loan modification through the Home Affordable Modification Program. When initially introduced to the public, MHA excluded FHA insured mortgages, stating that FHA would develop its own standalone program. This Mortgagee Letter announces a new FHA Loss Mitigation option, the FHA-Home Affordable Modification Program (FHA-HAMP). FHA-HAMP will provide homeowners in default a greater opportunity to reduce their mortgage payments to a sustainable level. This Mortgagee Letter is effective August 15, 2009.

Basic Program Guidelines
The new FHA-HAMP authority will allow the use of a partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification. The objective of FHA-HAMP is to assist FHA mortgagors who are in default to modify their mortgage to an affordable payment. According to Mortgagee Letter 2000-05 and subsequent guidance, disposition options (pre-foreclosure sales and deeds-in lieu of foreclosure) are available immediately upon default, if the cause of the default is incurable, i.e. the borrower has no realistic opportunity to replace the lost income or reduce expenses sufficiently to meet the mortgage obligation.

To confirm if the mortgagor is capable of making the new FHA-HAMP payment, the mortgagor must successfully complete a trial payment plan. The trial payment plan shall be for a three month period and the mortgagor must make each scheduled payment on time. The mortgagor’s monthly payment required during the trial payment plan must be the amount of the future modified mortgage payment. The Mortgagee must service the mortgage during the trial period in the same manner as it would service a mortgage in forbearance. If the mortgagor does not successfully complete the trial payment plan by making the three payments on time, the mortgagor is no longer eligible for FHA-HAMP. Prior to proceeding to foreclosure, the Mortgagee must re-examine and re-evaluate the borrower’s financial condition and confirm that none of FHA’s other Loss Mitigation options could assist the mortgagor.

The attachment to this Mortgage Letter supplements program guidelines for FHA-HAMP, including a requirement that the servicer obtain an executed Hardship Affidavit (available at https://www.hmpadmin.com/portal/docs/mod_docs/hamphardshipaffidavit.pdf) from every mortgagor and co-mortgagor seeking an FHA-HAMP. FHA-HAMP is a permanent addition to HUD’s Loss Mitigation Program as of the date of this Mortgagee Letter.

Debt to Income Ratios
To be eligible under FHA-HAMP, the front end debt to income ratio must be as close as possible, but not less than, 31 percent. This ratio is defined as the total monthly mortgage payment (PITI) for the modified mortgage divided by the mortgagor’s gross monthly income (the “Front End Ratio”). The back end debt to income ratio must not exceed 55 percent and is defined as the total monthly mortgage payment plus all recurring monthly debt divided by the mortgagor’s gross monthly income (the “Back End Ratio”). Please refer to the sections in the Attachment regarding Underwriting – Front End and Back End Debt to Income Ratios.

Calculation of Maximum Partial Claim Amount under FHA-HAMP
The maximum partial claim amount under FHA-HAMP consists of the sum of (i) arrearages, (ii) legal fees and foreclosure costs related to a canceled foreclosure action and (iii) principal reduction. Arrearages that may be included in the partial claim shall not exceed 12 months of PITI. The maximum partial claim amount under FHA-HAMP is 30 percent of the outstanding principal balance as of the date of default. The principal deferment on the modified mortgage is determined by multiplying the outstanding principal balance by 30 percent and then reducing that amount by arrearages advanced to cure the default for up to 12 months PITI, and any foreclosure costs incurred to that point subject to the requirements provided in Mortgagee Letter 2008-21. The principal deferment amount for a specific case shall be limited to such an amount that will bring the mortgagor(s) total monthly mortgage payment to 31 percent of gross monthly income.

Example

Mortgagor had a reduction of income and is delinquent 3 full mortgage payments. The unpaid principal balance on the mortgage on the date of default is $150,000 and the monthly payment is $1,220 (consisting of P&I of $920 and escrows, including MIP, of $300). The financial analysis reveals that the mortgagor’s gross monthly income is $3,500 and the total monthly other recurring debt payments are $800.

In order to fulfill the 31% Front End Ratio requirement, the mortgagor(s) total monthly mortgage payment would have to be reduced to $1,085 ($3,500 x 31%). Therefore, P&I would have to be reduced to $785 ($1,085 total monthly mortgage payment less $300 escrow and MIP). Assuming that the loan modification will have an interest rate of 6% and a P&I of $785, the new mortgage amount would have to be $130,931, resulting in a principal reduction of $19,069 ($150,000 unpaid principal balance less $130,931). In this example, the mortgagor’s Back End ratio is 53.9% ($1,885/$3,500), which satisfies the 55% Back End Ratio limitation.

In this example, the maximum principal deferment is $41,340 (30% of $150,000, less the $3,660 delinquency, or $45,000 – $3,660). However, based on their gross income, mortgagor is eligible only for a principal deferment of $19,069 plus $3,660 arrearages (which would include any foreclosure costs incurred to that point, in accord with Mortgagee Letter 2008-21) for the total Partial Claim of $22,729.

Requirements to Use FHA-HAMP

FHA-HAMP can be utilized only if the mortgagor(s) does not qualify for current loss mitigation home retention options (priority order FHA Special Forbearance, Loan Modification and Partial Claim) under existing guidelines (ML 2008-21, 2003-19, 2002-17, 2000-05). To qualify for the FHA-HAMP program, Mortgagees must evaluate the defaulted mortgage for loss mitigation actions using the aforementioned priority order. According to Mortgagee Letter 2000-05 and subsequent guidance, disposition options (pre-foreclosure sales and deeds-in lieu of foreclosure) are available immediately upon default, if the cause of the default is incurable, i.e. the borrower has no realistic opportunity to replace the lost income or reduce expenses sufficiently to meet the mortgage obligation.

If the mortgagor does not successfully execute the loan modification, the mortgagor is no longer eligible for FHA-HAMP. In such cases, per 24 CFR 203.355, the Mortgagee must re-evaluate the mortgagor’s eligibility for the other appropriate loss mitigation actions prior to commencing or continuing a foreclosure.

Mortgagee Incentives
Mortgagees that utilize FHA-HAMP are eligible to receive incentive payments. Mortgagees utilizing this initiative will be allowed to first file for a partial claim (to bring the loan current and defer principal where appropriate), followed by a loan modification claim (claim type 32). Under FHA-HAMP, the Mortgagee may receive an incentive fee of up to $1,250. This total includes $500 for the partial claim and $750 for the loan modification. Mortgagees may also claim up to $250 for reimbursement for a title search and/or recording fees.

Partial Claim Filing and Document Delivery

Mortgagees must file a claim for insurance benefits for the partial claim within the 60-day timeframe stated in ML 2003-19 to receive incentive fees for the FHA-HAMP loss mitigation action. Any previous outstanding partial claim(s) must be subordinated and the mortgage company must provide HUD’s Secretary-Held servicing contractor (see ‘Remittance’ below) with a subordination agreement to request subordination.

Monitoring
FHA will monitor Mortgagees for compliance with the terms of this Mortgagee Letter and will take administrative actions, including sanctions and penalties, against all parties for non-compliance.

Remittance

Please note that all provisions described in the aforementioned existing guidelines, such as Repayment Terms, Option Failure and Disclosures apply also, except as specifically changed under FHA-HAMP.

Mortgagees must forward all required documentation, including subordination requests, and advise all parties to send any payments for the Partial Claims to HUD’s Secretary-Held Assets Servicing Contractor which is currently located at:

C&L Service Corp. / Morris-Griffin Corp.
2488 East 81st Street, Suite 700
Tulsa, Oklahoma 74137

Toll Free Phone: (866) 377-8667 Toll Free Fax: (866) 249-0626
Local: (918) 551-5300 Local Fax: (918) 551-5399

Current information about the Secretary-Held Assets Servicing Contractor is located at:
http://www.hud.gov/offices/hsg/sfh/nsc/fmaddr.cfm

Information Collection Requirement

The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control numbers 2502-0060, 2502-0523, 2502-0429, and 1505-0216. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB Control Number.

Any questions regarding this Mortgagee Letter may be directed to HUD’s National Servicing Center (NSC) at 888-297-8685 or hsg-lossmit@hud.gov. Persons with hearing or speech impairments may reach this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

David Stevens
Assistant Secretary for Housing – Federal Housing Commissioner

Attachment – Guidelines for FHA-HAMP

How the Obama Plan Works–Details

The Obama Plan despite all its handicaps, is still ia viable and working solutions toward the foreclosure crisis in USA, and particularly, in Nevada. Nevada, as we all know, is the forerunner in this foreclosure crisis. Here, is directly from the HUD and not from a second channel. Of course straight from the horse’s mouth.

Helping Families Save their Homes Act 2009
Summary of S. 896 Provisions

HOPE for Homeowners: The bill amends the HOPE for Homeowners Program, to (a) permit reduction of excessive fee levels, (b) provide greater incentives for mortgage servicers to engage in modifications under the Program, and (c) reduce administrative burdens to loan underwriters by making the requirements more consistent with standard FHA practices. Specifically, the bill would:

• Put the HUD Secretary in charge of running the program, relegating the Program Board’s role to an advisory capacity
• Change the upfront fee from 3% to “up to 3%.”
• Change the annual fee from 1.5% to “up to 1.5%.”
• Require the HUD Secretary to weigh both the financial integrity of the program and the bill’s purposes of foreclosure prevention in setting premiums.
• Change the provision for HUD to receive 50% of appreciation profit sharing to authorize “up to 50%” of such profit sharing; allow HUD to share this with the existing first or subordinate lienholders to induce loan writedowns; provide flexibility to assign any profit sharing rights HUD elects to share; cap profit sharing at up to the appraised value of the property when the existing loan was made.
• Permit payments to servicers of existing mortgage loans on the property and to underwriters of the new FHA loan for each successful refinance.
• Include a number of administrative changes, including:
o requiring conformity to FHA single family procedures and standards as much as possible;
o modifying current debt income affordability test to apply it at the time of the new loan application, instead of March 1st of 2008;
o modifying certification of no intentional default on other debts so that it now applies “to any other substantial debt” within the last five years; and eliminating reference to going to jail because of false statements;
o providing for slightly less prescriptive language regarding collection of income tax returns;
o eliminating extraneous LTV restrictions on use of second lien loans to maintain property; and
o barring borrowers with a net worth of more than $1 million.
• Re-instate authority of HUD, with the concurrence of the Board, to conduct an auction to refinance loans on a wholesale or bulk basis.
• Offset the costs of program changes with a reduction in TARP authority of $1.244 billion.

Servicer Safe Harbor: The bill provides a safe harbor from liability to mortgage servicers issuers, trustees, loan sellers, depositors, and any other person” to the extent the person’s cooperation is required to allow the servicer to engage in loan modifications, as long as the servicer provides a modification consistent with the Administration’s program or it utilizes Hope for Homeowners.

Deposit Insurance: The bill amends the Federal Deposit Insurance Act and the Federal Credit Union Act to enhance the liquidity and stability of insured depository institutions to ensure availability of credit and reduction of foreclosures. Specifically, the bill would:
• Extends through 2013 the temporary increase in deposit insurance coverage for both the FDIC Deposit Insurance Fund and the National Credit Union Administration (NCUA) Share Insurance Fund to $250,000 (the temporary increase is currently scheduled to sunset on December 31, 2009).
• Provides FDIC an increase in borrowing authority to $100 billion, while providing a temporary increase until the end of 2010 to $300 billion. Specifically restricts FDIC from using the $300 billion for funding losses under programs established with Treasury under TARP.
• Provides NCUA an increase in borrowing authority to $6 billion, with a temporary increase to $30 billion.
o Any amounts borrowed must be used only for insurance purposes.
o Neither the FDIC nor the NCUA has ever used this borrowing authority.
o The FDIC borrowing authority amount has not changed since 1991, even though the size of the industry has tripled. The NCUA borrowing authority has not changed since 1972 when it was established, even though the size of the industry has increased from $13.8 billion in 1972 to $813 billion at year-end 2008.
o Any money borrowed must be repaid, with interest, pursuant to a repayment schedule that must be in effect prior to receiving any money, and which is subject to a requirement to consult with and report to Congress.
• Allow the FDIC to charge systemic risk special assessments by rulemaking, on both insured depository institutions and depository institution holding companies. For holding company assessments, the concurrence of the Secretary of the Treasury would be required.

FHA Approval: Contains numerous provisions to better ensure that predatory lending entities and individuals are not allowed to participate in the FHA home mortgage insurance program. Specifically, the bill would:
• Require HUD approval of all parties participating in the FHA single family mortgage origination process.
• Allow HUD to impose a civil money penalty against loan originators who are not HUD-approved and yet participate in FHA mortgage originations.
• Make clear that an applicant is ineligible for approval if the entity or any officer, partner, director, principal, or employee of the entity is: a) suspended or debarred by any Federal agency; b) under indictment for, or has been convicted of, an offense that reflects adversely upon the applicant’s integrity, competence or fitness to meet the responsibilities of an approved mortgagee; c) subject to unresolved findings contained in a HUD or other governmental audit, investigation, or review; d) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees; e) convicted of a felony related to participation in the real estate or mortgage loan industry; or f) in violation of provisions of the S.A.F.E. Mortgage Licensing Act.
• Require that HUD receives notice of the debarment and any change in licensing status of a FHA approved mortgagee.
• Require HUD to expand the existing FHA process of reviewing new applicants for FHA approval for the purpose of identifying those representing a high risk to the Mutual Mortgage Insurance Fund and implement procedures that expand the number of loans reviewed by FHA for lenders approved within the last 12 months, and include a process for random reviews that is based on loan volume by newly approved participants.
• Require FHA approved mortgagees to use their HUD registered company names in all advertizing and to keep copies of all advertisements.

FHA and RHS Foreclosure Prevention

• Expands the authority of the Federal Housing Administration (FHA) and the Rural Housing Service (RHS) to engage in foreclosure prevention in their respective single family loan programs, by allowing for both FHA and RHS the following new tools:
• Partial Claims. Permits partial claims of up to 30%, which will allow reductions in debt service down to levels affordable to the homeowner
• Standard for loss mitigation. Permits loss mitigation tools to kick in for loans that face “imminent default” (ie., not just loans in default)
• Assignment Authority. Gives both FHA and RHS authority to facilitate loan modifications through assignment of loans, to address servicer loss mitigation disincentives relating to having to purchase loans from Ginnie Mae pools

McKinney-Vento Homeless Reauthorization

• 1st major program reauthorization in 20 years
• Authorizes $2.2 billion for the program in FY 2010 and such sums in FY 2011
• Expands the federal definition of “homeless” by counting families who will lose their housing in 14 days (current practice is 7), by adding families with children and unaccompanied youth who have experienced a long term period without living independently and can be expected to do so for an extended period, and adding those fleeing domestic violence or dangerous or life threatening situations
• Expands flexibility to use funds to assist families with children not technically defined as homeless – by permitting local continuums to use up to 10% of their funds for such families, by expanding the proportion of funds going to homeless prevention activities (which can serve such families), and by allowing rural areas much more flexibility to serve such families
• Streamlines McKinney-Vento homeless programs by consolidating the competitive grant program and by using a simplified match requirement

• Additional Funding for HUD programs – HUD Authorizations not in House bill: (a) $10 million each of the next 2 years for advertising to increase public awareness or mortgage scams and counseling assistance, (b) $50 million each of the next 2 years for housing counseling in areas with highest foreclosure rates, (c) $5 million in each of the next 2 years for Fair Housing activities in areas with the highest foreclosure rates.

• Tenants Protections: The bill allows bona fide tenants to remain in their residence, pursuant to their lease, following a foreclosure, except when the successor in interest or subsequent purchaser will occupy the unit as a primary residence – in that case the tenant must receive notice to vacate at least 90 days before the effective date of such notice. A lease or tenancy is bona fide if it is the result of arms-length transaction and if the rent is not substantially less than fair market rent.

• Public-Private Investment Partnerships – Requires that any program to create a private-public investment fund must have conflict of interest rules, and requires funds to report on 10 largest positions in the fund and investors with greater than 10 percent interest in fund, to retain records by fund, to acknowledge fiduciary duty, and to develop ethics rules and screening. Allows the Special Inspector General access to books and records of a fund. Requires Treasury to consult with Special Inspector General on the interaction between the Private-Public Investor Program, the Term-asset Backed Securities Loan Facility, and similar programs and to issue conflicts of interest rules, including concerning the potential for excessive leverage as a result of interactions of program. Also makes additional funds of $15 million available to the Special Inspector General.

The House Manager’s Amendment includes the following key clarifications:

• Neighborhood Stabilization Program (NSP) Refinements – Clarifies that states receiving the minimum allocation of NSP funding, that have otherwise fulfilled the targeting requirements of the program, may distribute any remaining funding to areas with homeowners at risk of foreclosure or in foreclosure. Maintains the statutory purpose of the NSP program, which is the rehabilitation and resale of abandoned and foreclosed properties. And eliminates the requirement that NSP properties be purchased at a discount from the current market appraised value.

• Private-Public Investment Partnerships – The language makes clear that Treasury shall write the conflict of interest rules required by the provision. Clarifies that managers are to provide the Secretary information on any investor that holds an equity interest in a fund of at least 10 percent. Clarifies that Special Inspector General shall prioritize audits or inspections of any program funded in whole or part by the Emergency Economic Stabilization Act of 2008.

• Servicer Safe Harbor – inserts language to exclude actual fraud from the loan modifications and transactions protected by the amendment.

Obama Plan is Not Stopping Foreclosure–NY Time

An interesting article has been published in NY Times stating that the expectations are falling with the Obama Loan Modification Plan. It had, in fact, not slowed down the rising trends in foreclosure. Here, is this interesting article.

http://www.nytimes.com/2009/10/10/business/10modify.html

Las Vegas Loan Modification Companies Needs Mortgage Rules

Las Vegas Review Journal has noted in its edition of 30th October, 2009, that lots of so called foreclosure firms would be out of luck if they don’t renew or carry the new bond set up by the Mortgage and Lending Divisions. The dead line is in fact, October 1, 2009. That is a good news for homeowners of Nevada because lots of these scam artists, loan shark companies would be out of business. I get at least 3 to 5 calls every day in my office about these fradulent companies who are plying their trade without any license and without technical and legal knowledge. Homeowners, please remember, it is your home which you need to protect. Remember, a licensed attorney is always a good option. An attorney can analyze your situatin (it may look simpler) in many different ways and find a better plan for you.

Here is the article.

http://www.lvrj.com/news/breaking_news/Companies-that-applied-to-conduct-mortgage-modifications-fail-to-post-bonds-62693407.html

Judge Dismiss MERS

Mortgage Electronic Registration Systems (MERS) is claimed to be a privately held company that controls a confidential electronic registry designed to track mortgages and the changes in servicing rights and ownership of mortgage loans in the United States. Shareholders and owners of MERS include AIG, Fannie Mae, Freddie Mac, WAMU, CitiMortgage, Countrywide, GMAC, Guaranty Bank, and Merrill Lynch. It is argued that the U.S. government may currently control MERS via its control and ownership of many of these MERS’ shareholders.

MERS serves as the mortgagee of record for lenders, investors and their loan servicers in the county land records. MERS claims its process eliminates the need to file assignments in the county land records which lowers costs for lenders and consumers by reducing county recording revenues from real estate transfers and provides a central source of information and tracking for mortgage loans. MERS helped make mortgage-backed securities possible and helped create the United States housing bubble.

MERS is just an electronic fiction which claims to possess loans papers. Judges are increasingly dismissing them as fake and not a real party in interest.

Here is the link to this interesting phenomenon.

http://www.nytimes.com/2009/04/24/business/24mers.html?adxnnl=1&adxnnlx=1254392060-uddNKL8Aviix6QxlGYZWMA

How To Prepare Financial Information Before You Talk To Your Lender?

HOUSEHOLD FINANCIAL INFORMATION
INCOME BUDGET FOR HOUSEHOLD

SOURCE OF INCOME LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Employment $ $ $ $
Overtime ________________________________________
Child Support/Alimony _____________________________________
Pension _______________________________________
Interest ______________________________________
Public Benefits _____________________________________
Dividends
Trust Payments ______________________________________
Royalties ______________________________________
Rents Received ______________________________________
Other (List) ______________________________________

TOTAL (MONTHLY) $ $ $ $

NOTES/ANTICIPATED CHANGES:________

EXPENSE BUDGET FOR HOUSEHOLD

TYPE OF EXPENSE LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Payroll Deductions $ $ $ $
Income Tax Withheld ____________________________
Social Security ___________________________
FICA ___________________________
Wage Garnishments _______________________ Credit Union ___________________________________
Other _____________________
Home Related Expenses
Mortgage or Rent ___________________________________
Second Mortgage ___________________________________
Third Mortgage ___________________________________
Real Estate Taxes ___________________________________
Insurance __________________________________
Condo Fees & Assessments __________
Mobile Home Lot Rent ________
Home Maintenance/ Upkeep ________________
Utilities _________________________________
Gas __________________________________________________
Electric ___________________
Oil ___________________
Water/Sewer _______________
Telephone:
Land Line ____________
Cell ____________
Cable TV ____________
Internet
Other ___________
Food
Eating Out ________________
Groceries ________________
Clothing _______________________
Laundry and Cleaning _____________________
Medical _______________________
Current Needs _______________________
Prescriptions _______________________
Dental _______________________
Insurance Co-Payments or Premiums
Other _________________________________
Transportation _________________________
Auto Payments _________________________________
Car Insurance _________________________________
Gas and Maintenance _________________________
Public Transportation _______________________
Life Insurance _________________________
Alimony or Support Paid _________________________
School Expenses _________________________
Student Loan Payments _________________________
Entertainment _________________________
Newspapers/Magazines _________________________
Charity/Church _________________________
Pet Expenses _________________________
Amounts Owed on Debts _________________________
Credit Card_______________________________________
___________________
Credit Card
___________________
Credit Card
___________________
Medical Bill
___________________
Medical Bill
___________________
Other Back Bills (List)
___________________

Cosigned Debts
Business Debts (List)
___________________
___________________
Other Expenses (List)
___________________
___________________
Miscellaneous
TOTAL

Other Important Debt Issues:

Wage Garnishments Yes______ No______
Pending Court Cases Yes______ No______
Pending Utility Shut-offs Yes _____ No _____
Car Loan Defaults or Repossessions Tax Debts Yes ____ No____
Student Loan Debts Yes_____ No_____

Other:
Notes/Anticipated Changes:
Describe Assets and Other Resources:

Savings Yes______ No______ Amount $______________

Court Cases Pending Against Others Yes______ No__________
Value $______________

Anticipated Tax Refunds Yes______ No____________
Amount $______________

Assets Which Can Be Sold Yes ______ No______ Value $______________

Pension or Retirement Funds Yes______ No______ Value $______________

Other Assets and Notes:

INCOME AND EXPENSE TOTALS

Last Mo. Actual This Mo. Expected This Mo. Actual Adjusted Expected
A. Total Projected Monthly Income
B. Total Projected Monthly Expenses
Excess Income or Shortfall (A minus B)

Notes:
OTHER INFORMATION

1. Have you made an effort to arrange a workout on their own? What result?

2. Have you filed bankruptcy? If so when? Current status of case if still pending? If bankruptcy is over, what result?

3. Other issues which came up during this time.

4. Questions and open issues that must be resolved.

White House Releases Data on The Slowest Lenders Performance in Loan Modification

White House recently released data on the pace of slowest performing loan modification. It is a sad reflection on the state of affairs. It picked BOA and Wells Fargo. However, there has been a noticeable change in the attitude of Bank of America. I hope other would do appropriate changes as well. Here, is the link to this White House Release.

http://www.ustreas.gov/press/releases/tg252.htm

A Little Judge Who Hates Foreclosure in Brooklyn

I love this judge, he is my man. Please read this interesting article on this wonderful person.

http://www.nytimes.com/2009/08/31/nyregion/31judge.html?_r=1&emc=eta1

Hard Times Coming to Commercial Real Estate

The housing crisis is spreading unabated, and now it is soon to engulf commercial real estate. There has already been cracks in this market in widespread vacancy rates, and sky rocketing rate of interest. Banks are learning their lessons and crafting new strategy for commercial real estate. Here, is the news story.

http://www.nytimes.com/2009/09/02/business/economy/02office.html?scp=6&sq=&st=nyt

Wells Fargo & Bank of America are the Slowest in Loan Modification

A new report just published which states that Bank of America and Wells Fargo are the slowest banks when doing loan modification. No wonder we are having such a mess. Here is the report.

http://www.nytimes.com/2009/08/05/business/05treasury.html?fta=y

Bank Executives Hosts Parties in Foreclosed Homes

Finally, some use has been crafted from the executives of the banks_____ it is not the often quoted homeless people illegally occuping empty and foreclosed homes, it is the fancy bank executives.

http://money.aol.com/article/real-estate/bank-exec-hosts-parties-in-bank-owned/666193

How California is Stopping Loan Fraud Agencies?

California is suing the loan fraud agencies to stop them from their rip off and false promises of stopping the foreclosure and loan modification.

Here is the link.
http://www.ftc.gov/os/caselist/0923120/090715usfrcmpt.pdf

FTC tightening grip on Loan Fraud Agencies

Here, is an interesting news item how FTC is handling all these loan fraud, attorney-affiliated, attorney-backed agencies.

http://www.walletpop.com/blog/2009/07/15/major-crackdown-on-foreclosure-rescue-and-mortgage-scams-continu/?icid=sphere_blogsmith_inpage_dailyfinance

Slow Pace of Loan Modification-A New Report

MSNB is reporting that there has been a very slow pace of loan modification despite governmental and private sector’s outcries. Here is the report
http://www.msnbc.msn.com/id/32281959/ns/business-real_estate/

Foreclosure Still Rising

These are the latest statistics which indicate the tide of rising foreclosure is not coming to an end.

http://247wallst.com/2009/08/13/foreclosures-make-huge-move-up-in-july/

Why Not to Call California based Loan Modification Firms Including Attorneys?

This is an interesting article, published of course by California Bar Association mandating ethical practices both by California licensed attorneys as well loan modification agencies. Interesting, of course.

http://www.calbar.ca.gov/calbar/pdfs/ethics/Ethics-Alert-Foreclosure.pdf

Foreclosure’s in Lenders’ Interests?

Washington Post published an interesting article portraying that the lenders think the rising foreclosure is in their best interest. Shocking?They think homeowners eventually will self cure it.

Here is the link.

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072703065.html

How to Apply for Nevada Mediation For Loan Modification

This law office is always in forefront of helping Nevada homeowners. We had been frequently contacted in the last few days about the form which is required for Nevada Mediation. The following is the copy of this form. Please reprint and use it as many times as required. This is part of the public record.

STATE OF NEVADA
FORECLOSURE MEDIATION PROGRAM
Election/Waiver of Mediation Form FMP Form 001.063009
ELECTION/WAIVER OF MEDIATION FORM
(To be filled out by Trustee)PROPERTY ADDRESS __________________________ TS # ___________________________________________________
_________________________________APN _____________________________________________
TRUSTEE _____________________________ DoT __________ Book/Inst _____________________

***ATTENTION—YOU MUST ACT WITHIN THIRTY (30) DAYS***
IF NO ACTION IS TAKEN, THE FORECLOSURE MAY PROCEED
You have been served with a Notice of Default and Election to Sell, a copy of which is enclosed, that could result in the loss of your home. You may want to consult with an attorney concerning your rights and responsibilities.

The State of Nevada has created a mediation program for homeowners whose owner occupied, primary residence is subject to foreclosure. Mediation is a process through which you and the lender meet with a neutral mediator to determine whether an agreement can be reached to cure any defaults in the loan or modify the terms of the loan to enable you to remain in your home. The mediator will be appointed by the Foreclosure Mediation Program Administrator. The mediator will not provide legal advice to either party. If you feel the need for legal representation, it is recommended that you retain an attorney to assist you in the mediation.
Your Name(s): ___________________________________________________________
Address: ________________________________________________________________
________________________________________
Phone No: ( ) _________________ (telephone)( ) _________________________ (cellular)
Email: ___________________________________________________________________
Co-owner’s Name: _________________________________________________________
Address: _________________________________________________________________
_________________________________________________________________________
Phone No: ( ) __________________ (telephone)_________________________________
( ) __________________ (cellular)
Email: ___________________________________________________________________

PLEASE SELECT ONE OF THE CHOICES BELOW AND RETURN COPIES IN ENCLOSED ENVELOPES.
_____ ELECTION OF MEDIATION The undersigned hereby request[s] that a mediation be scheduled to attempt to work out a resolution of the loan. ($200.00 Money Order or Cashier’s Check Applies – See Below) _________WAIVER OF MEDIATION The undersigned is/are aware of the right to seek mediation but have determined that I/we do not want to proceed with a mediation and hereby waive the right to do so.

The undersigned hereby certify under the penalty of perjury that I/we are the owner[s] of the real property that is the subject of the pending foreclosure and occupy the real property as my/our primary residence.
_____________________________________ ______________________________________
Signature of Property Owner Date Signature of Co-Owner Date

COMPLETE TWO COPIES OF THIS FORM AND FORWARD ONE TO THE MEDIATION ADMINISTRATOR AND THE OTHER TO THE TRUSTEE OF THE DEED OF TRUST. TWO UNSTAMPED, PRE-ADDRESSED ENVELOPES HAVE BEEN ENCLOSED.
IF YOU HAVE CHOSEN TO SEEK MEDIATION, YOU MUST SEND A MONEY ORDER OR CASHIER’S CHECK IN THE SUM OF $200 PAYABLE TO: “STATE OF NEVADA FORECLOSURE MEDIATION PROGRAM.” THIS PAYMENT MUST BE RETURNED, BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, WITHIN 30 DAYS OF THE DATE OF SERVICE OF THE NOTICE OF DEFAULT AND ELECTION TO SELL.
PAYMENT MUST BE SENT TO THE TRUSTEE IN THE ENVELOPE THAT WAS ENCLOSED WITH THIS FORM. DO NOT SEND PAYMENT TO THE MEDIATION ADMINISTRATOR. STATE OF NEVADA
FORECLOSURE MEDIATION PROGRAM Election/Waiver of Mediation Form FMP Form 001.063009
ELECTION/WAIVER OF MEDIATION FORM

Instructions

The Election/Waiver of Mediation is for owner-occupied residential property only. This form is not for use with vacation homes, rental property, or any other property where the owner does not live in the property as a primary residence. This form should come to you from the lender; you cannot begin this process yourself by using this form.

The ELECTION/WAIVER OF MEDIATION form has been provided to you in duplicate. (You may make
additional copies if needed.) You must fill out the forms in duplicate so that the same information is included on both copies of the forms. You must fill in the blanks on both forms and make your election to either request mediation or waive mediation.

Print your name and address in the spaces provided. Include your telephone numbers and your email address. If you have a co-owner, their name, address, phone numbers and email address should be included. This information will only be used for the mediation process.
In the designated location, you must select (with a check mark or “X”) one of two choices. You may only select one of the two options. Either select:

1. “___ ELECTION OF MEDIATION” if you choose to enter into the Mediation Program;
OR
2. “___ WAIVER OF MEDIATION” if you do not want to participate in the foreclosure Mediation Program.

You must then sign and date each form. NOTE that by signing the form you are certifying under penalty of perjury that you own and occupy the subject property as your primary residence.
Sign each form. One copy of the form must to be mailed to the Trustee of the deed of trust and one copy of the form must be mailed to the Mediation Administrator. The envelopes provided are preaddressed to the Trustee and Mediation Administrator. You must mail both envelopes by Certified U.S. mail, return receipt requested. You will need to pay the postage for the mailings. Do not mail your payment to the Mediation Administrator.

If you elect mediation, you must include the $200.00 mediation fee along with the form in the envelope addressed to the trustee. The $200.00 mediation fee must be paid in the form of a money order or cashiers check and made payable to: “State of Nevada Foreclosure Mediation Program”.
If you choose to forego or waive mediation, there is no need to send the $200.00 mediation fee. However, whether you elect to enter into the mediation program or elect not to participate in mediation, both forms should be mailed. If you do not mail the forms to the Trustee and the Mediation Administrator, you will not be allowed to participate in the mediation program and the foreclosure will proceed. This is your only opportunity to elect to participate in the foreclosure mediation process.

Fed New Help for Underwater Mortgages

Feds are thinking and in some cases working on giving help to homeowners who have underwater mortgages. Here is the link.

http://www.nytimes.com/2009/07/26/realestate/26mort.html?_r=1&scp=1&sq=mortgage%20July%2026,%202009&st=cse

Fed Stopping Fraudulent Loan Modification Firms

Finally, federal authorities is waking up to the realty of controlling and stopping the non-attorney loan modification agencies from plying their fraudulent scam on innocent and needy homeowners.

Here is the link to the article.

http://www.msnbc.msn.com/id/32007521/ns/business-the_new_york_times/

How to Write a Wrongful Foreclosure Complaint

Attorney Malik reviews basic wrongful complaint.
How to Write a Sample Complaint for Wrongful Foreclosure
[No legal advice intended. It is purely an academic exercise because of greater interest in such issues. Absolutely no legal relationship is created and no follow up questions entertained other than general issues.]
IN THE CLARK COUNTY
OF THE STATE OF NEVADA

FRANK SINATARA,
Plaintiffs,

v.

MILLSFARGO MUTUAL BANK, FA dba MILLSFARGO MUTUAL MORTGAGE
dba MILLSFARGO MUTUAL; PROFESSIONAL FORECLOSURE SERVICES
Defendants.

FIRST AMENDED COMPLAINT

Come now the plaintiffs, Frank Sinatara, by and through their attorneys of record, and for their First Amended Complaint against the defendants hereby complain and allege as follows:

I. PARTIES

1.1 Frank Sinatara are residents of Clark County, Nevada.

1.2 MillsFargo Mutual Bank, FA (hereafter “WMU”) does business in the state of Nevada and at relevant times serviced a loan acquired by MillsFargo Mutual and ultimately by the Federal National Mortgage Association.

1.3 Professional Foreclosure Services is believed to be a Nevadan corporation operated from California and is in the business of conducting non-judicial foreclosures in Clark County, Nevada.

II. FACTUAL ALLEGATIONS AND FIRST CLAIM: BREACH OF CONTRACT

2.1 On or about January 2005 the plaintiffs purchased a condominium and obtained a mortgage loan from the Johny Walker National Mortgage Company, Pahrump, Nevadain the approximate amount $265,000.00. This mortgage loan was eventually transferred for servicing to Milikan Mortgage Company (hereafter “Milikan”). On or about June, 2006, WMU acquired Milikan and began servicing plaintiffs’ mortgage loan. The exact monthly payment varied according to property taxes and other fees paid but a typical monthly payment was $1496.36 including reserves for the payment of taxes and insurance.

2.2 Beginning in February 2007 and continuing until July of 2001 the plaintiffs made timely payments to Lee National Mortgage until such time as the loan was assigned to Milikan Mortgage and, thereafter, payments were made to Milikan Mortgage.

2.3 Around June of 2001 the plaintiffs were notified that MillsFargo Mutual had acquired Milikan Mortgage and payments were to be made to MillsFargo Mutual prospectively.

2.4 On or about August 1, 2001 the plaintiffs, through their personal bank, MacMacMacPacific Bank, initiated an automatic bill payment service to automatically pay the MillsFargo Mutual home loan payment, which commenced on August 14, 2001. Initially, the payments were scheduled to be sent on or about the 14th day of each month in accordance with the loan agreement. Between August 14, 2001, and April 10, 2002 MacMacPacific Bank sent automatic payments to MillsFargo Mutual for the amount of the full payment each and every month in a timely fashion.

2.5 The automatic payments were received by MillsFargo Mutual within a few days of the transmission by MacMacPacific Bank, but not credited to their account.

2.6 Around October of 2007 the monthly statements from MillsFargo Mutual reflected that payments were not being credited. The Consumers promptly checked with MacMacMacPacific Bank to ensure that the payments had been sent and then supplied the requested information about the transmission and receipt of the payments to MillsFargo Mutual. The Consumers had MacMacPacific Bank produce canceled checks from these payments which were transmitted to MillsFargo Mutual whenever requested. In November, MillsFargo Mutual, without explanation, sent back the September payment to MacMacPacific Bank which credited it to the Consumers’ MacMacPacific Bank account.

2.7 On December 12, 2001 MillsFargo Mutual wrote to the Consumers indicating no payments had been received since October 1. MillsFargo Mutual assessed escrow expenses and delinquency charges and threatened to foreclose on the property.

2.8 The Consumers immediately responded to this, again supplying canceled checks and proof that MillsFargo Mutual had in fact received their payments.

2.9 In early 2002, despite repeated communication from the Consumers and repeated proof of payments made, MillsFargo Mutual hired Professional Foreclosure Services to commence foreclosure. On March 6, 2002, a Notice of Default was issued by Professional Foreclosure Services and approximately 30 days later a Notice of Trustee Sale scheduling a non-judicial foreclosure for July 19, 2002, was transmitted to the Consumers.

3.0 The Consumers continued to send letters and make phone calls to MillsFargo Mutual to no avail. As a result, in April 2002 adverse credit consequences occurred to the Consumers including a cancellation of a MacMacPacific Bank credit line and reduction of an American Express credit line.

3.1 MillsFargo Mutual and/or Professional Foreclosure Services has transmitted to various credit reporting agencies, including Equifax, false adverse information about the Consumers, causing their credit to be impaired.

3.2 In April of 2002 MillsFargo Mutual returned some of the payments and refused to take further payments made by the Consumers.

3.3 Beginning May 2002, the Consumers have made payments directly to MillsFargo Mutual payable to a bank account in a MillsFargo Mutual bank to show their good faith and intent to comply with their loan obligations.

3.4 The Consumers have contacted Professional Foreclosure Services to dispute the debt and request verification of the debt and have received no information whatsoever in violation of the Fair Debt Collection Practices Act and the Alaskan Collection Agency Act, as well as in breach of the duty of Good Faith and Fair Dealing implicit in contracts.

III. SECOND CLAIM: WRONGFUL FORECLOSURE

3.1 As a proximate result of the negligent or reckless conduct of MillsFargo Mutual and Professional Foreclosure Services the Consumers’ credit has been impaired and they are threatened with the eminent loss of their property despite the fact that they have made all payments in accordance with the loan agreement.
3.2 Unless enjoined, the plaintiffs will suffer irreparable harm and will not have an adequate remedy at law.

3.3 As a proximate result of the negligent actions of both defendants, the Consumers have suffered consequential damage and will continue to suffer additional damage in an amount to be fully proved at the time of trial.

IV. THIRD CLAIM: SLANDER OF TITLE

4.1 The defendants have caused to be recorded various documents including a Notice of Trustee Sale which has impaired the Consumers’ title which constitutes slander of title and the Consumers should be awarded resulting damages to be fully proved at the time of trial.

V. FOURTH CLAIM: VIOLATION OF THE CONSUMER PROTECTION ACT

5.1 The defendants have engaged in a pattern of unfair practices in violation of the Nevada Revised Statutes XXXXXX Consumer Protection Act, XXXX et seq. entitling the Consumers to damages, treble damages and reasonable attorney fees and costs pursuant to the statute.

VI. FIFTH CLAIM: SLANDER OF CREDIT

6.1 The Consumers allege that the actions and inactions of the defendants have impaired their credit causing them to lose the ability to have good credit entitling them to damages, including statutory punitive damages pursuant to state and federal law, all to be proved at the time of trial.

VII. INFLICTION OF EMOTIONAL DISTRESS

7.1 The defendants have intentionally or negligently taken actions which have caused the plaintiffs severe emotional distress.

Wherefore, having set forth various causes of action against the defendants, the plaintiffs pray for the following relief:

1.That this Court enjoin the foreclosure presently scheduled for July 19, 2005, conditioned upon the Consumers making payments as the have in the past in a timely fashion;

2. That the actions of both defendants be determined to be unfair and deceptive business practices in violation of UDAP Nevada;

3. That the Consumers be awarded punitive damages provided for in UDAP XXXX including costs and attorney fees;

4. That the Consumers be awarded consequential damages to be fully proved at the time of trial;

5. That the Consumers be awarded their fees and costs pursuant to the written loan agreements which bind the defendants; and

6. That the Court grant any other relief that may be just or equitable.

Attorney for XXXXXXX

FBI Issues Mortgage Fraud Report

Here, is the link to the new report of mortgage fraud by FBI.

http://www.fbi.gov/publications/fraud/mortgage_fraud08.htm

Loan Fraud Companies Sued

We hear the loan fraud companies scamming homeowners. Now, this include loan modfication companies including their attorney. Here is the link.

http://www.mortgagefraudblog.com/ee-assets/my-uploads/UnitedFirstComplaint.pdf

Investors,Borkers Sued Over Sophisticated Fraud

Here, is an interesting complaint (lawsuit) which is filed in Arizona against a team of sophisticated network of investors, brokers, lenders and others.

http://www.mortgagefraudblog.com/ee-assets/my-uploads/Arizona%20Investments%20Complaint.pdf

Lots of Resistance to Loan Modification by Both Servicers and Lenders

We all thought that with the advent and efforts of the new Obama Administration, the loan modification process would be accelerated. But our hopes are dying down as both Servicers and Lenders are putting roadblocks one after another on some pretext in loan modification process. Too often they would claim they never received the documents. The call centers would route your call to wrong departments, or to different part of the world, especially India and Phillippines or even Costa Rica, where friendly representatives would greet you but without any help. Too often, their only concern is how to collect money from you. Here, is an excellent article published in NY Times about how Obama plans likes to speed up the loan modification program.

http://www.nytimes.com/2009/07/11/business/11nocera.html?8dpc

Servicers Still Resisting Loan Modifcation

NY Times has published an excellent front page story how the servicers are still resisting loan modifications despite many many attempts and efforts to do accelerate and simplify the loan modifications process by both banks and servicers. Here is this heart wrenching article from NY Times.

http://www.nytimes.com/2009/06/29/business/29loanmod.html

Loan Modification Taking Longer Times

USAToday has published an interesting articles about loan modifcation taking more and more times by lenders on various pretexts. Following is the story.
<a href=”http://www.usatoday.com/money/economy/housing/2009-06-18-obama-plan-mortgages_N.htm”>http://www.usatoday.com/money/economy/housing/2009-06-18-obama-plan-mortgages_N.htm

New Law Passed for Renters

The law office of Malik Ahmad receives many calls a day about the plight of renters whose homes had been foreclosed or are in the danger of being foreclosed. Many times tenants with tears and emotionally choked voices tell this law office about their sadful stores. Now, there is a good news for tenants that they cannot be evicted under the newly enacted federal laws. Please read it and if you don’t understand contact a local attorney.
http://www.tenantstogether.org/downloads/S.896Final.pdf

Housing Affordability Sheet Under the Mediation Program

The Law Office of Malik Ahmad takes pride in publishing the latest news and information about Nevada homeowners and their welfare. Here, is the latest worksheet required by Supreme Court of Nevada for mediation purposes.

Nevada Supreme Court Hires Mediation Administrator

This law office takes pride in posting the latest news and information for the welfare of the Nevada homeowners. Here, we go again.

http://www.nevadajudiciary.us/index.php/foreclosure-mediation/420-nevada-foreclosure-mediation-program-administrator-is-hired.html

Supreme Court of Nevada Decides New Foreclosure Mediation Rules

Here, is the good news from Supreme Court of Nevada and for its homeowners. Supreme Court of Nevada had finally decided the detailed rules for the foreclosure mediation program under AB149:

http://www.nevadajudiciary.us/images/pdf/foreclosure.mediation.rules.ord.pdf

New Nevada Legislature Mediation Program Can Stop Foreclosure: Good News

About the Nevada Foreclosure Mediation ProgramCREATING THE PROGRAM

Assembly Bill 149 was passed by the Nevada Legislature during the 2009 session and signed by Governor Jim Gibbons. Its purpose is to address the foreclosure crisis head-on and to help keep Nevada families in their homes.

This law establishes a Foreclosure Mediation Program for owner-occupied residential properties that are subject to foreclosure notices – formally known as a Notice of Default and Election to Sell – filed on or after July 1, 2009. To qualify for the mediation program, a property must be a homeowner’s primary residence and located in Nevada.

WHAT YOU NEED TO KNOW ABOUT FORECLOSURE MEDIATION?

Mediation is an alternative method to help parties resolve disputes by agreement with the help of trained mediators. Mediating a foreclosure action has its advantages. It is fast, inexpensive, and offers a flexibility that more formal processes do not.

Home foreclosures impact both the homeowner and the lender. Homeowners do not want to lose their homes and mortgage lenders do not want to be in the real estate business.

This article is published with the courtsey of the Supreme Court of Nevada.

Both sides may benefit through foreclosure mediations.

WHY SHOULD YOU MEDIATE?
You can play a major role, with the help of a trained mediator, in deciding the outcome of your individual dilemma. Mediation is a give-and-take process in which the parties work to reach a mutually acceptable resolution to a mutual problem. Resolutions reached through foreclosure mediations are compromises that offer advantages to lenders as well as homeowners.

If you have the ability to meet the other party half way, everyone may benefit.
 Can you, as a homeowner, make your mortgage payments if your home loan is modified?
 Can you, as a lender in today’s real estate market, modify a loan to the extent that the homeowner can perform?
If the answers are YES, the Foreclosure Mediation Program may be able to save another Nevada home.

WORKING FOR A RESOLUTION

Sometimes the parties will not be able to reach an agreement, even with the help of a trained mediator, and the home will be lost to foreclosure. That is a reality in today’s economy.

But by working together to explore the various options, the hope is that a homeowner can avoid foreclosure and continue living in the home they purchased. If the mediation is successful, the homeowner may also avoid the stigma of foreclosure that can affect a person’s ability to obtain credit for years to come.

However, if a homeowner does not have the financial ability to make mortgage payments, even if the loan is modified, foreclosure may ultimately result.

MEDIATION IS QUICK AND EFFICIENT

Proposed Supreme Court rules limit mediations to four hours and require that mediations be conducted within 90 days of a foreclosure notice being filed.

Those same rules also require that all decision makers be present for the mediations. That means, if an agreement is reached, it can be finalized quickly.

MEDIATION IS COST EFFECTIVE

Other than the filing fee paid by the lender, the cost of mediation is $400, shared equally by the homeowner and the lender. Each party must pay their $200 portion prior to the mediation.

A lawyer is not required to be present with you in the mediation process, but each side is welcome to have an attorney represent them.

AT THE CONCLUSION OF THE MEDIATION…

Within 10 days of the mediation, the mediator will prepare the necessary Statement of Agreement or Non-agreement and serve it on the parties. The original will be filed with the Foreclosure Mediation Program Administrator and the mediation will be closed. If there is an agreement, the parties will execute the appropriate documents. If there is no agreement, the parties will be free to pursue other legal remedies.

Interesting Article from Reno Gazette

http://www.rgj.com/article/20090620/NEWS/90620031/1321

Good News for Nevada Homeowners

Good News For Nevada Homeowners
Passing of AB 149AN ACT relating to real property; revising provisions governing foreclosures on property; providing for mediation under certain circumstances; providing for the imposition of a fee for mediation; and providing other matters properly relating thereto.

Existing law sets forth procedures governing foreclosures on real property upon default. A trustee under a deed of trust has the power to sell the property to which the deed of trust applies, subject to certain restrictions. (NRS 107.080, 107.085)

LET US HAVE A CLOSER LOOK
Program facts

What’s the foreclosure mediation program?
The program, which was created when Assembly Bill 149 became law, allows homeowners who get a notice of default to go into mediation with their lender in front of a court-appointed mediator. Both parties are required to negotiate in good faith toward a potential resolution, which might include a loan modification. The law was created after looking at similar programs in such states as Colorado, Connecticut, Florida, Massachusetts, Michigan and Pennsylvania.

When does it go into effect?
July 1. Forms and finalized rules will be available by then on the Nevada Supreme Court’s Web site at www.nevadajudiciary.us. The court is seeking public comment to help finalize the program’s rules. The first hearing was held in Carson City on Tuesday, and the second hearing will be held in Las Vegas in Friday. The second hearing will be broadcast live on the Supreme Court Web site.

Who qualifies?
Homeowners who receive a notice of default on July 1 and thereafter will receive a mediation form along with their notice. Homeowners will then have 30 days to request mediation. Homes must be owner-occupied and not be investment properties. Homeowners who already have surrendered their homes to the lender or have started bankruptcy proceedings will not be eligible. Homeowners who received a notice of default before July 1 will only be eligible if their lender provides consent.

How much will it cost?
Lenders and borrowers are required to pay $200 each to pay for mediation costs. Non-native speakers will have to provide their own translator.

Where do I get more information?
For more information — including requesting a mediation or volunteering as a mediator — contact the program administrator’s office at 775-687-9816 or e-mail foreclose@nvcourts.nv.gov

What Additional Changes With Respect to Trustee’s Power of Sale has been made?The good news is that the law has been changed effective July 1, 2009. But it only applies to primary home owners and does not apply to rental properties. Nevada Legislature has placed additional restrictions on home foreclosure. Now a person who holds the title of record can request mediation for loan modification.

Who can provide mediation?It can be an attorney, a senior judge, hearing master or other designee. Some 345 attorneys had signed up for mediation. They shall be paid an hourly rate of $85.00 dollars.

What happens after mediation?
Section 1 of this bill establishes additional restrictions on the trustee’s power of sale with respect to owner-occupied housing by providing a grantor of a deed of trust or the person who holds the title of record with the right to request mediation under which he may receive a loan modification. Once mediation is requested, no further action may be taken to exercise the power of sale until the completion of the mediation. Each mediation must be conducted by a senior justice, judge, hearing master or other designee pursuant to rules adopted by the Nevada Supreme Court, and a fee of not more than $85 per hour may be charged and collected for the mediation.

How a deficiency can be made good under the new Laws?Section 2 of this bill also restricts the trustee’s power of sale with respect to owner-occupied housing by revising the period in which a deficiency in performance or payment under the trust agreement may be made good before the trustee may exercise that power.

Has Service of Notice been changed as well?
Section 3 of this bill restricts the trustee’s power of sale with respect to owner-occupied housing by revising the manner in which service of notice that a person is in danger of losing his home must be made.

Whether Nevada Supreme Court Adopt Rules for Voluntary Mediation?
In addition, section 4 of this bill authorizes the Nevada Supreme Court to adopt rules providing for voluntary mediation with respect to a homeowner who is not in default but is at risk of default.

Other Salient Features of the Bill
Section 1. Chapter 107 of NRS is hereby amended by adding thereto a new section to read as follows:
1. In addition to the requirements of NRS 107.085, the exercise of the power of sale pursuant to NRS 107.080 with respect to any trust agreement which concerns owner-occupied housing is subject to the provisions of this section.
2. The trustee shall not exercise a power of sale pursuant to NRS 107.080 unless the trustee:
(a) Includes with the notice of default and election to sell which is mailed to the grantor or the person who holds the title of record as required by subsection 3 of NRS 107.080:
(1) Contact information which the grantor or the person who holds the title of record may use to reach a person with authority to negotiate a loan modification on behalf of the beneficiary of the deed of trust;

(2) Contact information for at least one local housing counseling agency approved by the United States Department of Housing and Urban Development; and

(3) A form upon which the grantor or the person who holds the title of record may indicate his election to enter into mediation or to waive mediation and one envelope addressed to the trustee and one envelope addressed to the Mediation Administrator, which the grantor or the person who holds the title of record may use to comply with the provisions of subsection 3;

(b) Serves a copy of the notice upon the Mediation Administrator; and
(c) Causes to be recorded in the office of the recorder of the county in which the trust property, or some part thereof, is situated:
(1) The certificate provided to the trustee by the Mediation Administrator pursuant to subsection 3 or 6 which provides that no mediation is required in the matter; or (2) The certificate provided to the trustee by the Mediation Administrator pursuant to subsection 7 which provides that mediation has been completed in the matter.

3. The grantor or the person who holds the title of record shall, not later than 30 days after service of the notice upon him in the manner required by NRS 107.080, complete the form required by subparagraph (3) of paragraph (a) of subsection 2 and return the form to the trustee by certified mail, return receipt requested. If the grantor or the person who holds the title of record indicates on the form his election to enter into mediation, the trustee shall notify the beneficiary of the deed of trust and every other person with an interest as defined in NRS 107.090, by certified mail, return receipt requested, of the election of the grantor or the person who holds the title of record to enter into mediation and file the form with the Mediation Administrator, who shall assign the matter to a senior justice, judge, hearing master or other designee and schedule the matter for mediation. No further action may be taken to exercise the power of sale until the completion of the mediation. If the grantor or the person who holds the title of record indicates on the form his election to waive mediation or fails to return the form to the trustee as required by this subsection, the trustee shall execute an affidavit attesting to that fact under penalty of perjury and serve a copy of the affidavit, together with the waiver of mediation by the grantor or the person who holds the title of record, or proof of service on the grantor or the person who holds the title of record of the notice required by subsection 2 of this section and subsection 3 of NRS 107.080, upon the Mediation Administrator. Upon receipt of the affidavit and the waiver or proof of service, the Mediation Administrator shall provide to the trustee a certificate which provides that no mediation is required in the matter.

4. Each mediation required by this section must be conducted by a senior justice, judge, hearing master or other designee pursuant to the rules adopted pursuant to subsection.
The beneficiary of the deed of trust or his representative shall attend the mediation. The grantor or his representative shall attend the mediation if the grantor elected to enter into mediation, or the person who holds the title of record or his representative shall attend the mediation if the person who holds the title of record elected to enter into mediation. The beneficiary of the deed of trust shall bring to the mediation the original or a certified copy of the deed of trust, the mortgage note and each assignment of the deed of trust or mortgage note. If the beneficiary of the deed of trust is represented at the mediation by another person, that person must have authority to negotiate a loan modification on behalf of the beneficiary of the deed of trust or have access at all times during the mediation to a person with such authority.

5. If the beneficiary of the deed of trust or his representative fails to attend the mediation, fails to participate in the mediation in good faith or does not bring to the mediation each document required by subsection 4 or does not have the authority or access to a person with the authority required by subsection 4, the mediator shall prepare and submit to the Mediation Administrator a petition and recommendation concerning the imposition of sanctions against the beneficiary of the deed of trust or his representative. The court may issue an order imposing such sanctions against the beneficiary of the deed of trust or his representative as the court determines appropriate, including, without limitation, requiring a loan modification in the manner determined proper by the court.

6. If the grantor or the person who holds the title of record elected to enter into mediation and fails to attend the mediation, the Mediation Administrator shall provide to the trustee a certificate which states that no mediation is required in the matter.

7. If the mediator determines that the parties, while acting in good faith, are not able to agree to a loan modification, the mediator shall prepare and submit to the Mediation Administrator a recommendation that the matter be terminated. The Mediation Administrator shall provide to the trustee a certificate which provides that the mediation required by this section has been completed in the matter.

8. The Supreme Court shall adopt rules necessary to carry out the provisions of this section. The rules must, without limitation, include provisions:
(a) Designating an entity to serve as the Mediation
Administrator pursuant to this section. The entities that may be so designated include, without limitation, the Administrative Office of the Courts, the District Court of the county in which the property is situated or any other judicial entity.
(b) Ensuring that mediations occur in an orderly and timely manner.
(c) Requiring each party to a mediation to provide such information as the mediator determines necessary.
(d) Establishing procedures to protect the mediation process from abuse and to ensure that each party to the mediation acts in good faith.
(e) Establishing a total fee of not more than $400 that may be charged and collected by the Mediation Administrator for mediation services pursuant to this section and providing that the responsibility for payment of the fee must be shared equally by the parties to the mediation.
9. Except as otherwise provided in subsection 11, the provisions of this section do not apply if:
(a) The grantor or the person who holds the title of record has surrendered the property, as evidenced by a letter confirming the surrender or delivery of the keys to the property to the trustee, the beneficiary of the deed of trust or the mortgagee, or an authorized agent thereof; or
(b) A petition in bankruptcy has been filed with respect to the grantor or the person who holds the title of record under chapter 7, 11, 12 or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the case or granting relief from a stay of foreclosure.
10. A noncommercial lender is not excluded from the application of this section.
11. The Mediation Administrator and each mediator who acts pursuant to this section in good faith and without gross negligence is immune from civil liability for those acts.
12. As used in this section:
(a) “Mediation Administrator” means the entity so designated pursuant to subsection 8.
(b) “Noncommercial lender” means a lender which makes a loan secured by a deed of trust on owner-occupied housing and which is not a bank, financial institution or other entity regulated pursuant to title 55 or 56 of NRS.
(c) “Owner-occupied housing” means housing that is occupied by an owner as his primary residence. The term does not include any time share or other property regulated under chapter 119A of NRS.

Changes in Notice Provisions of NRS
Sec. 2. NRS 107.080 is hereby amended to read as follows: 107.080 1. Except as otherwise provided in NRS 107.085, and section 1 of this act, if any transfer in trust of any estate in real property is made after March 29, 1927, to secure the performance of an obligation or the payment of any debt, a power of sale is hereby conferred upon the trustee to be exercised after a breach of the obligation for which the transfer is security.
2. The power of sale must not be exercised, however, until:
(a) [In] Except as otherwise provided in paragraph (b), in the case of any trust agreement coming into force:

(1) On or after July 1, 1949, and before July 1, 1957, the grantor, [or his successor in interest,] the person who holds the title of record, a beneficiary under a subordinate deed of trust or any other person who has a subordinate lien or encumbrance of record on the property [,] has , for a period of 15 days, computed as prescribed in subsection 3, failed to make good the deficiency in performance or payment; or (2) On or after July 1, 1957, the grantor, [or his successor in interest,] the person who holds the title of record, a beneficiary under a subordinate deed of trust or any other person who has a subordinate lien or encumbrance of record on the property [,] has , for a period of 35 days, computed as prescribed in subsection 3, failed to make good the deficiency in performance or payment;
(b) In the case of any trust agreement which concerns owner occupied housing as defined in section 1 of this act, the grantor, the person who holds the title of record, a beneficiary under a subordinate deed of trust or any other person who has a subordinate lien or encumbrance of record on the property has, for a period that commences in the manner and subject to the requirements described in subsection 3 and expires 5 days before the date of sale, failed to make good the deficiency in performance or payment;
(c) The beneficiary, the successor in interest of the beneficiary or the trustee first executes and causes to be recorded in the office of the recorder of the county wherein the trust property, or some part thereof, is situated a notice of the breach and of his election to sell or cause to be sold the property to satisfy the obligation; and [(c)] (d) Not less than 3 months have elapsed after the recording of the notice.
3. The 15- or 35-day period provided in paragraph (a) of subsection 2, or the period provided in paragraph (b) of subsection 2, commences on the first day following the day upon which the notice of default and election to sell is recorded in the office of the county recorder of the county in which the property is located and a copy of the notice of default and election to sell is mailed by registered or certified mail, return receipt requested and with postage prepaid to the grantor [, and] or to the person who holds the title of record on the date the notice of default and election
to sell is recorded, at [their respective addresses,] his address, if known, otherwise to the address of the trust property. The notice of default and election to sell must describe the deficiency in performance or payment and may contain a notice of intent to declare the entire unpaid balance due if acceleration is permitted by the obligation secured by the deed of trust, but acceleration must not occur if the deficiency in performance or payment is made good and any costs, fees and expenses incident to the preparation or recordation of the notice and incident to the making good of the deficiency in performance or payment are paid within the time specified in subsection 2.
4. The trustee, or other person authorized to make the sale under the terms of the trust deed or transfer in trust, shall, after expiration of the 3-month period following the recording of the notice of breach and election to sell, and before the making of the sale, give notice of the time and place thereof by recording the notice of sale and by:

(a) Providing the notice to each trustor and any other person entitled to notice pursuant to this section by personal service or by mailing the notice by registered or certified mail to the last known address of the trustor and any other person entitled to such notice pursuant to this section;
(b) Posting a similar notice particularly describing the property, for 20 days successively, in three public places of the township or city where the property is situated and where the property is to be sold; and
(c) Publishing a copy of the notice three times, once each week for 3 consecutive weeks, in a newspaper of general circulation in the county where the property is situated.
5. Every sale made under the provisions of this section and other sections of this chapter vests in the purchaser the title of the grantor and his successors in interest without equity or right of redemption. A sale made pursuant to this section may be declared void by any court of competent jurisdiction in the county where the sale took place if:
(a) The trustee or other person authorized to make the sale does not substantially comply with the provisions of this section [;] or any applicable provision of section 1 of this act;
(b) Except as otherwise provided in subsection 6, an action is commenced in the county where the sale took place within 90 days after the date of the sale; and
(c) A notice of lis pendens providing notice of the pendency of the action is recorded in the office of the county recorder of the county where the sale took place within 30 days after commencement of the action.
6. If proper notice is not provided pursuant to subsection 3 or paragraph (a) of subsection 4 to the grantor, to the person who holds the title of record on the date the notice of default and election to sell is recorded, to each trustor or to any other person entitled to such notice, the person who did not receive such proper notice may commence an action pursuant to subsection 5 within 120 days after the date on which the person received actual notice of the sale.
7. The sale of a lease of a dwelling unit of a cooperative housing corporation vests in the purchaser title to the shares in the corporation which accompany the lease.
Sec. 3. NRS 107.085 is hereby amended to read as follows:
107.085 1. With regard to a transfer in trust of an estate in real property to secure the performance of an obligation or the payment of a debt, the provisions of this section apply to the exercise of a power of sale pursuant to NRS 107.080 only if:
(a) The trust agreement becomes effective on or after October 1, 2003
(b) On] , and, on the date the trust agreement is made, the trust agreement is subject to the provisions of § 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. §
1602(aa), and the regulations adopted by the Board of Governors of the Federal Reserve System pursuant thereto, including, without limitation, 12 C.F.R. § 226.32 [.] ; or (b) The trust agreement concerns owner-occupied housing as defined in section 1 of this act.
2. The trustee shall not exercise a power of sale pursuant to NRS 107.080 unless:
(a) In the manner required by subsection 3, not later than 60 days before the date of the sale, the trustee causes to be served upon the grantor or the person who holds the title of record a notice in the form described in subsection 3; and (b) If an action is filed in a court of competent jurisdiction claiming an unfair lending practice in connection with the trust agreement, the date of the sale is not less than 30 days after the date the most recent such action is filed.
3. The notice described in subsection 2 must be: (a) Served upon the grantor or the person who holds the title of record:
(1) Except as otherwise provided in subparagraph (2), by personal service or, if personal service cannot be timely effected, in such other manner as a court determines is reasonably calculated to
afford notice to the grantor [;] or the person who holds the title of record; or
(2) If the trust agreement concerns owner-occupied housing as defined in section 1 of this act:
(I) By personal service;
(II) If the grantor or the person who holds the title of record is absent from his place of residence or from his usual place of business, by leaving a copy with a person of suitable age
and discretion at either place and mailing a copy to the grantor or the person who holds the title of record at his place of residence or place of business; or
(III) If the place of residence or business cannot be ascertained, or a person of suitable age or discretion cannot be found there, by posting a copy in a conspicuous place on the trust property, delivering a copy to a person there residing if the person can be found and mailing a copy to the grantor or the person who holds the title of record at the place where the trust property is situated; and
(b) In substantially the following form, with the applicable telephone numbers and mailing addresses provided on the notice and a copy of the promissory note attached to the notice:

NOTICE
YOU ARE IN DANGER OF LOSING YOUR HOME!Your home loan is being foreclosed. In not less than 60 days your home will be sold and you will be forced to move. For help, call:
Consumer Credit Counseling _______________
The Attorney General __________________
The Division of Financial Institutions ________________
Legal Services ______________________
Your Lender ___________________
Nevada Fair Housing Center ________________
4. This section does not prohibit a judicial foreclosure.
5. As used in this section, “unfair lending practice” means an unfair lending practice described in NRS 598D.010 to 598D.150, inclusive.
Sec. 3.5. NRS 107.095 is hereby amended to read as follows:
107.095 1. The notice of default required by NRS 107.080 must also be sent by registered or certified mail, return receipt requested and with postage prepaid, to each guarantor or surety of
the debt. If the address of the guarantor or surety is unknown, the notice must be sent to the address of the trust property. Failure to give the notice, except as otherwise provided in subsection 3, releases the guarantor or surety from his obligation to the beneficiary, but does not affect the validity of a sale conducted pursuant to NRS 107.080 [nor] or the obligation of any guarantor or surety to whom the notice was properly given.
2. Failure to give the notice of default required by NRS 107.090, except as otherwise provided in subsection 3, releases the obligation to the beneficiary of any person who has complied with
NRS 107.090 and who is or may otherwise be held liable for the debt or other obligation secured by the deed of trust, but such a failure does not affect the validity of a sale conducted pursuant to
NRS 107.080 [nor] or the obligation of any person to whom the notice was properly given pursuant to this section or to NRS 107.080 or 107.090.
3. A guarantor, surety or other obligor is not released pursuant to this section if:
(a) The required notice is given at least 15 days before the later of:
(1) The expiration of the 15- or 35-day period described in paragraph (a) of subsection 2 of NRS 107.080; [or]
(2) In the case of any trust agreement which concerns owner-occupied housing as defined in section 1 of this act, the expiration of the period described in paragraph (b) of subsection 2 of NRS 107.080; or (3) Any extension of [that] the applicable period by the beneficiary; or (b) The notice is rescinded before the sale is advertised.
Sec. 4. Chapter 2 of NRS is hereby amended by adding thereto a new section to read as follows:
The Supreme Court may adopt rules providing for voluntary mediation with respect to a homeowner who is not in default but is at risk of default.
Sec. 5. NRS 459.646 is hereby amended to read as follows:
459.646 1. A person who, without participating in the management of a parcel of real property, holds or is the beneficiary of evidence of title to the property primarily to protect a security
interest in the property is not a responsible party with respect to a release of a hazardous substance on the property if:
(a) The owner of the property is relieved from liability under NRS 459.610 to 459.658, inclusive, with respect to the release;
(b) The owner or holder of evidence of title did not cause the release; and
(c) The owner or holder of evidence of title does not participate actively in decisions concerning hazardous substances on the property.
2. A lender to a prospective purchaser who has filed an application to participate in the program pursuant to NRS 459.634 or a lender who forecloses his security interest in property pursuant
to NRS 40.430 to 40.450, inclusive, or 107.080 to 107.100,
inclusive, and section 1 of this act, and within a reasonable period after the foreclosure, not to exceed 2 years, sells, transfers or conveys the property to a prospective purchaser who has filed an application to participate in the program pursuant to NRS 459.634 is not a responsible party solely as a result of:
(a) Foreclosing a security interest in the property; or
(b) Making a loan to the prospective purchaser if the loan:
(1) Is to be used for acquiring property or removing or remediating hazardous substances on property; and
(2) Is secured by the property that is to be acquired or on which is located the hazardous substances that are to be removed or remediated.
Sec. 5.5. The amendatory provisions of this act governing trust agreements which concern owner-occupied housing, as defined in section 1 of this act, apply only with respect to such agreements for which a notice of default is recorded on or after July 1, 2009.
Sec. 5.7. Notwithstanding any provision of NRS 2.120 to the contrary and in recognition of the emergency situation confronting this State concerning mortgage foreclosures and the need to
implement the provisions of this act quickly, any rules adopted by the Supreme Court pursuant to subsection 8 of section 1 of this act take effect on the date specified by the Supreme Court in the order adopting the rules, which in no event may be less than 30 days after entry of the order.
Sec. 6. This act becomes effective on July 1, 2009.

Feds Cracking on Fraud Loan Mod Agencies

Federal government has made elaborate plans to squeeze their grip on fraud loan modification companies. Here is the report prepared by the Housing Committee.

http://www.ftc.gov/os/2009/05/P064814foreclosuretescue.pdf

http://www.ftc.gov/os/2009/05/P064814foreclosuretescue.pdf
http://www.ftc.gov/os/2009/05/P064814foreclosuretescue.pdf

How To Avoid Firms Who Prey on Homeowners?

I have written frequently about fraud, scam agencies especially from California and some in Nevada, who are constantly ripping off needy homeowners by offering them some fraudulent schemes. First of all, it is almost impossible to reduce your principal. It has been done very rarerly and seldomly. These agencies tell their victims that they can reduce their interest rate as well as their principal in half. That is absolutely a lie. Show me a simple example where it is done. It has been done and can be done if some loan violations are proved in either a TILA, RESPA or simple deceptive trade practices matters. Of course that would be a product of a litigation and a lawsuit, and these loan fraud/mod agencies are not equipped to handle that. Even if they are blessed with the presence of an attorney, under some pseudo affiliation program, which they claim, their attorney may not be qualified in all these matters. Every day more homeowners are losing their home because of these non performing promises made by them. Here, is an interesting article in NY Times about how to avoid these firms.
Here is the article.

http://www.nytimes.com/2009/06/13/your-money/mortgages/13scam.html?em

What is a foreclosure scam?

This is another interesting government report.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm

Good News About Your Credit Card Slashing

Your credit card companies have been mercilessly raising your interest rate. They are some other version of the payday loan. In Las Vegas, practically in every shopping center, there is a pay day loan. Guess what there interest rate? It is never less than 400 to 500 %. Please folks stay away from payday loan. They are the modern version of cocaine and addiction. I had seen even well off people going there and taking these loans. They are easy to get and very difficult to pay. Here, is what I found in NY Times about credit card companies slashing their bills and making and offering deals to consumers. If you are smart enough you can try the same and ask credit card companies to cut your bill. The condition is that you have to pay it right away and trash your card afterwards.

Another interesting article is about buying your way toward foreclosure.

How to find and send info to Servicers?

<strong>Mortgage Servicer Information Requirements
Before homeowners starts complaining, it is good idea to provide all the financial information to your servicer at one time and in one installments. Let us see what exactly is required by them:
1. 4506T: This is an IRS form which needed to be signed by homeowners and sent back to your servicers or lenders.
2. Last bank statements, most recent
3. Two pay checks most recent
4. IRS tax returns.
5. Financial information sheet of income and expenses.
6. Copy of any utility bill showing that you are the primary homeowners.
7. Hardship letter.
If you need help in answering questions, it is available free Also, one should be tactful in talking to them over the phone. Phone to customers service is okay, but try to find out the phone numbers for home retention, loss mitigation and loan modification folks. Customer service is nice but they needlessly keep you busy. Loan modification and loss mitigations are rude, stiff but can be helpful. My problem is that most of them are former or current bill collectors and have an attitude which is at times very unfriendly and impolite. Most of them have a standard stock answer sheet like it is:
-It is still under review.
-We will take 30 to 90 days to reply.
-You do not qualify, like they had instantly find out.
-Started asking about payment and payment plan.
The servicers all have Help desks, you can also call HOPE NOW at 1-888-995-4673, or you can contact a HUD counselor at http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.

Information Required by Servicer
American Home Mortgage Servicing Inc and Option One Financial Questionnaire You Must Fill Out: https://ahmsi3.com/servicing/PDF_files/Financial_Analysis_for_Loss_Mitigation_Workout_Form.pdf
Required Documents:
*A letter detailing the circumstances surrounding your current financial situation (Hardship Letter)
*Copy of 2 most recent bank statements.
*Copy of 2 most recent pay-stubs
　　**Note – If self-employed, 6 months of profit and loss statements
*Previous year’s Tax Return or W2
How and Where to Send Questionnaire and Other Information:
American Home Mortgage
Fax: 1-866-452-1837
General Information Provided by Servicer:
https://ahmsi3.com/servicing/BAT_solutions.asp　

Aurora Loan Services Financial Questionnaire You Must Fill Out: Available at https://www.myauroraloan.com/HRG/
Required Documents:
*A letter with a detailed explanation of your financial hardship.
*Two most recent paycheck stubs for each mortgagor (if self-employed, provide the year to date Profit and Loss Statement).
*Bank Statements. Please include the two (2) most recent bank statements for your checking, savings, mutual funds, 401k account, and other investment information.
*Statements of Disability/Unemployment, Retirement and/or Social Security benefits applied for or received. Please include copies of any and all check stubs.
*Federal Income Tax Returns (if self-employed, provide copies of the 2 most recent year’s tax returns including any applicable schedules)
How and Where to Send Questionnaire and Other Information:
Aurora Loan Services
P.O. Box 1706
Scottsbluff, NE 69363-1706
Attention: Home Retention Group
FaxNumber: 1-866-517-7976
General Information Provided by Servicer:
https://www.myauroraloan.com/HRG/

Bank of America Financial Questionnaire You Must Fill Out:
http://www.bankofamerica.com/loansandhomes/financial-difficulty/worksheet.pdf
Required Documents:**
*A letter detailing the circumstances surrounding your current financial situation (Hardship Letter)
*Copy of 2 most recent bank statements.
*Copy of 2 most recent pay-stubs
　　**Note – If self-employed, 6 months of profit and loss statements
*Previous year’s Tax Return or W2
How and Where to Send Questionnaire and Other Information:
Bank of America
Homeownership Retention Department
Fax: 1-714-792-5227
General Information Provided by Servicer:
http://www.bankofamerica.com/loansandhomes/financial-difficulty/index.cfm?adlink=&statecheck=PA&cm_mmc=&cm_sp=&type=
**B of A is very vague about this, the list shown is my recommendation, you can’t go wrong providing more than they ask for.
Chase, WaMu and EMC Note: Chase is vague about its requirements and does not provide a way to transmit documents to them. This is probably because they have established home ownership centers which they want borrowers to visit. They provide a telephone number rather than a fax number. Nonetheless, the more information you bring to a center, the more smoothly the process will go.
Financial Questionnaire You Must Fill Out:
Not publicly available. I am told that borrowers accessing their accounts on-line can download the questionnaire.
Required Documents:
Wage-earners must provide two (2) current pay stubs
Self-employed individuals must provide 4 months of the most recent bank statements and most recent tax return.*
An audited or reviewed YTD income statement is required for corporations and LLCs.
A Hardship Letter – A letter outlining the events that have made it difficult for you to continue your monthly payments.
How and Where to Send Questionnaire and Other Information:
Call:: 1-866-550-5705
General Information Provided by Servicer:
https://www.chase.com/chf/mortgage/hrm_home

Citi Note: Citi has a short questionnaire at their site. Unless you answer “Yes” to the question of whether or not you are behind in your payment, you won’t be referred to “Hardship Assistance”, which is their code words for a loan modification.
Financial Questionnaire You Must Fill Out:
https://www.citimortgage.com/Servicing/workableSolution.do
Required Documents:
*2 recent consecutive pay stubs (or profit and loss statement), or
*2 consecutive months of bank statements, or
*2 consecutive tax returns, and
*A Hardship Letter – A letter outlining the events that have made it difficult for you to continue your monthly payments.
How and Where to Send Questionnaire and Other Information:
CitiMortgage, Inc.
Fax: 1 301 696 4473
General Information Provided by Servicer:
http://www.citimortgage.com/homeassist/

Countrywide Bank of America Note: Countrywide is one of few servicers that mentions participation in the ARM Fast Track Solution program for borrowers with sub-prime or option ARMs, who are exposed to rate and payment increases.
Financial Questionnaire: Countrywide does not provide one on-line, the one below is from Bank of America which now owns Countrywide.
http://www.bankofamerica.com/loansandhomes/financial-difficulty/worksheet.pdf
Required Documents:
*Reason for default or hardship letter signed by all parties
*Two (2) months complete, most recent bank statements
*Two (2) months most recent pay stubs and/or proof of other income
*If self-employed, Profit and Loss statement for at least the most recent three (3) months, & most recently filed tax return
How and Where to Send Questionnaire and Other Information:
Call at 1-800-669-6607 to ask for fax number
General Information Provided by Servicer:
http://my.countrywide.com/media/FinancialAssistance.html

GMAC, Homecomings Financial Questionnaire You Must Fill Out:
http://www.gmacmortgage.com/pdfs/Financial_Analysis.pdf
Required Documents:
None, everything is included in the questionnaire
How and Where to Send Questionnaire and Other Information:
Fax to: 1.866.709.4744
General Information Provided by Servicer:
http://www.gmacmortgage.com/Resource_Center/homeowner_help/homeowner_help.html

　
HSBC Financial Questionnaire You Must Fill Out: Note: You must identify yourself as an HSBC borrower to get access to the form.
https://www.hsbcmortgageservices.com/hardship_assistance_frm
Required Documents:
*Most recent full 30 day bank statement
Most recent pay stub (including unemployment, compensation disability, SSI etc)
*Proof that you are receiving alimony or child support
*If self employed, business bank statements along with Profit and Loss Statement
*Copy of Lease Agreement if you are renting the property
*If property is listed for sale, copy of listing agreement
How and Where to Send Questionnaire and Other Information:
Fax: 1-866-392-9693
Attention: Hardship Department
General Information Provided by Servicer:
https://www.hsbcmortgageservices.com/hardship_assistance

IndyMac Financial Questionnaire You Must Fill Out: Indy Mac does not provide access to its questionnaire until it establishes that you are eligible for a modification. To start that process, go to http://www.imb.com/singlecontent.aspx?id=1874 You will have to input your loan number and social security number.
Required Documents: After you log in, you will be asked first for a hardship statement, and then for income documentation., which you fax to them for approval to proceed. After approval, you go back and fill out the financial questionnaire.
How and Where to Send Questionnaire and Other Information:
Fax: 1.866.435.7643
General Information Provided by Servicer:
https://www.imb.com/singlecontent.aspx?id=1372

Litton Financial Questionnaire You Must Fill Out: Note: You must identify yourself as a Litton borrower to get access to the form.
https://www.littonloan.com/index.asp
Required Documents:
*Completed and signed hardship affidavit
*Copies of your two most recent pay stubs
*Copy of your most recently filed federal tax return
*Completed and signed IRS Form 4506-T
*Copy of a recent personal bank statement
*Copy of a recent utility bill (e.g., electric bill, gas bill, water bill, phone bill, etc.)
*Copy of your most recent quarterly profit and loss statement (if self-employed)
*Award letter stating your Social Security, disability, or pension earnings (if applicable)
How and Where to Send Questionnaire and Other Information:
Fax: 1-713-793-4923
General Information Provided by Servicer:
https://www.littonloan.com/faq_stabilityplan.asp

Ocwen Financial Questionnaire:
http://www.ocwencustomers.com/csc_apply_mortg_assistance.cfm?findif=1
Required Documents:
Integrated with Financial Questionnaire
How and Where to Send Questionnaire and Other Information:
Fax: 1-407-737-6174
General Information Provided by Servicer:
http://www.ocwencustomers.com/csc_mortg_assist_process.cfm?findif=1

Saxon
　Financial Questionnaire You Must Fill Out: Saxon Financial Statement
Required Documents:
*Current proof of Income for all co-borrowers (e.g. pay stubs)
*Current bank statements
*Last W-2 for each co-borrower
*Last Federal Tax Return (if self-employed)
*Hardship Letter of why you fell behind and what you would like to do to bring your account current
How and Where to Send Questionnaire and Other Information:
Fax: 1-888-240-1885
General Information Provided by Servicer:
https://www.saxononline.com/WorkoutOptions/Default.aspx

Wachovia Note: Wachovia does not provide a financial questionnaire, it is focused entirely on eligibility for modifications under the Making Home Affordable program. The documents requested below are in connection with that program. Wachovia now belongs to Wells Fargo and may be phasing out its servicing operations.
Required Documents:
*Monthly gross household income, include pay stubs and other income documentation.
*Most recent income tax return.
*Details concerning any second mortgage on the house.
*Payments on each credit card on which you carry a balance.
*Payments on an y other loans, such as student loans and car loans.
How and Where to Send Questionnaire and Other Information:
None given, only telephone numbers at Call us today.
General Information Provided by Servicer:
https://www.wachovia.com/foundation/v/index.jsp?vgnextoid=98ec824c26abf110VgnVCM200000627d6fa2RCRD
　
Wells Fargo / America’s Servicing Company Financial Questionnaire You Must Fill Out: https://www.wellsfargo.com/mortgage/account/requestpaymenthelp
Required Documents:
*A brief explanation of your hardship (Later in the process, we’ll ask you to put your explanation into a short letter)
*A detailed list of all your expenses, loans, and bills
*Proof of all household income (including your most recent pay stub, tax return or profit and loss statement)
How and Where to Send Questionnaire and Other Information:
Call: 800-678-7986. No fax number given.
General Information Provided by Servicer:
https://www.wellsfargo.com/mortgage/account/paymenthelp
　
SunTrust Mortgage Financial Questionnaire You Must Fill Out:
https://www.myloancare.com/SunTrust/HomeRetentionRequest.aspx
Required Documents:
Not specified, expect the usual.
How and Where to Send Questionnaire and Other Information:
Want questionnaire returned by email.
General Information Provided by Servicer:
http://www.suntrustmortgage.com/loanofficer.asp?hopenow

National City/PNC Financial Questionnaire You Must Fill Out:
http://www.nationalcitymortgage.com/Libraries/Important_Documents/Financial_Assistance_Application.sflb.ashx
Required Documents:
*Letter describing your current situation and how you would like it resolved.
*If your home is listed for sale, a copy of the listing agreement is needed
*Copy of your most recent pay stub from each income source, or other income verification.
*A financial statement form documenting all assets and liabilities (debts) plus monthly income and expenses.
.How and Where to Send Questionnaire and Other Information:
Fax: 937- 910-4009
General Information Provided by Servicer:
http://www.nationalcitymortgage.com/MyMortgage/Account_Center/Having_Trouble_Making_Payments.aspx

　

Mortgage Modification: Many Hurdles Still

Mortgage Modification: Many More Hurdles

The administration’s loan modification program has helped 55,000 troubled borrowers so far. But the housing crisis is complex and the fixes aren’t so easy.

The housing crisis has become very serious and complex according to CNNMoney.com. Most of the loan servicers are flooded by applications, their faxes machines are full and churning out copied paper days and nights. The numbers are busy in most part of the day. The phone lines are jammed. Still, the foreclosure is rising with the increase in the unemployment rate, divorces and other social factors of migration.

Nearly three months after President Obama first announced his $75 billion mortgage rescue effort, his administration is still refining the program in hopes of reaching its goal to save 9 million homeowners from foreclosure. As the NY times reported few days ago, so far, more than 55,000 borrowers have been put into trial modifications, which become permanent if they keep up with payments for three months. Hundreds of thousands more have applied.

Well, as we speak this loan modification process is getting longer and complicated. In some cases, the lenders are back to their original game. They were nice in the very first few days, now back to their dirty old game of playing with words, issues and papers. Most of these folks are collection representative with nasty phone habits and manners. The initiative must still get over several hurdles before its chances for success can be determined. Here, the lender has build many layers of Chinese wall made of not only real brick but some time with iron gates and panthers watching its caves.

Stressed Servicers:

The program’s guidelines were issued on March 4, but it took many servicers weeks to reprogram their systems and train their staffs. Many did not even start accepting applications until early- to mid-April, frustrating troubled borrowers forced to wait to find out if they qualify for lower rates. Servicers are still learning and giving training to their newly hired employees. Many servicers slowed down the process with the excuse that their software is not ready or they waiting for more guidelines to come. In fact, everyday, they came with different excuses.

This is causing lots of delay and confusion. It is a constant battle of sending the lenders every day something new. Each time the lender demands something new. In one case, they asked a marriage certificate along with utility bills. I remember in one instance they demanded an electricity bill for the month of April, which was promptly sent to them. Now, the servicer is demanding a utility bill for the month of May. They want to see if that is paid or not. Dumb question, there is always a column on the bill which says the current amount, and the amount last paid. Most of the reps do not understand simple logic. They are not even familiar with the basic computer functions and put you on hold for long time. It is shocking they never receive anything, or refuse to acknowledge something sent already.

Angry Investors:

One complicating factor in the mortgage meltdown is the fact that the loans are bundled into securities and then sold off in pieces to investors. Some servicers have blamed the slow pace of mortgage modifications on the fact that their contracts with investors limit their ability to adjust the loans’ terms.

To address this concern, Congress is currently finalizing a bill that would give servicers a “safe harbor” in modifying mortgages.

“The goal of ’safe harbor’ is to allow servicers to use these program to their fullest capacity. Some investors, however, are lobbying hard against the bill, saying that the contracts already give.

Although the administration has since expanded the modification requirement to cover second liens, some investors still aren’t satisfied. They want the administration to treat second liens in the modification program the same way it does in the Hope for Homeowners program, which requires these liens to be extinguished.

Escalating Unemployment: The rising unemployment rate is threatening to reverse any gains being made in stabilizing the housing market. When homeowners lose their jobs, they often can’t afford to stay in their homes. Modifications often can’t help, experts say.

Few Words for The Borrowers
Too

While I have lambasted lenders many times in these columns, some of our borrowers have not been above board as well. They were willing partcipants in this greed game in many ways. Most of them would tell you lots of stories when they come to your office but still would not bring the right papers with them. Their knowledge about the basic aspects of their loan is very elementary. Of course story telling skills are great. Some do not even know how much is their current interest rate or terms of the loan. Some were offered good modification terms, which either they lost the paperwork or procastinated, and did not sign on some flimsy grounds and hopes of more bargaining. The offers are lapsed and new paperwork is required and meanwhile they had serious negative ratings on their credit reports. Some of these folks needs another modification. Why on earth they were lazy in the first place. I want to be honest here. I see lots of lazy, financially irresponsible people who are borrowers. Truthfully, some of them should not be allowed to buy homes, and it is not a bad idea if some of these people should be living in apartments. Sometime you wish when you see a lousy driver ahead of you, how on earth he got a driver license. He should have been behind bars. Yes, that is true. Some are just lazy people, and I have no compassion for them. Your brought it to yourself, and meanwhile you are an equal contributor to mess up our economy. How come you don’t pay your HOAs and insurance, and mow your lawn, and sometime park in your front line. Come on guys civic lessons are not taught in a school, and neither the lousy parental skills where only children are procreated and then lift on whims to be raised and educated from the public system. Okay, I am sorry, I get drifted as I am not a social scientist to lecture here having lots of my own flaws. Truth is that some of these folks should not be allowed to be homeowners and some should not be allowed to get married. That is a great irony of our time.

This may be an unending process. Another bad thing, which I noticed that homeowners are getting used to stay free and without a payment in these homes. This is making their approach very parasitic and self centered. They are dreadful to pay even a modest payment. They should acknowledge the fact that their action is conducive to causing bad economy. If they can continue paying theri car payments, and their credit card payments, they can also pay their mortgage payments. It shocks me when folks come to my office with all kinds of stories and gory tale of the miserable things happened to them but never acknowledge their own financial irresponsibility. How come they can’t pay a mortage monthly amount of mere $900. Yes, this is true. This lady called me from this fancy location and with crying and tears of course told me she is behind her payments for 6 months. I asked her what kind of hardship she had? She is still fully employed and had in fact taken a foreign tour as well. How can you go and take a foreign tour and not pay your outstanding mortgage statements? She said and acknowledged that she is a procastinator. In fact, I was so afraid few times that I sent the loan modification signed package myself right to the box else these procastinators forget and just don’t mail it. Yes, it had happened, and the bank refused to acknowledge the expired contract. Once they refuse, the modification has to start all over again. This, of course, is the pinnacle of procastination and laziness. Next time I make sure, they do not come to my office. Some of them of course had stiffed me with the outstanding balance.

This is very unfortunate when an attorney modifies the loan, the terms are attractive, but still the homeowners is reluctant to take it. Why? Their excuses are novel and unique. The wanted half of the principal reduced and interest rate locked fo 40 years fo 3 percent. That shocks me when a mobile society like US, intends to stay in their home for 40 years. How many people you can tell us who stayed in their homes for 40 years, or ever stayed in their homes for 40 years. Probably there may be exceptions in some strong ethnic neighborhoods. On average, a US family moves about five times in their life and buys at least 5 to 8 homes during this life span.

Folks, this is plain and simple loan modification. My answer to them is simple:
-How come you were not so smart when you were signing your original loan?
-Why are you asking all kinds of fault in simple loan modification papers.
-Why did you not ask all these questions at that time?
-Were you sleeping when the loan officer ripped you?
-What happened during the closing?
-Did you take an attorney with you?
-You had one home, what was the dire necessity to buy a second home?
-There was no gun placed on your head by anyone?
- Why on earth you refi your home four time in last 6 years?
-Lastly why happened to the cash out after refinancing?

We are creating a socialistic mentality. Of course, we live in USA and not in some communist country or even in the former USSR. This is USA and not a housing complex of some socialist country. These are legal contracts, and decent human being should honor if an aid is provided to them to get through this turbulent time. They should say thank you loudly. Profit making is a genuine American capitalistic issue and this creates financil security and brings prosperity to our system. We cannot deny lenders, and other related agencies to make profits. It is fundamental principle of capitalism. This crisis was not created by George Bush (no matter how much unpopular he can be, and neither created by Obama: it was created by the collective greed of all of us including lenders, loan officers, real estate brokers and of course our greedy politicians. Of course, it is loan modification—definitely not a loan rewrite or a refinancing. Take what you can take,and remember one thing beggers cannot be choosers!.

How to Fight Wrongful Foreclosure in Nevada?

Foreclosure is on the rise and especially in Nevada. The last time, and that was only a few days ago, I had seen some 30 lawyers in the District Court’s room where all the cases were on foreclosure. It broke my heart when the lenders attorneys’ foreclosed and asked judge to sign the eviction orders for some 20 homes in less than 20 minutes. Yes, there was no fight in any of the case. Couple of homeowners aka defendants appeared and they offered just meek defenses, filed no opposition and begged the judge just for few more days, in barely inaudible voices. Please, say No\: the homeowners does not have to be meek, humble and beg for more time. They can put up a fight, and fight with their bear tooth, (tooth and nail of course). Once Winston Chruchill said, that Britian (that of course in second world war) shall fight in the air, in the mountains, and in the seas. That should be the motto of Nevada homeowners. Give them a fight. Give them hell. This is your home. It is your fortress and you should be a foot solider, and fight this hand to hand combat.

Challenging Wrongful Foreclosure in Nevada

This is a brief guide for lay persons about how to challenge foreclosure successfully. This memo is not a substitute for legal assistance. For legal advice, please only seek qualified and licensed Nevada attorneys.

Foreclosure is a complex areas of law and one should not venture into it without proper legal help. However, at this time it is meant as only education purposes. It is divided into the following parts:

• Filing Bankruptcy before Foreclosure Occurs
• Suing to Enjoin Foreclosure before It Occurs
• Suing to Set Aside a Foreclosure that Has Already Taken Place
• Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
• Filing Bankruptcy after Foreclosure
• Procedural Grounds for Challenging the Foreclosure
• Substantive Grounds for Challenging the Foreclosure

Filing Bankruptcy before Foreclosure Occurs

This is often the shortest and simplest procedure. It has the following advantages:
- a bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently;
- you have the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period;
- you may be able to reduce or eliminate the fees of the lender’s attorney;
- you may be able to avoid interest on the amount you are delinquent (though not interest on the loan itself).

Hire a qualified lawyer for bankruptcy. A paralegal would not understand all the issues. It is not just the forms needed to be filled and filed. Also, you need an expert who can give you a qualified opinion considering all of your target areas. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.

Suing to Enjoin Foreclosure before It Occurs
To obtain an injunction, you must file a complaint in a court. You will need a lawyer. Only a qualified lawyer can tell you how to obtain an injunction. Sometime a bond is required, and more often the requirements of a bond are dispensed with based on proper grounds.

Temporary injunctions require:- a “clear” showing of “immediate and irreparable injury, loss or damage”
- balancing of equities;
- or “that the acts or omissions of the adverse party will tend to render final judgment ineffectual.” Judges take this requirement seriously.
- The most difficult requirement of all may be the need to give a bond “in such sum as the court … deems proper” unless you successfully obtain permission to bring the action as an indigent person.
- A homeowner with only modest amounts of other assets and income may be unable to qualify as indigent and may also be unable to find anyone willing to provide a bond, especially one on short notice.

Suing to Set Aside a Foreclosure that Has Already Taken Place
The grounds for setting aside a foreclosure are limited to “some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price.” Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.

You have the burden of proof in a lawsuit to set aside a foreclosure. Damages are the only remedy. There is nothing to prevent a third-party purchaser from keeping your house even if he knows of your claim against the lender and even if he believes that your claim is meritorious.

Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
Foreclosure may be challenged by a counterclaim when the lender (or other new owner of the property) seeks possession by a “detainer” action. It is better to file the counterclaim in writing, and the grounds for doing so are discussed below. It is preferable that you use a lawyer to assist you, but most persons do not.

Lenders may assert that a wrongful foreclosure may not be challenged even when the parties are before the court on the issue of possession, the right to possession is necessarily founded on ownership, and ownership depends on the lawfulness of the foreclosure.

On the other hand, if the new owner is successful in the detainer action, it is entitled not only to possession but also to the rental value of the property from the date of foreclosure until the date of removal.

Must Furnish a Bond.

The amount of it can be prohibitive: a “sufficient amount to cover, besides costs and damages, the value of the rent of the premises during the litigation.” Even the furnishing of an affidavit of indigency may be insufficient to retain possession during an appeal.

Filing Bankruptcy after Foreclosure

It is possible to set aside the foreclosure through the bankruptcy process. The grounds that may be asserted are discussed below.

There is some good news even if you lose the challenge; bankruptcy usually discharges all or part of a deficiency judgment against you for any amount still due after the foreclosure occurs.

Procedural Grounds for Challenging the Foreclosure

• Failure to Give Personal Notice. No personal notice to a borrower is required by statute. However, we believe that federal and state constitutions require personal notice to each borrower, either by summons or by certified mail that is actually received, and we are litigating cases so as to establish this principle.

• Insufficient Notice by Newspaper Publication or Posting in Public Places. Under Nevada statutes, advertisement of a foreclosure sale must be made three different times in “some” newspaper “published” in the “county where the sale is to be made.” Only 20 days’ notice is required, and the use of publications read almost exclusively by lenders and lawyers is permitted. Both the shortness of the time and the use of obscure newspapers seem vulnerable to constitutional objection.

• Failure to Give Notice Required by the Deed of Trust. Many deeds of trust require notice of foreclosure by certified mail, or at least by mail, in addition to notice by newspaper publication. Many also require notice – before foreclosure is sought — that the entire sum has been declared to be due because of a late payment or other default.

• No Meaningful Opportunity to Dispute the Foreclosure. This too is a constitutional challenge to Nevada’s foreclosure process. It is based on the notion that making you find a lawyer and file a lawsuit in 15 days, assume a high burden of proof, and furnish a bond are unfair hurdles imposed on you.

• Defects in the Foreclosure Sale. Nevada judges have said that the foreclosure must occur in the county in which the property is located; it must take place at an accessible location; and a lender may not use a purely technical default as a basis for foreclosure. However, when the lender demands the full amount of the debt, they have refused to let the borrower cure the delinquency by paying the disputed amount before the foreclosure occurs. They also have ruled that there is no minimum price that must be paid and have allowed the lender to recover a deficiency judgment if the amount received in the sale is less than the amount owed. They have yet to decide whether the combination of a shockingly low price and another procedural defect are sufficient to disallow the foreclosure.

Substantive Grounds for Challenging the Foreclosure

The following claims and defenses are among those that may be raised so as to defeat a foreclosure altogether or reduce the amount of any deficiency:

• Late Payments Were Accepted on Other Occasions. Remember the defense of waiver and estoppel. (Now, you need attorney, this is of course complex phrases) This suggests that the lender waived the right to refuse late payments and was estopped from foreclosing.

• The Lender Refused to Supply a Pay-Off Amount or Accept Full Payment so Foreclosure Could Be Avoided. Despite unfavorable precedent, this could be a viable ground.

• A Borrower was in Military Service at the Time of the Foreclosure.

• The Loan was Unconscionable. That is, the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other. Was this done in arm length? (this does not mean the physical length of your arm)

• The Making of the Loan, or the Servicing of It, was Riddled with Unfair and Deceptive Practices that Violated the Nevadae Consumer Protection Act.

• The Servicer Collected Unauthorized Fees for the Escrow Account, or as Late Charges, or as Attorney Fees during the Foreclosure Process.

• One Spouse Was Required to Sign the Mortgage Note even though the Credit of the Other Spouse was Sufficient.

• One or More Borrowers Lacked the Mental or Physical Capacity to Borrow.

• The Mortgage Broker Was Paid an Unlawful Sum by the Lender.

• The Lender Violated a Relationship of Trust with the Borrower that Developed in the Lending Process.

• There Was Fraud or Misrepresentation by the Lender in the Making of the Loan.

Summary of All Home Loan Modification Program by All Lenders

Here is a summary of all Home Loan Modification Programs offered by all lenders. This link would take you to their excellent work done in this regard. This is in a statistically tabular form, easy to read and grasp. All thanks should go to the National Consumerlaw Organization. They indeed are doing a great service in helping stopping foreclosure and educating America in this regard.

http://www.consumerlaw.org/issues/financial_distress/content/loan_modification/Chart-LossMitigationPrograms.pdf

An Expert Analysis of Your Loan Documents (Fight Back Your Foreclosure)

[This is just an ideal analysis of an expert about your loan documents. It may or may not be true in your case. As usual seek a licensed attorney and that too a Nevada licensed attorney's advice in your particular situation.]

Expert Analysis of a Mortgage Loan;
This Loan Should Never Have Been Made
Introduction
1. I have been asked to review the file of the ABC mortgage loan entered into by PLAINTIFF1 and PLAINTIFF2 on July 20, 2009 and provide my opinion regarding the practices exhibited by ABC in the origination and processing of the loan made to the PLAINTIFFS, as well as the financial impact that ABC’s actions had on the PLAINTIFFS.

2. [Statement of Qualifications]

3. My hourly rate for this case is $300, paid to the Office of M———– Law Office. A full list of my publications is included in my resume, which is attached.

4. My opinions in this case are based on a review of the files provided to me by, Counsel to the PLAINTIFFS. These files include loan files provided to counsel by ABC and XYZ, the company that did the title work on the loan; as well as depositions of the PLAINTIFFS, various employees of ABC, the closer of the ABC loan, and the person designated as an expert witness by ABC.

Summary of Findings

ABC’s loan to the PLAINTIFFS on July 9, 2009 should never have been made. The loan provided no benefit to the PLAINTIFFS. It appears that virtually all aspects of the processing of this loan, from application, appraisal, determination of affordability, closing, and underwriting were fundamentally flawed.

• The PLAINTIFFS did not have sufficient income to make the loan payments, and this was apparent in the documents.

• The PLAINTIFFS’ purpose in obtaining the loan – to pay off their other debts – was not achieved. They wanted protection from debt collectors, which they did not get.

• The PLAINTIFFS wanted to maintain their home – for themselves and their son – and this loan resulted in foreclosure and loss of ownership. The Plaintiff 1 is a cab driver, and Plaintiff 2 is a substitute school teacher.

• The loan was based on an inflated value of the house, and there appears to have been no real review of the appraisal which substantiated this inflated value. The appraisal provided was done without any actual and inhouse home inspection.

• The loan was based on a clearly flawed process – in the application, the approval, the processing, the appraisal, the closing, the delivery of federally required disclosures – such that it appears from a review of the file that the entire loan was fraught with serious problems. The documentation provided were not validated or checked by any independent means and agency.

The problems of this loan range from the overarching issue for these borrowers – that the loan was a terribly bad deal for this family – to the highly specific – that there are numerous irregularities in the application, loan approval, underwriting, closing, and disbursement processes. These problems are grouped into the following four categories:

1) The loan was of no benefit to the PLAINTIFFS. Their immediate, mid term and long term financial health were all seriously harmed by the July 20, 2009 loan from ABC.

2) The ABC loan was unaffordable for the PLAINTIFFS. The PLAINTIFFS did not have adequate income to sustain the payments when the loan was made. When the payments increased, due to the force placed insurance, continued payments became impossible.

3) ABC ignored serious red flags apparent in the loan file which indicated that the appraisal of the PLAINTIFFS’ was inflated. The appraisal was flawed, in violation of industry standards, and it appears that this inflation was facilitated and accepted by ABC.

4) The numerous problems in the processing and closing stages of the ABC loan indicate either seriously improper processing standards or outright deception. These problems are evident from the file and would have been caught if prudent underwriting standards had been followed. Report

1) The ABC loan was of no benefit to the PLAINTIFFS.

The PLAINTIFFS’ immediate, mid term and long term financial health were all seriously harmed by the July 20, 2009 loan from ABC. The interest rate on their mortgage increased. The monthly payments increased significantly. The amount their mortgage payments could adjust to based on future interest rates increased considerably. The ABC loan depleted their home equity by thousands of dollars. Their total monthly payments from their mortgage loan plus other scheduled debts increased dramatically. No debt was paid off by the ABC loan that posed any financial threat whatsoever to the PLAINTIFFS. Indeed, the ABC loan only relieved them of paying $97 a month in other debts, yet their mortgage payments increased from $344 to $568. They were immediately and considerably worse off the day the ABC loan was funded, and as time passed the financial damage to the PLAINTIFFS resulting from the ABC loan only got worse.

The PLAINTIFFS were referred to ABC for a home equity loan by collection agencies. PLAINTIFF2 had not previously thought of the idea of obtaining such a loan to pay off their various debts. Yet, after receiving numerous calls from debt collectors on a daily basis for over a year, she succumbed to the suggestion that ABC could “help you with your bills.” So she went to ABC for assistance for her family.

The ABC loan was extremely expensive – based on every measurement. The up-front closing fees were $4,616.66 – which is over 8.3% of the amount loaned. The calculation to determine whether this is a high cost loan under federal law (a HOEPA loan ) yields different results depending upon the treatment of the fees charged by the lender. However, even the most lender friendly view of these fees – which accepts ABC’s designation of the fees as bona fide and reasonable – indicates that the fees charged by the lender exceeded 6.7%. Loans in which the lender charged more than 5% have been considered as predatory for many years in a number of states, including Nevada, and by Fannie Mae and Freddie Mac. In a landmark analysis of the problem, the Departments of Housing and Urban Development and Treasury issued a joint report in 2000 recommending that home loans in which more than 6% was charged up front in fees should be prohibited.

According to PLAINTIFF2’s deposition, the loan application, and ABC’s Conversation log of the initial conversation with PLAINTIFF2, the purpose of this loan was to consolidate the PLAINTIFFS’ debts. The loan application lists some debts. The credit report lists more. With the exception of the loan used to purchase their home, all of the PLAINTIFFS’ debts appear to have been revolving debts, and thus were likely to have been unsecured.

The PLAINTIFFS were delinquent on a number of these debts – so delinquent in fact, that if there had been an attempt to bring these debts to judgment through the courts, some of them may have been time barred due to the statute of limitations. Indeed, if a debt collector had even attempted to collect a time barred debt from the PLAINTIFFS by threatening to sue them if they did not pay the debts, the collector may been found to have violated the Fair Debt Collection Practices Act.

It appears, however, that while there were numerous phone calls to the PLAINTIFFS in vigorous attempts to harass them into paying these debts, there were not any actions filed in the courts against them on these debts. This is likely to be caused by the PLAINTIFFS’ poverty. They were probably either completely or close to being judgment proof for all of these debts. In other words, as these debts were likely unsecured, there would not have been any repossession of property resulting from nonpayment. Furthermore, if these debts had been reduced to judgment, it is very unlikely that any money could have been collected from the PLAINTIFFS to pay the judgment – either by attachment or garnishment. The PLAINTIFFS were just too poor, they had so little assets that West Virginia’s exemptions would have protected those paltry assets, as well as their low incomes, from being available to pay these judgments. As a result, the only way these debts could have been collected was by having the PLAINTIFFS refinance their house and use the equity to pay these otherwise uncollectible debts.

The ABC loan paid off four unsecured debts of the PLAINTIFFS.

• The JCP Credit Bank debt of $1,101.
• The ANBCC debt – in which $4,364 was owed, yet only $3,000 was paid in the refinancing.
• The Elder Beerman debt of $333.
• The WFBB debt of $967.

The JCP Credit Bank Debt. The debt to JCP Credit Bank of $1,101 may well have been time barred – as there are no payments listed on the credit report, and the debt is simply listed as being in collection. The PLAINTIFFS were not making payments on this debt, and a lawsuit to collect the debt may well have been unsuccessful – either because the debt was time barred or because the PLAINTIFFS had so little assets that none could be collected to pay off the judgment. It seems likely that the only reason that this debt was paid off was because it was the collector for this debt that referred the PLAINTIFFS to ABC. As this debt probably could not have been otherwise collected at the point in time that the ABC loan was made, and the PLAINTIFFS were not making payments on it, paying it off with a 30 year adjustable rate note at a minimum rate of $12%, had a completely negative financial impact on the PLAINTIFFS. The cost to the PLAINTIFFS from financing this unnecessary debt in the ABC loan is $4,077.01.

The ANBCC Debt. The payoff of the debt to ANBCC was similarly bad for the PLAINTIFFS. While the Credit Report is not clear about the most recent payment on this debt, it appears that it was seriously delinquent and that the PLAINTIFFS had not made payment in many months. As PLAINTIFF2 was the sole debtor on this debt, it is unlikely that the PLAINTIFFS’ home would have been subject to attachment to satisfy the judgment. PLAINTIFF2’s income of between $400 and $500 a month would clearly all have been safe from garnishment to satisfy the judgment. In her deposition PLAINTIFF2 indicated that she had never heard of this creditor. Information from the Credit Report reveals that no reports relating to this debt had been made since the previous March, when it was at least four months delinquent; in fact it was at least four months delinquent a year before, in August, 1998. In any event, it appears that at the ABC closing on July 20, 1999, to the extent that there were any disclosures at all to the PLAINTIFFS, the HUD 1 provided to them at that time did not include this debt. Instead, it indicates that the loan for $3,319 to Sears would be repaid. It was only after the loan closing, after the papers were signed by the PLAINTIFFS, that the collector demanded that this debt be included in this loan. The cost to the PLAINTIFFS of financing this otherwise – potentially – uncollectible debt at 12% for 30 years (using the $3,000 amount) was $11,109.02.

This leaves the remaining two debts: one to Elder Beerman for $333 and one to WFBB for $967. Although the Elder Beerman debt appears from the Credit Report to be somewhat delinquent, the PLAINTIFFS had made some payments in recent months of $17. The WFBB debt was also delinquent, but recent payments appear to have been made at a rate of $30 a month.

As the PLAINTIFFS were only making payments on these two debts before the refinancing and not on the other two, the ABC loan only relieved them of making $47 a month in payments for their unsecured debt – which is the combined total of these two payments. In terms of monthly payments the PLAINTIFFS were making before the refinancing and monthly payments they were still required to make after it, their monthly cost thus was only reduced by this $47 a month. However, in the process they paid an additional $4544.66 in points and fees to close the loan, and the base rate of interest on the money owed to purchase their home went from 8.375%, with monthly payments of $343.56, to 12% and payments of $567.79.

Comparing the monthly payments on all debt – regardless of whether the PLAINTIFFS were making the payments – reveals that the PLAINTIFFS monthly payments still increased after the ABC loan was made –

Payments Before ABC Refinancing

Mortgage Loan P & I – $344
Property Ins and Taxes – 66
Minimum payments due on
Unsecured Debt – 561

Total Monthly Obligations $971 Payments After ABC Refinancing

Mortgage Loan P & I – $568
Imputed Property
Ins and Taxes – 66
Minimum payments due on
Unsecured Debt – 411

Total Monthly Obligations $1045

So to pay off $5,041 in unsecured debt – at least some of which was probably uncollectible – the PLAINTIFFS used up a total of $9,945 in home equity. From every vantage point, this loan made the PLAINTIFFS worse off than they were before the ABC loan was financed:

• The monthly payments on home secured debt increased with the ABC loan –

Banc One – $344 ABC – $568

• The monthly payments required of the PLAINTIFFS for all debt increased with the ABC loan –

Banc One – $971 ABC – $1045

• The interest rate applicable to home secured debt increased with the ABC loan –

Banc One – 8.375% ABC – 12%

• The debt secured by the home increased with the ABC loan –

Banc One – $44,790 ABC – $55,200

• The total of payments on their home secured loan increased dramatically with the ABC loan –

Banc One – $123,679 ABC – $204,406

• The risk of further additions to the monthly payments increased with the ABC loan –

Banc One payments would have decreased in September, 2001 to $301

ABC payments could never go lower than they were at the inception of the loan, and would only increase because of a) change from the initial teaser rate for the payments to the fully indexed rate, b) rises in the applicable index for the loan’s interest rate, or c) the force placing of property insurance.
The ABC loan provided no benefit to the PLAINTIFFS. Instead it caused their monthly payments to increase, significantly increased their total debt load, stripped them of thousands of dollars of home equity, reduced their available money because of the drain caused by the high payments, and set their course towards losing their home to foreclosure.

2) The ABC loan was unaffordable for the PLAINTIFFS.

The PLAINTIFFS did not have adequate income to sustain the payments when the loan was made. When the payments increased due to the force placed insurance, their lack of sufficient income made continued payments impossible.
The fact that the PLAINTIFFS lacked sufficient income to sustain the payments on this loan is quite apparent from the loan file. A review of the loan file indicates that ABC either knew that the PLAINTIFFS did not have sufficient income to make the payments, or that this lender simply did not care. Some examples of rather obvious clues to this effect — In the “Conversation Log” which records some of the original risk analyses, the debt ratio is described as “1515/1428 106%.” This indicates two important pieces of information: 1) that in this initial analysis the income for the PLAINTIFFS was considered to be $1428 a month. This is a far different number than the $3125 listed in the Loan Application. 2) That the PLAINTIFFS’ debt load exceeded their income.

• On this same Conversation Log, when contact is first made on June 17, 1999, it shows that the loan is contemplated to be a “full doc” loan – indicating that the borrowers were able and willing to provide full documentation of their income. Yet, a few weeks later, on the Comments and Concerns Log, which appears to have been generated on July 12, 1999, the loan has morphed from a fully documented loan into a stated income loan. According to both this document and Mary Quan, the witness proferred by ABC on loan origination issues, one criterion for a stated income loan is a letter from the borrowers stating their income. No such letter appears anywhere in the PLAINTIFFS’ loan file.

• The “Verification of Employment” for PLAINTIFF1 shows income in each of the previous two years of $12,960 for 1997 and $11,818 for 1998. Both of these incomes are far less than the $17,700 ($1475 times 12) shown on the Loan Application. Similarly the only items included as Verification of Employment for PLAINTIFF2 show a biweekly gross income of – at most – $216. Translating that into a monthly income (multiplying by 26 and dividing by 12) yields a monthly income of $468. This is a far different figure that the $1,650 a month noted in the Application.

• All of the critical questions are checked on the Underwriting Approval Sheet, which requires the reviewer to ascertain the information before checking next to each item. The items for Income, Verification of Employment, Current YTD Paystubs, and W-2s Wage Statements for previous year, are all checked. The check mark next to each item is intended to indicate that all of these tasks have been completed. Yet, the underlying documents upon which these tasks were based directly contradict the amount of income stated on the Application.

• The explanation of derogatory credit information in the file – used to explain the delinquencies on some of the PLAINTIFFS’ debts – states that the reason they were late on these payments was “because of the change in my income.” This is an indication that the PLAINTIFFS’ income had decreased recently that should have triggered a further analysis for the reviewer to ascertain sufficient income to make the loan payments.

Stated income loans are generally justified in the mortgage industry because of the difficulty some professions have in documenting income. According to ABC’s witnesses, the standard is to do fully documented loans for salaried borrowers like the PLAINTIFFS. A stated income loan might have been justified for borrowers with both a salary and other income. However, there is no indication anywhere in the PLAINTIFFS’ loan file of any income other than that which is documented in the Verifications of Employment, which show much less income than that stated on the Loan Application.

According to PLAINTIFF2, the real joint income of both of the PLAINTIFFS in 1999 was in the range of $1100 a month (this is probably their net income). This is nowhere close to the $3125 listed on the Loan Application. Indeed, this number is much closer to the $1428 figure listed in initial Risk Notes by AMC. Further, the $1428 figure is almost exactly what they were actually both earning a month.

The PLAINTIFFS obtained the ABC loan to consolidate debts. They went through the time and stress and expense of refinancing their home in order to reduce their monthly payments and keep their home. They believed that the loan would pay-off their debts. Before the ABC loan their monthly payments on their unsecured debt was $561 a month. Their mortgage payment was $344, and their monthly escrow for taxes and insurance was $66.05. Their total monthly payments before the ABC loan equaled $971. Yet after the ABC loan was made, the total monthly payments went up to $1045!

If the ABC loan had indeed paid off all these other debts and had included the amounts required to pay property taxes and insurance, their new monthly payments would have been a total of $568 – the monthly payment for the ABC loan. Instead, to keep up with their unsecured debt payments, the PLAINTIFFS still had to pay an additional $411 a month, plus monthly contributions to property taxes and insurance.

The ABC loan required the PLAINTIFFS to pay more each month than they had previously. This problem of increased monthly payments was considerably exacerbated when ABC added the premiums for force placed insurance. Yet the force placed insurance was itself a problem waiting to happen – PLAINTIFF2 quite specifically asked for escrow in the initial conversation about the loan. Even one of the papers presented to the PLAINTIFFS at closing would lead one to believe that there would be escrow on the loan. As a result, when the force placed insurance was added to the required monthly payments, around August, 2001, this apparently triggered the beginning of the PLAINTIFFS’ serious default problems which eventually led to foreclosure.

When this loan was made there was no analysis of the PLAINTIFFS’ ability to pay. In fact, as is illustrated above, the approach more closely resembled “burying one’s head in the sand.” ABC ignored the PLAINTIFFS’ income and all the warning signs which should have indicated to any reviewer of the file that this family would have great difficulty making the new, higher monthly payments which would be a result of this mortgage.

When the loan was made three facts could be easily predicted, any one of which would considerably exacerbate the difficulties the PLAINTIFFS would have making these mortgage loan payments:

• The monthly obligations required of the PLAINTIFFS would be greater immediately after the loan was made than it had been before, yet they went through this refinancing to lower their payments.

• The monthly obligations would most likely increase in the first year, because while the PLAINTIFFS had requested that their new loan include escrow and expected that it did, it did not. As a result, the additional cost of premiums for the force placed insurances charged by ABC was entirely foreseeable. Force placed insurance is traditionally much more expensive than homeowner obtained insurance because it includes large commissions to the lenders that sell it. In fact, when the monthly payments for this ABC loan did increase because of the force placed insurance, that triggered the PLAINTIFFS’ first real difficulties maintaining current payments.

• The monthly obligations could likely rise again in September, 2002 because of the adjustable nature of the ABC Note. According to the Note, the initial interest rate was 12%, the interest rate could never decrease beneath 12%, yet it could rise to 18%. The rate was based on the combination of the index from the six month LIBOR, plus a margin of 7.125%. The initial rate for the first three years of the loan was actually a “teaser rate” because it was not fully indexed. In other words, the rate charged was actually less than the combination of the LIBOR rate at the time of the loan, plus the margin in Note. The actual rate at that time would have yielded an interest rate of 12.75% and monthly payments of $599, instead of the payments of $568 that were charged. The critical point is that there is no indication anywhere in the file of an analysis of the PLAINTIFFS’ ability to pay even this fully indexed rate – although this would be the effective rate on the loan even if interest rates did not increase between the time the loan was made and the first change date in October, 2002.

The actual events relating to the applicable interest rate for the October, 2002 payment did not cause a payment increase for the PLAINTIFFS. Indeed interest rates had decreased considerably in the intervening years between the date of the loan and the change date. However, the terms of the ABC loan prevented the PLAINTIFFS from experiencing the benefit of that decrease. Instead of their payments going down, as they would have with an adjustable rate note, the payments stayed the same. So while the PLAINTIFFS’ note placed all the risk of increased interest rates on them, it provided no benefit from decreased interest rates. Indeed, if the Note had allowed for the PLAINTIFFS to experience the benefit of an interest rate decrease, their payments as of October, 2002 would have been lowered to $487.37, and perhaps they would have been able to avoid foreclosure.

3) ABC ignored serious red flags apparent in the loan file which indicated that the appraisal of the PLAINTIFFS’ home was inflated. The appraisal was flawed, in violation of industry standards, and it appears that this inflation was facilitated and accepted by ABC.

The PLAINTIFFS purchased their home on August 20, 1996 for $56,500. There are no discussions anywhere in the Appraisal, or elsewhere in the file, of any improvements they made to the house. Yet, at the outset of the loan application process for the ABC loan, the house seemed to have an assigned value of $70,000. The following notations in the file provide examples:

• On the very first day the loan was considered (June 17, 1999) the amount of the loan was determined to be $53,000 and the loan was planned to be an 80% LTV – which requires a value of the house of at least $66,250.

• On the Conversation Log dated the same day, the house is noted as having a value of $70,000.

• On the Loan Proposal Worksheet, indicating that the appraisal has only been ordered, the value of the house is stated as $70,000.

The Appraisal was completed on July 14, 1999. It states that the value of the house was $69,000. This represents a growth of over 22% in less than three years as measured against the purchase price of the house. That would necessitate a yearly increase averaging over 7%. Yearly increases in house values of this amount indicate an escalating real estate market which does not appear to have been the case in the PLAINTIFFS’ neighborhood.

A growth of over $12,000 in value on a property worth $56,500 in three years time can only reasonably result from either improvements to the house or a hot, sellers’ market. The Appraisal itself indicates that neither was the case. About the market in the PLAINTIFFS’ neighborhood, the appraiser said:

Market values are stable. Marketing times are 3 to 6 months. Demand and supply are in balance. Property values are in an upswing but it is too early to project future growth.

Regarding the improvements, none are noted on the Appraisal, instead, value was deducted because of the condition of the house:

There are no repairs needed that were noticed by this Appraiser. 25% was deducted for physical depreciation because of the actual and effective age of subject. Quality of construction is average, general condition is good.

The loan file indicates that the Title Commitment from NREIS was faxed on July 16, 1999, presumably to ABC. On the face page, this document shows that the house was purchased on August 20, 1996 for $56,500. So the ABC reviewer had the critical information indicating an unexplained, significant growth in the value of the PLAINTIFFS’ house.

A close examination of the Appraisal itself reveals another problem. For example, the drawn floor plan, which is a critical part of any appraisal, does not include any measurements for the second floor. One result of this omission is that the total square footage of the house was determined to be different than previously.

Industry standards require that there be a review of the appraisal which is separate from the loan production underwriting. In this loan, this review presumably is evidenced by the “Branch Appraisal Review Report.” It is not clear what day this report was produced, but it was presumably after the Appraisal was completed on July 14 and before the closing. It is only notable for what is not on this report:

• No question is raised about the unexplained 22% growth in value in just three years.

• No questions are raised about the omission in the Appraisal of measurements for the second floor.

From the lax standards of review applied to the Appraisal, and the fact that no questions were even raised about the potential that the Appraisal was inflated, it appears that ABC really did not care what the real value of the house was. In fact, according to ABC’s witness Eric Printemps, the loan to value requirement for a stated income loan like the PLAINTIFFS was a 70% ratio. Yet, a waiver was granted to allow their loan to be based on an 80% LTV. ABC did not require any additional procedures or safeguards when this exception was made. It appears that there was one critical question that ABC looked at in determining whether a loan would be made – whether the borrowers have a history of paying their mortgage payments on time:

Q. Can you tell me what things you would have been looking for, you, even if you can’t tell me the specific criteria, what was important in approving a loan?

A.. The borrower’s mortgage history.

Q. Okay. Anything else?

A. Well, that probably would have been the No. 1 factor.

ABC made this loan to the PLAINTIFFS despite many indications that the property was not worth the appraised amount.

4) The numerous problems in the processing and closing stages of the ABC loan indicate either seriously improper processing standards or outright deception. These problems are evident from the file and would have been caught if prudent underwriting standards had been followed.

As was discussed in Section 1 of this Report, the PLAINTIFFS fully intended for all of the other debt to be consolidated and paid off with this ABC loan. That section details how the cost of this loan far exceeded any savings in monthly payments from the loans that were paid off. These are real substantive problems with the loan made to the PLAINTIFFS. There are also a myriad of issues with the way the loan was made to them – problems with the procedure of making the loan. Some of these problems are —

• It appears that the loan the PLAINTIFFS received was different – and more expensive – than the loan described in the July 9 RESPA and TILA disclosures: The differences are:

• The loan described in the July 9, 1999 documents has an interest rate of 11% – rather than the 12% they were actually provided.
• The loan described in the July 9, 1999 documents had monthly payments of $533.30 – rather than the actual $567.79.
• The loan described in the July 9, 1999 documents called for total closing costs of $4073 – rather than the $4616.66 actually charged.
• Comparing the difference between the loan promised and the loan provided: the loan actually provided would cost the PLAINTIFFS $12,416.40 more over the course of the loan, ignoring any increase in interest rate.

• The PLAINTIFFS say that the loan closer was at their home for only ten minutes or so, they were not given the opportunity to review the documents prior to signing them, and that the loan documents were not left at their home after the closing.

There is also a glaring set of problems associated with the HUD 1s and the Summary of Debts and Disbursements in this file. There are three separate sets of these documents in the loan file. Two sets were provided to the PLAINTIFFS’ counsel by the title company. Two sets were provided in response to discovery requests by ABC. One set from each overlapped. This multiplicity of sets indicates 1) potential violations of both the federal Truth in Lending Act and the Real Estate Settlement Procedures Act, 2) complete disregard of the wishes and intentions of the PLAINTIFFS, 3) serious violations of industry standards in the closing and processing of loans. This is a chart explaining the three sets of documents –-

Set 1
Set 2
Set 3

Date on documents
no date on HUD 1
Summary is dated 7/19/99
HUD 1 dated 7/27/99
Summary dated 7/28/99
no date on HUD 1
Summary is dated 7/22/99

Signed or initialed
signed
initialed
signed

Total Settlement Charges Shown
$4,616.66
$4,544.06
$4,616.66

Debt to Sears Paid?
Yes – $3,319
No
No

Debt to Triad Financial Paid?
No
Yes – $3,000
Yes – $3,000

Stated Disbursement to PLAINTIFFS
$72.60
$464.20
$391.60

Matches TILA Disclosure
yes
no
yes

Matches Actual Disbursements to PLAINTIFFS of $464.20
no
yes
no

Provided to PLAINTIFFS’ counsel by –
Title company
HUD 1 is provided by both Title company and ABC
Summary is provided only by ABC
ABC

Bates Stamped
1003, 1004
1001, 237, 238, 243,
196, 198

I do not know what actually happened here – why there are so many different versions of HUD1s with matching Summary of Debts and Disbursements – not one of which matches both the actual disbursements and the TILA disclosures. Clearly, there is some funny business going on.

Firstly, the Summary of Debts and Documents itself is very misleading. It appears that the entire purpose of this document is to mislead the borrower into believing that all of the debts listed are to be repaid in the ABC loan. There is no independent need for this document, other than to contradict and confuse the borrower. The actual disbursements from the loan are already listed – as they are required to be – on the right hand column of the HUD 1. Indeed, most people looking at the ABC document Summary of Debts and Disclosures would think that all of the debts listed were to be repaid. It is only on very close analysis, and comparing each line of this document with the list of disbursements of loan proceeds on the HUD 1, that one can determine that only four of the listed debts are to be repaid in the ABC loan.

The analysis of what happened in this loan process is assisted by the information provided the PLAINTIFFS’ Counsel by ABC’s Counsel in response to the questions that were raised about the payment to Triad Financial. It appears from this information that Triad Financial found out that their debt was not scheduled to be repaid in the ABC loan. It looks like they called PLAINTIFF2 and complained about this and she told them she thought they were to be paid. PLAINTIFF2 clearly understood that all of the debts were going to be repaid. Triad was thus able – after the closing – to demand that their loan be paid off. The loan that had been scheduled to be paid off to Sears was then dropped from the list of pay offs, and replaced with the Triad’s debt. The PLAINTIFFS did not appear to have any knowledge that one debt was being swapped for another.

Based on all this documentation, I can surmise what may have happened –

• The documents I have titled Set I were probably those that were actually signed by the PLAINTIFFS at closing on July 20. These documents indicate that the loan to Sears will be paid off, and that the PLAINTIFFS will receive cash of only $72.60. These documents match the TILA disclosures provided.

• The documents titled Set II were prepared after closing (they are dated July 27) in response to the change in debts to be paid off, from the Sears debt to the Triad Financial debt. The disbursements shown in these documents appear to match the actual checks written by the Title company. These disbursements, however, do not match the TILA disclosures provided to the PLAINTIFFS.

• The documents titled Set III were also prepared after closing. Despite the fact that they are dated July 22, it is likely that they were actually prepared some time after this date, and possibly after actual disbursements of the proceeds. These documents match the TILA disclosures, however, they do not match the actual disbursements.

There is no cohesive set of documents here. The HUD 1 that matches the TILA disclosures does not match the Summary of Disbursements which actually matches the real disbursements made by the Title Company. This lack of consistency, the multiplicity of documents, the failure of these documents to match the real events in this loan, are all strong indications that the processing and closing and disbursement of proceeds of this loan violated industry standards.

Conclusion

This report has described numerous problems indicated on the paperwork in the PLAINTIFFS’ loan file. All of these problems would have been caught with careful underwriting – as they are simply apparent from a careful review of the loan file itself. To sum up, and describe the problems embedded in this loan which are evident from a close review of the file, these issues would have been caught by underwriters intent on ensuring that the loan be a) the loan offered and agreed to by the borrower, b) one which provides real benefit to the borrower, and c) in compliance with prudent lending standards.

This is a loan which should have never been made. The PLAINTIFFS were hurt financially by it by every possible measurement. Standard industry practices, and even ABC stated practices, were violated.

Foreclosure: All over USA:

In Florida Despair all over:

Trying to help financially troubled homeowners:

Nevada Deceptive Trade Practices

Everyday many homeowners are coming to my office, seeking help from the predators who had made them victims in various ways; by promising them to lower their debts; by promising them to restructure their debts; by promising to lower their interest and principal. I have heard innumerable heart broken stories. In this posting, I would highlight some of the laws which are enforceable in Nevada statute books and can be used to catch these criminals. Again, it is advisable to seek a qualified and licensed attorney in addressing your particular issues.
Most of these deceptive trade laws are contained in NRS 598.741
1. “Buyer” means a natural person who is solicited to purchase or who purchases the services of an organization which provides credit services.
2. “Commissioner” means the Commissioner of Consumer Affairs.
3. “Division” means the Consumer Affairs Division of the Department of Business and Industry.
4. “Extension of credit” means the right to defer payment of debt or to incur debt and defer its payment, offered or granted primarily for personal, family or household purposes.
5. “Organization”:
(a) Means a person who, with respect to the extension of credit by others, sells, provides or performs, or represents that he can or will sell, provide or perform, any of the following services, in return for the payment of money or other valuable consideration:
(1) Improving a buyer’s credit record, history or rating.
(2) Obtaining an extension of credit for a buyer.
(3) Providing counseling or assistance to a person in establishing or effecting a plan for the payment of his indebtedness, unless that counseling or assistance is provided by and is within the scope of the authorized practice of a debt adjuster licensed pursuant to chapter 676 of NRS.
(4) Providing advice or assistance to a buyer with regard to subparagraph (1) or (2).
(b) Does not include: [As you can see, only licensed attorneys should modify, restructure a loan or do any credit advice] (1) A person organized, chartered or holding a license or authorization certificate to make loans or extensions of credit pursuant to the laws of this state or the United States who is subject to regulation and supervision by an officer or agency of this state or the United States.
(2) A bank, credit union or savings and loan institution whose deposits or accounts are eligible for insurance by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund or a private insurer approved pursuant to NRS 678.755.
(3) A person licensed as a real estate broker by this state where the person is acting within the course and scope of that license, unless the person is rendering those services in the course and scope of employment by or other affiliation with an organization.
(4) A person licensed to practice law in this state where the person renders services within the course and scope of his practice as an attorney at law, unless the person is rendering those services in the course and scope of employment by or other affiliation with an organization.
(5) A broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission where the broker-dealer is acting within the course and scope of such regulation.
(6) A person licensed as a debt adjuster pursuant to chapter 676 of NRS.
(7) A reporting agency.
6. “Reporting agency” means a person who, for fees, dues or on a cooperative nonprofit basis, regularly engages in whole or in part in the business of assembling or evaluating information regarding the credit of or other information regarding consumers to furnish consumer reports to third parties, regardless of the means or facility of commerce used to prepare or furnish the consumer reports. The term does not include:
(a) A person solely for the reason that he conveys a decision regarding whether to guarantee a check in response to a request by a third party;
(b) A person who obtains or creates a consumer report and provides the report or information contained in it to a subsidiary or affiliate; or
(c) A person licensed pursuant to chapter 463 of NRS.
Section NRS 598.746 deals with Prohibited acts: Receiving money before complete performance; receiving money for referral to provider of credit; misleading statements; other fraudulent or deceptive acts. An organization and its agents, employees and representatives who sell or attempt to sell the services of the organization, shall not:
1. Charge or receive any money or other valuable consideration before full and complete performance of the services the organization has agreed to perform for or on behalf of the buyer.
2. Charge or receive any money or other valuable consideration solely for referral of the buyer to a retail seller who will or may extend credit to the buyer, if the credit which is or will be extended to the buyer is upon substantially the same terms as those available to the general public.
3. Make, counsel or advise any buyer to make, any statement which is untrue or misleading and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, to a consumer credit reporting agency or to any person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit, with respect to a buyer’s creditworthiness, credit standing or credit capacity.
4. Make or use any untrue or misleading representations in the offer or sale of the services of an organization. For the purposes of this subsection, a “misleading representation” includes a guarantee that:
(a) The organization is able to remove information that is adverse to the buyer’s ability to obtain credit from the buyer’s credit record, history or rating.
(b) The organization is able to obtain an extension of credit for the buyer regardless of the buyer’s existing credit record, history or rating.
5. Engage, directly or indirectly, in any act, practice or course of business which operates or would operate as a fraud or deception upon any person in connection with the offer or sale of the services of an organization.
6. Remove, or assist or advise the buyer to remove from the buyer’s credit record, history or rating, information that is adverse to the buyer’s ability to obtain credit if the information is accurate and not obsolete.
7. Create, or assist or advise the buyer to create a new credit record, history or rating by using a different name, address, social security number, employee identification number or other misleading information.
8. Attempt to transfer or assign the organization’s certificate of registration.
9. Submit a buyer’s dispute to a consumer credit reporting agency without the buyer’s knowledge.
10. Call, or authorize any other person who is not the buyer to call a consumer credit reporting agency and portray himself as the buyer.

NRS 598.752 Organization to register and deposit security before advertising services or conducting business in this State; separate security not required from salesperson, agent or representative of organization; regulations.
1. Before advertising its services or conducting business in this State, an organization must register pursuant to NRS 598.721 and deposit security in the amount of $100,000 with the Division pursuant to NRS 598.726. The security must be conditioned on compliance by the organization with the provisions of NRS 598.746 to 598.772, inclusive, and the terms of its contracts with buyers.

2. If an organization has deposited the required security, a salesperson, agent or representative of the organization who sells its services is not required to deposit his own separate security. For the purposes of this subsection, a person is a salesman, agent or representative of an organization if:

(a) He does business under the same name as the organization; or

(b) The organization and the issuer of the security certify in writing that the security covers the salesperson, agent or representative.

3. The Division shall adopt such regulations as it deems necessary to carry out the provisions of this section.

NRS 598.757 Organization to provide buyer certain information in writing.
1. Before the execution of a contract between the buyer and an organization or before the receipt by the organization of any money or other valuable consideration, whichever occurs first, the organization must provide to the buyer, in writing:
(a) A statement:
(1) That the buyer has a right pursuant to 15 U.S.C. §§ 1681g and 1681h to receive disclosure of all information, except medical information, in any file on him maintained by a consumer credit reporting agency;
(2) That 15 U.S.C. § 1681j requires that this disclosure be made free to the buyer if he requests it within 30 days after receipt of notice of a denial of credit;
(3) Of the approximate cost to the buyer of receiving this disclosure when there has not been a denial of credit; and
(4) That the buyer has the right pursuant to 15 U.S.C. § 1681i to dispute the completeness or accuracy of any item contained in any file on him maintained by any consumer credit reporting agency.
(b) A detailed description of the services to be performed by the organization for the buyer and the total amount the buyer will become obligated to pay for the services.
(c) A statement that the buyer has a right to proceed against the security deposited with the Division by the organization under the circumstances and in the manner set forth in NRS 598.731 and 598.736. The statement provided pursuant to this paragraph must include the name and address of the issuer of the security.
(d) A statement that the buyer may cancel a contract for the services of an organization within 5 days after its execution by written notice mailed or delivered to the organization.
(e) A statement identifying the availability of any nonprofit association which provides services similar to those offered by the organization. The statement provided pursuant to this paragraph must include the association’s telephone number, including the association’s national toll-free telephone number, if any.
2. The written information provided pursuant to subsection 1 must be printed in at least 10-point bold type and must include the following statement or a similar statement approved by the Division:
RIGHTS OF CONSUMERS REGARDING CREDIT FILES
PURSUANT TO STATE AND FEDERAL LAW

You have the right to obtain a copy of your credit file from a consumer credit reporting agency. There is no fee if, within the past 30 days, you have been turned down for credit, employment or insurance because of information in your credit report. The consumer credit reporting agency is obligated to provide someone to help you interpret the information in your credit file.

You have a right to dispute inaccurate information by contacting the consumer credit reporting agency directly. However, neither you nor any credit service organization has the right to have accurate, current and verifiable information removed from your credit report. Generally, under the Fair Credit Reporting Act, the consumer credit reporting agency is obligated to remove accurate, negative information from your report only if it is more than 7 years old and bankruptcy information can be reported for 10 years. If you have notified a credit reporting agency that you dispute the accuracy of information in your credit file, the consumer credit reporting agency is obligated to make an investigation and modify or remove inaccurate information. The consumer credit reporting agency may not charge a fee for this service. Any relevant information and copies of all documents you have concerning the disputed information should be given to the consumer credit reporting agency. If the investigation does not resolve the dispute to your satisfaction, you may send a brief statement to the consumer credit reporting agency to keep in your credit file, explaining why you think the information in the credit file is inaccurate. The consumer credit reporting agency is obligated to include your statement or a summary of your statement about disputed information in any report it issues about you.

RIGHTS OF CONSUMERS REGARDING
CANCELLATION OF A CONTRACT

You have a right to give written notice of your intent to cancel a contract with a credit service organization for any reason within 5 working days from the date you signed it. If for any reason you do cancel a contract during this time, you do not owe any money. You have a right to sue a credit service organization if it misleads you.
3. The organization shall retain a copy of the written information it provides pursuant to the requirements of subsections 1 and 2 for not less than 2 years.

NRS 598.762 Requirements of contract for purchase of services; copy of contract must be retained by organization.
1. A contract between a buyer and an organization for the purchase of the services of the organization:
(a) Must be in writing;
(b) Must be signed by the buyer;
(c) Must be dated; and
(d) Must clearly indicate above the signature line that the buyer may cancel the contract within 5 days after its execution by giving written notice to the organization of his intent to cancel the contract. If the notice is mailed, it must be postmarked not later than 5 days after the execution of the contract.
2. A copy of each contract executed by a buyer and an organization must be retained by the organization for not less than 2 years.

NRS 598.767 Organization to maintain registered agent for service of legal process. An organization shall file with the Division the information required pursuant to NRS 77.310 and continuously maintain a registered agent for service of legal process.

NRS 598.772 Waiver of statutory rights prohibited; burden of proof upon person claiming exemption or exception from definition.

1. Any waiver by a buyer of the provisions of NRS 598.746 to 598.777, inclusive, is contrary to public policy and is void and unenforceable. Any attempt by an organization to have a buyer waive rights given by NRS 598.746 to 598.777, inclusive, is unlawful.

2. In any proceeding involving NRS 598.741 to 598.787, inclusive, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

(Added to NRS by 1987, 1520; A 1993, 2277)—(Substituted in revision for NRS 598.286)

NRS 598.777 Buyer’s action for recovery of damages or injunctive relief; attorney’s fees; punitive damages. A buyer injured by a violation of NRS 598.746 to 598.772, inclusive, or by a breach by an organization of a contract subject to those sections, may bring an action for recovery of damages, for injunctive relief or for both recovery of damages and injunctive relief. Judgment for damages must be entered for actual damages, but in no case less than the amount paid by the buyer to the organization, plus reasonable attorney’s fees and costs. If the court deems it proper, the court may award punitive damages.

(Added to NRS by 1987, 1520; A 1993, 2277)—(Substituted in revision for NRS 598.287)

NRS 598.782 Criminal penalty.
1. Except as otherwise provided in subsection 2, a person who violates any provision of NRS 598.746 to 598.772, inclusive, is guilty of a misdemeanor.
2. A person who breaches a contract subject to NRS 598.746 to 598.772, inclusive, is not guilty of a misdemeanor solely because of the breach.
NRS 598.787 Provisions and remedies not exclusive; violation constitutes deceptive trade practice.
1. The provisions of NRS 598.746 to 598.777, inclusive, are not exclusive and do not relieve the parties or the contracts subject thereto from compliance with any other applicable provision of law.
2. The remedies provided in NRS 598.772 and 598.777 for violation of any provision of NRS 598.746 to 598.772, inclusive, are in addition to any other procedures or remedies for any violation or conduct provided for in any other law.
3. Any violation of NRS 598.746 to 598.772, inclusive, constitutes a deceptive trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.

NRS 598.900 Untrue or misleading statements by organization prohibited; effect on contract. An organization shall not make any untrue or misleading representations to the buyer or in its advertising. A contract for membership in an organization where any untrue or misleading representation was made to the buyer or the buyer was made aware of the untrue or misleading representation is void and unenforceable by the organization.

NRS 598.905 Correction of violations. If an organization does not comply with the provisions of NRS 598.840 to 598.895, inclusive, or 598.905 to 598.930, inclusive, the buyer may agree in writing, after a full disclosure, to any correction of the defect if the correction is made within 30 days after he signs the contract for membership in the organization. If the buyer does not consent, or if the correction is not made within the 30-day period, the contract is rescinded, and the buyer must be given a full refund.

NRS 598.910 Effect of transfer by organization of its obligation to provide goods or services; circumstances under which buyer may rescind contract.

1. If an organization transfers its obligation to provide goods or services to a buyer to another organization which provides substantially fewer goods or services, the buyer may consent to the transfer in writing after a full disclosure to him of the goods and services to be provided by the new organization. If a buyer does not consent, his contract is rescinded, and he must be given a refund pro rata based on the amount of time he was a member of the organization.

2. The buyer may rescind the contract and the organization shall give him a refund pro rata based on the amount of time he was a member of the organization if any of the following circumstances occur:

(a) Except as otherwise provided in this paragraph, the organization moves its place of business which is geographically closest to the buyer’s residence, as indicated in the contract, more than 20 miles farther from the buyer’s residence than it was when the contract for membership was signed. The provisions of this paragraph do not apply if:

(1) The organization offers the buyer a substantially equivalent at-home ordering service through at least one other generally available channel of communication, including, without limitation, the Internet;

(2) The at-home ordering service offers the same categories of goods and services provided by the organization at the time the organization moves its place of business; and

(3) Any goods ordered by the buyer through the at-home ordering service are shipped, at the election of the buyer, to either the buyer’s residence, as indicated in the contract, or a freight receiver within 20 miles of that residence.

(b) Within 6 months after the contract for membership was signed, the organization stops providing any category of goods or services represented to the buyer to be available when he signed the contract.

NRS 598.915 Waiver of statutory rights is void. Any waiver by the buyer of the provisions of NRS 598.840 to 598.930, inclusive, is contrary to public policy and void.
NRS 598.920 Actions against organization; restitution, treble damages, attorney’s fees and costs may be awarded.
1. A cause of action or a defense of a buyer against the organization is not extinguished by the transfer, assignment or sale of the contract for membership in the organization to a third party.

2. In an action by a buyer against an organization for violation of the provisions of NRS 598.840 to 598.930, inclusive, the court may award restitution, treble damages, reasonable attorney’s fees and costs. If the course of action was based on a violation of NRS 598.900, the court may award the buyer $1,000, reasonable attorney’s fees and costs, or restitution, treble damages, reasonable attorney’s fees and costs, whichever is greater.

NRS 598.930 Remedies not exclusive; violation constitutes deceptive trade practice.
1. The remedies, duties and prohibitions of NRS 598.840 to 598.930, inclusive, are not exclusive and are in addition to any other remedies provided by law.

In Case You Walk Away From Your Home?

I have been asked many time the consequences of “walking away” from your home. Here, is an interesting article discussing all the aspects of this common phenomenon in our society.

Complaint to Enjoin Foreclosure (Education Purposes Only)

<em>This is a sample complaint to enjoin your impending foreclosure and it is meant for only education purposes in this foreclosure crisis facing the state of Nevada. Again, and as usual, please consult a Nevada Licensed Attorney for any further questions.

[Names of attorneys]
[Attorneys' business address]

District Court
Clark County, Nevada[Plaintiff's name],
Plaintiff,
vs.
[Defendant's name],
Defendant ))
)

) Case No.: [Case number]

[Pleading title]

COMPLAINT
Plaintiff, complaining of the defendants and in support of her motion for injunctive relief, alleges as follows:
Nature of Action
1. Plaintiff brings this action for damages and to enjoin a foreclosure proceeding instituted against her by the current holder of her mortgage loan, JJJ.P. Morgan Chase Bank. She contends that the originator of the loan in question, R & B Funding Group, Inc. acted unlawfully in connection with the origination of a mortgage loan made to her in April, 2006 by failing to comply with Nevada laws prohibiting the financing of fees in excess of five percent of the loan amount, and by failing to ensure that she was provided with financial counseling prior to consummating this “high cost” loan. Plaintiff further contends that Royal Mortgage & Financial Service Centers, Inc. which served as her mortgage broker, breached its fiduciary duty to her. Plaintiff further alleges that the practices of R & B Funding Group, Inc. as well as New Royal Mortgage & Financial Service Centers, Inc. constituted unfair and deceptive practices.
Parties
2. Plaintiff is a citizen and resident of the town of Consumerville in Las Vegas, Nevada.
3. Defendant, R & B Funding Group, Inc., D/B/A National Builders (hereinafter “R & B”) is, upon information and belief, a Nevada Corporation and originated Plaintiff’s mortgage loan together with a mortgage broker, Royal Mortgage & Financial Service Centers, Inc., pursuant to arrangements made by R & B.
4. Defendant, JJJ.P. Morgan Chase Bank (hereinafter “J.P. Morgan”), is, upon information and belief, the creditor and/or the trust administrator of a trust that is assignee of Plaintiff’s loan, or otherwise holds Plaintiff’s loan.
5. Defendant New Royal Mortgage & Financial Service Centers, Inc. (hereinafter “Royal Mortgage”), is, upon information and belief, a corporation organized under the laws of North Carolina and performed mortgage brokerage and/or loan origination services pursuant to arrangements made by R & B at times pertinent to the events referenced in this complaint.
6. Defendants XXXXXXXXXXX and XXXXXXXX are parties to this action only in their capacity as Substitute Trustees of Plaintiff’s Deed of Trust, and the only relief sought against Defendant Weld and/or Smith is injunctive relief enjoining foreclosure of the deed of trust.
Factual Allegations
7. Plaintiff XXXXXXX is an 76-year-old widow. She is in failing health and has limited understanding of financial transactions, including the instant transaction.
8. Consumer lives in a modest home on Main Road in Consumerville, in North Las Vegas, Nevada. She and her late husband purchased this home almost fifty years ago, and she has lived there ever since.
9. In the spring of 2003, Consumer’s son, Son Consumer contacted a mortgage broker about refinancing Consumer’s existing mortgage. At that time, Consumer’s home was secured by a mortgage with Bank of America, Inc.
10. On information and belief, John Consumer contacted an individual named Steve Smith, who, upon information and belief, was employed by Defendant mortgage broker Royal Mortgage.
11. Sometime in March or April 2003, XXXXXXX Smith contacted Consumer by calling her on the telephone and informed her that he would arrange for the refinancing of Plaintiff’s home loan.
12. Steve Smith took information from Plaintiff over the telephone concerning her finances, and upon information and belief, prepared loan application documents for Plaintiff in order to secure a loan with Defendant R & B.
13. At all times relevant hereto, Steve Smith was an employee and agent of defendant Royal Mortgage.
14. Upon information and belief, all contacts with Steve Smith and/or Royal Mortgage, were transacted over the telephone.
15. On approximately April 18, 2003, a loan closing was conducted in Consumer’s living room. On information and belief, a representative from the law firm of Brock, Scott & Ingersoll went to Consumer’s home and asked her to sign many documents. Upon information and belief, Defendant R & B, and not Consumer, selected this law firm to be the settlement agent in this transaction.
16. At the time that the loan closed, Consumer signed a HUD-1 Settlement Statement dated April 18, 2002, which listed the various loan related expenses.
17. The amount of the loan was $37,000.00.
18. Among the various fees charged in connection with Plaintiff’s loan included a “loan origination fee” of $395, a “mortgage broker fee” of $1424.50, a “settlement fee” of $100, a “title search” fee of $425, a “lender amount” of $35, and a “doc prep” fee of $100.
19. According to the Federal Truth-in-Lending Act Disclosure Statement signed at the closing, Consumer was to pay monthly payments of $298.50 for 30 years. The total of payments as disclosed is $107,460.00.
20. The total of points and fees paid by plaintiffs at or before the loan closing exceeded 5% of the “total loan amount,” as that term is defined by NRSXXXXXX were financed within the loan.
21. The loan was secured against title to plaintiff’s principal dwelling, located at Main Road, Consumerville, North Carolina, by a Deed of Trust which is recorded in Book 00 at Page 00 of the Orange County Registry.
22. The proceeds of the loan were primarily for personal, family, or household purposes.
23. Plaintiff was not advised that the loan was a “high cost-home loan” as defined in NRSXXXXX.
24. Upon information and belief, no party to the transaction received a certification from a counselor approved by the Nevada Housing Finance Agency verifying that plaintiff had been counseled as to the advisability of the loan transaction.
25. Plaintiff was not counseled by a counselor approved by the North Carolina Housing Finance Agency as to the advisability of the loan transaction.
26. Defendant, R & B had a duty to inform plaintiff that the loan transaction was a “high-cost home loan” and, as such, that this loan required the various counseling protections and safeguards embraced by Chapter 24 of the North Carolina General Statutes.
27. Defendant, R & B breached this duty and the plaintiff was directly, proximately and foreseeably damaged by the breach of this duty.
28. Upon information and belief, defendant Royal Mortgage did not provide bona fide or legitimate mortgage broker services to plaintiff, even though plaintiff was charged $1424.50 by defendant, Royal Mortgage, for mortgage broker services.
29. The loan transaction in question was intended to refinance Plaintiff’s then existing first mortgage with Bank of America in the amount of $26,635.37, as indicated by line 1513 on the HUD-1 Settlement Statement. On information and belief, a check was disbursed by the closing agent three days after the loan closing to Bank of America, but said check was neither cashed nor applied to Plaintiff’s mortgage account at Bank of America. Bank of America did not satisfy the deed of trust, but instead continued to withdraw monthly payments from Plaintiff’s checking account and applied them to her old mortgage account. Plaintiff attempted to make payments to the servicer of the mortgage that is the subject of this action, but as money was being withdrawn from her checking account each month by Bank of America, her checks on the new mortgage bounced.
30. On or about October 17, 2002, Defendant J.P. Morgan Chase Bank as Trustee, through its substitute trustee, Defendants Weld and/or Smith, filed a foreclosure action against the plaintiff, alleging that the plaintiff is in default in payments under the terms of the April 2002 loan contract. The foreclosure action is filed as 02 SP 000.
31. Plaintiff, who is unsophisticated, did not realize the bank’s error. After getting several collection calls and letters, she finally sought the help of a social worker from the Orange County Department of Aging, who in turn sought assistance from the North Carolina Attorney General’s Consumer Protection Division. As a result of these inquiries, the closing agent resubmitted a check to Bank of America on October 29, 2002, and upon information and belief, Plaintiff’s prior mortgage was satisfied shortly thereafter.
32. Despite being apprised of the circumstances surrounding the failure of the April 2002 lender to pay off Plaintiff’s prior mortgage, the substitute trustee refused to delay or stop the foreclosure proceedings. The foreclosure hearing before the clerk was scheduled for November 18, 2002.
Count One
VIOLATION OF CHAPTER 24 OF THE Nevada (Against Defendant R & B, and against J.P. Morgan Chase Bank as

Trustee in its capacity as assignee or holder of interest in Plaintiff’s loan)
33. All paragraphs of this complaint are incorporated herein as if fully restated.
34. The loan transaction in question was: a “high-cost home loan” which did not exceed the lesser of (i) the conforming loan size limit for a single family dwelling as established by FNMA or (ii) three hundred thousand dollars; and was incurred by natural persons primarily for personal, family, or household purposes; and was secured by a deed of trust against property occupied as the borrower’s principal dwelling as defined in XXXXXXXXXX. With willful and corrupt intent, the lender, Defendant, R & B, and/or its agents, made and/or arranged the loan without the counseling required under Chapter XX of the Nevada General Statutes and specifically under XXXXXXXXXXXXThe loan was made without certification from a counselor approved by the North Carolina Housing Finance Agency that the borrowers received counseling on the advisability of the loan transaction and the appropriate loan for the borrowers. These acts and practices entitle Plaintiff to the remedies set out in XXXXXXXXX. Defendant R & B, together with Defendants J.P. Morgan, as Trustee, are liable as holders of interests in Plaintiff’s loan.
Count TwoUNFAIR AND DECEPTIVE ACTS AND PRACTICES
AS DEFINED IN NRS xxxxxxxxxxxxxxx(Against Defendant R & B, and against J.P. Morgan Chase Bank as Trustee in its capacity as assignee or holder of interest in Plaintiff’s loan)
35. All paragraphs of this complaint are incorporated herein as if fully restated.
36. Defendants’ acts as described above, and particularly those acts specifically set out in Count One, proximately damaged Plaintiff, are in and affecting commerce, violate public policy, have the capacity to deceive an ordinary consumer, are unscrupulous, immoral, and oppressive, and constitute unfair and deceptive trade practices under NRSXXXXXXXXXX1, thereby entitling Plaintiff to three times her actual damages plus a reasonable attorney’s fee pursuant to NRSXXXXX and XXX. The remedy requested pursuant to this count which relates to acts or practices described in Count One is plead in the alternative to the relief requested pursuant to Count One, as prescribed in XXXXXXE(d). Defendant R & B, together with Defendants J.P. Morgan are liable as holders of interests in Plaintiff’s loan.
Count Three
BREACH OF FIDUCIARY DUTIES(Against Defendant Royal Mortgage)37. All paragraphs of this complaint are incorporated herein as if fully restated.
38. Defendant, Royal Mortgage, upon information and belief, was the employer of and had as its agent Steve Smith, who solicited and intentionally induced the trust, confidence and reliance of Plaintiff as her mortgage loan counselor and guide, and Smith and Royal Mortgage occupied the position of Plaintiff’s mortgage broker. The position of trust, confidence and reliance that Steve Smith and Royal Mortgage occupied with respect to Plaintiff and the position they occupied as Plaintiff’s mortgage broker created fiduciary duties owed by Smith and Royal Mortgage to Plaintiff which were breached by the conduct set forth above, that was done for the sake of self dealing and unjustified profits taken by Smith and Royal Mortgage through the broker fee of $1424.50.
39. Plaintiff is entitled to remedies that include imposition of a constructive trust upon the proceeds of the transaction as were paid to Defendant, Royal Mortgage and Steve Smith, to an order requiring disgorgement of all proceeds paid to Royal Mortgage and Smith and to other legal and equitable remedies to be imposed jointly and severally upon Defendant Royal Mortgage.
Count Four
UNFAIR AND DECEPTIVE ACTS AND PRACTICES
AS DEFINED IN NRSXXXXXXXXXX1(Against Defendant Royal Mortgage)
40. All paragraphs of this complaint are incorporated herein as if fully restated.
41. The acts of Defendant Royal Mortgage as described above, and particularly those acts specifically set out in Count Three, proximately damaged plaintiff, are in and affecting commerce, violate public policy, have the capacity to deceive an ordinary consumer, are unscrupulous, immoral, and oppressive, and constitute unfair and deceptive trade practices under N.RSXXXX, thereby entitling plaintiff to three times her actual damages plus a reasonable attorney’s fee pursuant to N.RSXXXXXXX§§ 75-16 and 7.
Request for ReliefWHEREFORE, Plaintiff requests:
1. That Plaintiff be awarded, pursuant to Count One, monetary damages in the amount of double recovery of any interest paid on this loan together with a Declaratory Order that the remaining interest due under the loan is forfeited.
2. That Plaintiff be awarded, pursuant to Count Two, three times her actual damages plus a reasonable attorney’s fee pursuant to NRSXXXXXXC.G.S. 75-16 and 75-16.1, upon the condition that the remedy pursuant to Count Two, is in the alternative to the relief requested pursuant to Count One, as may NRSXXXXXXC.G.S. 24-1.1E(d);
3. That Plaintiff be awarded, pursuant to Counts Three, an Order that Defendant Royal Mortgage disgorge and pay to Plaintiff all proceeds paid to it and by any party in connection with the transaction.
4. That Plaintiff be awarded, pursuant to Count Four, three times her actual damages plus a reasonable attorney’s fee to be paid by Defendant Royal Mortgage;
5. That the foreclosure action brought by the substitute trustees on behalf of Defendant JP Morgan Chase Bank against the Plaintiff be temporarily and preliminary enjoined pending a final adjudication of this action;
6. That the Court award such other relief as it deems just and proper;
7. That this case be tried by a jury.

This the ______ day of November, 2009.

Dated this [Date]

[Attorneys' address]
[Attorneys' names]

Role of the Mortgage Servicer?

Today, we are leaving the omnipresent and of course omnipotent lenders aside, and discussing the role of the servicer. Your servicer is no less omnipotent in any way. He does everything on behalf of much covered lenders. Servicer, as you may know, are not the lenders: they just service your loans. They also do an important job: they hide the real lenders from you. Servicers take out their cut and send the remaining payments to the lenders. This can be clarified better if you know the traditional role of the landlord and property manager. They keep and maintain all the record of the lenders and are accountable to them for this purpose. The property manager just manages the property, takes his cut, and sends the remaining amount along with the property audits and accounting to the landlord who generally is an absentee landlord. Again, your lenders may be in USA, somewhere in Bahamas or in southwest China. Most mortgage loans are pooled and sold to investors in the secondary market. This process is called securitization. Basically, it is little complex topic, and we may leave it for another discussion, but securitization is the root cause of our current financial problems. The loans are packaged, bundled and sold as security to various investors. Again, your servicer collects all the payments, maintain all necessary accounts, including escrow accounts for taxes, insurance, property taxes etc. The servicer receives a percentage of all this collection. The rights to service, mortgage loans can be sold and of course purchased.

Sometimes investors like Freddie Mac and Fannie Mae enters into this game with servicers to administer the mortgages. The servicers do not hold any interests in these loans which they service. You may have noticed that the servicers very intelligently and shrewdly hide the names of the lenders. There is a way to get the name of the lenders which probably only attorneys can do. Our office also can help in this regard. Oh yes, we make them disclose the names of your lenders. That is a specific job and only Nevada licensed attorney should handle it.

The original of any note sold to investors must be endorsed in blank and delivered to the investor’s document custodian. The servicer is assigned the mortgage. However, the servicer is then required to assign the mortgage to the investor, but this assignment is unrecorded. Thereafter the servicer will be the mortgagee of record to ensure all those legal notices which they continuously send to borrowers.

How to Challenge the Servicers Standing to Foreclose?

This is the most crucial question, and we are going to discuss it with little bit more details here. Okay, when a foreclosure action is initiated, the servicers’ standing to bring any action mostly depends on state statues and case laws. Here, comes the tricky part. It is common for servicers to file the foreclosure action through an investor or trust is the actual holder of note and mortgage. A challenge can be very successful from a borrower where state law clearly defines who is the holder of the note, and defines the mortgage as the real party in interest. Let us say in a state for strict foreclosure, the plaintiff must prove by a preponderance of evidence that it is the owners of the note and mortgage and the borrower defaulted on the note.

The servicer has only rights to collect mortgage payments from you. It cannot foreclose on you because this is not included or generally not included in the right of assignment from the lender to servicer. In Nicholson v. Washington Mutual the court, (2001 WL 1992418 (Tex. App. Aug. 32, 2001) (not designated for publication (deed of trust must be strictly construed. There was no authority in the deed of trust for the lender to delegate these tasks to the servicer. Some other courts have also found that the servicer has a pecuniary interest in the mortgage.

What should an Attorney Do?

The attorney (again a Nevada Licensed Attorney, not an attorney-affiliated or attorney-backed, what is this is a joke, we are not biased, we tell the truth) should examine the agreement between the servicers and holder to find out the contractual rights to foreclose, or to release the interest right. However, if the servicer brings an action under its name, without disclosing the true holder of the mortgage, the foreclosure may be delayed by court and it can be asked to identify the real party in interest. (in re Viencek, 273 B.R. 354 (Bankr. N.D.Y. 2002) delay granted by Court for servicer to amend proof of claim to identify actual creditor).

More later. How bout’ some discussion on MERS now? The servicers may have an economic interest, but MERS have none. MERS do not have any active interest and they don’ become holder of the loans. They do not have any beneficial interest in the mortgage. They are not trustee and can be nominee only, holding title to the mortgage and but not the note. Despite these shortcomings, MERS claims that they are the nominee of the lender and has the right to foreclose in their own name. They sometime commence foreclosures and later on will assign the mortgage to a servicer if the problem arises. Several courts have questioned their rights to foreclosue or have denied their right to foreclose.

How to Write a Qualified Request (Fight Back Your Foreclosure)

VIA CERTIFIED MAIL
USA Federal Bank, FSB
[Address]

Attn: Mortgage Loan Accounting Department
Re: Loan # 99999999
XYZ
820 La Sconsa Dr.
Las Vegas, Nevada 89138

Dear Sir or Madam:

We have been retained to provide as attorney and to provide legal counsel to Mr. XYZ (authorization letter enclosed) to USA Federal Bank (“FSB”). FSB is the servicer of their mortgage loan at the above address. We dispute the amount that is owed according to the Monthly Billing Statement and request that you send us information about the fees, costs and escrow accounting on our loan. This is a “qualified written request” pursuant to the Real Estate Settlement and Procedures Act (section 2605(e)).

Specifically, we are requesting an itemization of the following:

1. A complete payment history, including but not limited to the dates and amounts of all the payments our client have made on the loan to date;

2. A breakdown of the amount of claimed arrears or delinquencies, including an itemization of all fees charged to the account;

3. An explanation of how the amount due on the Monthly Billing Statement ($1,000) was calculated and an explanation of why this amount was increased to $2,000 on August 1, 2005;

4. The payment dates, purpose of payment and recipient of any and all foreclosure fees and costs that have been charged to our account;

5. The payment dates, purpose of payment and recipient of all escrow items charged to our account since [date USA Federal Bank took over the servicing];

6. A breakdown of the current escrow charge showing how it is calculated and the reasons for any increase within the last 24 months; and

7. A copy of any annual escrow statements and notices of a shortage, deficiency or surplus, sent to us within the last three (3) years.

Thank you for taking the time to acknowledge and answer this request as required by the Real Estate Settlement and Procedures Act (section 2605(e)).

Very truly yours,
ZZZZZ

How to Write a Rescission Letter? (Fight Back Your Foreclosure)

[Again, this is part of the education series and of course a dedication to "Fight Back Your Foreclosure". Come on folks Don't Just Walk Away From Your Homes. No attorney client relationship is sought and meant. As usual, see a Nevada Licensed Attorney for legal help]

To Whom It May Concern:
Dear Sir/Madam: I represent the above mentioned clients concerning the loan transaction which they entered into with Aurora Loan Services. I have been authorized by my clients to rescind this transaction and hereby exercise that right pursuant to the Federal Truth in Lending Act, 15 U.S.C. § 1635, Regulation Z § 226.23.

The disclosure statement failed to provide all the required material disclosures correctly, including, but not limited to:

(a) The broker’s fee in this transaction is a prepaid finance charge but was erroneously disclosed as part of the amount financed. Consequently, the amount financed is overstated.

(b) Unless the disclosed prepaid finance charge is the broker’s fee, the prepaid finance charge and finance charge are understated.

(c) The disclosed payments do not equal the total of payments.

The security interest held by Countrywide is void upon our rescission. See 15 U.S.C. § 1635; Regulation Z § 226.23. Pursuant to the Regulation, you have twenty days after receipt of this notice of rescission to return to my clients all monies paid and to take action necessary or appropriate to reflect termination of the security interest.

My clients are hereby making a commitment of limited duration which will allow them to tender an amount due after appropriate credits are made by you to their account. Please be advised that if you do not cancel the security interest and return all consideration paid by our client prior to the expiration of our loan commitment, you will be responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a).

We are prepared to discuss a tender obligation, should it arise, and satisfactory ways in which my clients may meet this obligation. Please be advised that if you do not cancel the security interest and return all consideration paid by our client within 20 days of receipt of this letter, you will be responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a).

Until the expiry of twenty days, we still like to hear any proposals of loan modification including a reduction in their principal consistent with the current appraised price. Please also send me a copy of the clients’ payment history and other document showing the loan disbursements, loan charges, payments made, and current principal balance due.

Sincerely,

XYZ

Mortgage Help Not Working

Federal government changing mortgage assistance programs after efforts fall short

WASHINGTON (AP) — Two government programs designed to help hundreds of thousands of delinquent borrowers avoid foreclosure are having negligible effects, a top Bush administration official acknowledged Wednesday. One program will be revamped immediately, and the other possibly in the near future. Steve Preston, secretary of Housing and Urban Development, said both private industry and government efforts have fallen short as the foreclosure crisis has exceeded all but the most dire forecasts.

“The response has not kept up with the need,” Preston said in a speech the National Press Club. “Many Americans who should be getting help are not getting help.”

The “FHASecure” program announced in August 2007 has only assisted about 4,000 delinquent borrowers and “has really not met the need,” Preston said.

The other, called “Hope for Homeowners,” has received just 111 applications from distressed homeowners since it was launched Oct. 1.

“Few lenders have actually signed up, and few borrowers are submitting applications,” Preston said. “So clearly we needed to make meaningful changes.”

The HUD chief outlined changes intended to encourage more participation in the Hope for Homeowners program, which refinances cash-strapped borrowers into new government-backed mortgages.

He also said that housing officials are reviewing whether additional changes to FHASecure might help that program gain traction.

Last week, hundreds of lenders gave HUD officials an earful of criticism about the Hope for Homeowners program. They blamed drawbacks in the program’s original design for their lack of participation. Among their complaints: lenders were required to absorb large losses on the delinquent loans.

Under the new rules, lenders would be allowed to take a smaller loss. New loans can be made for 96.5 percent of the home’s current value, rather than the previous level of 90 percent.

Even with the changes, borrowers would still have to pay back half of any appreciation back to the government if they sell their house or refinance.

The new guidelines only apply to borrowers who are spending up to 31 percent of their pretax income on their home loans. Borrowers who are spending a larger share of their incomes are required to have at least 10 percent in home equity.

Preston also said that lenders who hold home equity loans or other second mortgages must not block the transaction, but will receive an small payment and a share of any eventual appreciation in return for doing so.

In addition, lenders will be allowed to create new 40-year mortgages, rather than the traditional 30-year term, which will lower the borrowers’ monthly payments but cost them more in interest over the life of the loan.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, called the changes “very helpful steps and reflect a commitment to meeting the need for more aggressive action to diminish foreclosures.”

However, consumer advocate John Taylor of the National Community Reinvestment Coalition said the changes “offer sweeteners for the lender and nothing for the homeowner.”

Preston did not release updated projections of how many homeowners are expected to participate, but officials hope the new guidelines will help the program reach its original estimate of helping 400,000 distressed borrowers over the next three years.

 

Complaint to Enjoin Impending Foreclosure (Only Educational Purposes)

<em>This is a sample complaint to enjoin your impending foreclosure and it is meant for only education purposes in this foreclosure crisis facing the state of Nevada. Again, and as usual, please consult a Nevada Licensed Attorney for any further questions.

[Names of attorneys]
[Attorneys' business address]

District Court
Clark County, Nevada[Plaintiff's name],
Plaintiff,
vs.
[Defendant's name],
Defendant ))
)

) Case No.: [Case number]

[Pleading title]

COMPLAINT
Plaintiff, complaining of the defendants and in support of her motion for injunctive relief, alleges as follows:
Nature of Action
1. Plaintiff brings this action for damages and to enjoin a foreclosure proceeding instituted against her by the current holder of her mortgage loan, JJJ.P. Morgan Chase Bank. She contends that the originator of the loan in question, R & B Funding Group, Inc. acted unlawfully in connection with the origination of a mortgage loan made to her in April, 2006 by failing to comply with Nevada laws prohibiting the financing of fees in excess of five percent of the loan amount, and by failing to ensure that she was provided with financial counseling prior to consummating this “high cost” loan. Plaintiff further contends that Royal Mortgage & Financial Service Centers, Inc. which served as her mortgage broker, breached its fiduciary duty to her. Plaintiff further alleges that the practices of R & B Funding Group, Inc. as well as New Royal Mortgage & Financial Service Centers, Inc. constituted unfair and deceptive practices.
Parties
2. Plaintiff is a citizen and resident of the town of Consumerville in Las Vegas, Nevada.
3. Defendant, R & B Funding Group, Inc., D/B/A National Builders (hereinafter “R & B”) is, upon information and belief, a Nevada Corporation and originated Plaintiff’s mortgage loan together with a mortgage broker, Royal Mortgage & Financial Service Centers, Inc., pursuant to arrangements made by R & B.
4. Defendant, JJJ.P. Morgan Chase Bank (hereinafter “J.P. Morgan”), is, upon information and belief, the creditor and/or the trust administrator of a trust that is assignee of Plaintiff’s loan, or otherwise holds Plaintiff’s loan.
5. Defendant New Royal Mortgage & Financial Service Centers, Inc. (hereinafter “Royal Mortgage”), is, upon information and belief, a corporation organized under the laws of North Carolina and performed mortgage brokerage and/or loan origination services pursuant to arrangements made by R & B at times pertinent to the events referenced in this complaint.
6. Defendants XXXXXXXXXXX and XXXXXXXX are parties to this action only in their capacity as Substitute Trustees of Plaintiff’s Deed of Trust, and the only relief sought against Defendant Weld and/or Smith is injunctive relief enjoining foreclosure of the deed of trust.
Factual Allegations
7. Plaintiff Benice Consumer is an 92-year-old widow. She is in failing health and has limited understanding of financial transactions, including the instant transaction.
8. Consumer lives in a modest home on Main Road in Consumerville, in North Las Vegas, Nevada. She and her late husband purchased this home almost fifty years ago, and she has lived there ever since.
9. In the spring of 2003, Consumer’s son, Son Consumer contacted a mortgage broker about refinancing Consumer’s existing mortgage. At that time, Consumer’s home was secured by a mortgage with Bank of America, Inc.
10. On information and belief, John Consumer contacted an individual named Steve Smith, who, upon information and belief, was employed by Defendant mortgage broker Royal Mortgage.
11. Sometime in March or April 2003, XXXXXXX Smith contacted Consumer by calling her on the telephone and informed her that he would arrange for the refinancing of Plaintiff’s home loan.
12. Steve Smith took information from Plaintiff over the telephone concerning her finances, and upon information and belief, prepared loan application documents for Plaintiff in order to secure a loan with Defendant R & B.
13. At all times relevant hereto, Steve Smith was an employee and agent of defendant Royal Mortgage.
14. Upon information and belief, all contacts with Steve Smith and/or Royal Mortgage, were transacted over the telephone.
15. On approximately April 18, 2003, a loan closing was conducted in Consumer’s living room. On information and belief, a representative from the law firm of Brock, Scott & Ingersoll went to Consumer’s home and asked her to sign many documents. Upon information and belief, Defendant R & B, and not Consumer, selected this law firm to be the settlement agent in this transaction.
16. At the time that the loan closed, Consumer signed a HUD-1 Settlement Statement dated April 18, 2002, which listed the various loan related expenses.
17. The amount of the loan was $37,000.00.
18. Among the various fees charged in connection with Plaintiff’s loan included a “loan origination fee” of $395, a “mortgage broker fee” of $1424.50, a “settlement fee” of $100, a “title search” fee of $425, a “lender amount” of $35, and a “doc prep” fee of $100.
19. According to the Federal Truth-in-Lending Act Disclosure Statement signed at the closing, Consumer was to pay monthly payments of $298.50 for 30 years. The total of payments as disclosed is $107,460.00.
20. The total of points and fees paid by plaintiffs at or before the loan closing exceeded 5% of the “total loan amount,” as that term is defined by NRSXXXXXX were financed within the loan.
21. The loan was secured against title to plaintiff’s principal dwelling, located at Main Road, Consumerville, North Carolina, by a Deed of Trust which is recorded in Book 00 at Page 00 of the Orange County Registry.
22. The proceeds of the loan were primarily for personal, family, or household purposes.
23. Plaintiff was not advised that the loan was a “high cost-home loan” as defined in NRSXXXXX.
24. Upon information and belief, no party to the transaction received a certification from a counselor approved by the Nevada Housing Finance Agency verifying that plaintiff had been counseled as to the advisability of the loan transaction.
25. Plaintiff was not counseled by a counselor approved by the Nevada Housing Finance Agency as to the advisability of the loan transaction.
26. Defendant, R & B had a duty to inform plaintiff that the loan transaction was a “high-cost home loan” and, as such, that this loan required the various counseling protections and safeguards embraced by Chapter 24 of the North Carolina General Statutes.
27. Defendant, R & B breached this duty and the plaintiff was directly, proximately and foreseeably damaged by the breach of this duty.
28. Upon information and belief, defendant Royal Mortgage did not provide bona fide or legitimate mortgage broker services to plaintiff, even though plaintiff was charged $1424.50 by defendant, Royal Mortgage, for mortgage broker services.
29. The loan transaction in question was intended to refinance Plaintiff’s then existing first mortgage with Bank of America in the amount of $26,635.37, as indicated by line 1513 on the HUD-1 Settlement Statement. On information and belief, a check was disbursed by the closing agent three days after the loan closing to Bank of America, but said check was neither cashed nor applied to Plaintiff’s mortgage account at Bank of America. Bank of America did not satisfy the deed of trust, but instead continued to withdraw monthly payments from Plaintiff’s checking account and applied them to her old mortgage account. Plaintiff attempted to make payments to the servicer of the mortgage that is the subject of this action, but as money was being withdrawn from her checking account each month by Bank of America, her checks on the new mortgage bounced.
30. On or about October 17, 2002, Defendant J.P. Morgan Chase Bank as Trustee, through its substitute trustee, Defendants Weld and/or Smith, filed a foreclosure action against the plaintiff, alleging that the plaintiff is in default in payments under the terms of the April 2002 loan contract. The foreclosure action is filed as 02 SP 000.
31. Plaintiff, who is unsophisticated, did not realize the bank’s error. After getting several collection calls and letters, she finally sought the help of a social worker from the Orange County Department of Aging, who in turn sought assistance from the North Carolina Attorney General’s Consumer Protection Division. As a result of these inquiries, the closing agent resubmitted a check to Bank of America on October 29, 2002, and upon information and belief, Plaintiff’s prior mortgage was satisfied shortly thereafter.
32. Despite being apprised of the circumstances surrounding the failure of the April 2002 lender to pay off Plaintiff’s prior mortgage, the substitute trustee refused to delay or stop the foreclosure proceedings. The foreclosure hearing before the clerk was scheduled for November 18, 2002.
Count One
VIOLATION OF CHAPTER 24 OF THE Nevada (Against Defendant R & B, and against J.P. Morgan Chase Bank as

Trustee in its capacity as assignee or holder of interest in Plaintiff’s loan)
33. All paragraphs of this complaint are incorporated herein as if fully restated.
34. The loan transaction in question was: a “high-cost home loan” which did not exceed the lesser of (i) the conforming loan size limit for a single family dwelling as established by FNMA or (ii) three hundred thousand dollars; and was incurred by natural persons primarily for personal, family, or household purposes; and was secured by a deed of trust against property occupied as the borrower’s principal dwelling as defined in XXXXXXXXXX. With willful and corrupt intent, the lender, Defendant, R & B, and/or its agents, made and/or arranged the loan without the counseling required under Chapter XX of the Nevada General Statutes and specifically under XXXXXXXXXXXXThe loan was made without certification from a counselor approved by the North Carolina Housing Finance Agency that the borrowers received counseling on the advisability of the loan transaction and the appropriate loan for the borrowers. These acts and practices entitle Plaintiff to the remedies set out in XXXXXXXXX. Defendant R & B, together with Defendants J.P. Morgan, as Trustee, are liable as holders of interests in Plaintiff’s loan.
Count TwoUNFAIR AND DECEPTIVE ACTS AND PRACTICES
AS DEFINED IN NRS xxxxxxxxxxxxxxx(Against Defendant R & B, and against J.P. Morgan Chase Bank as Trustee in its capacity as assignee or holder of interest in Plaintiff’s loan)

35. All paragraphs of this complaint are incorporated herein as if fully restated.
36. Defendants’ acts as described above, and particularly those acts specifically set out in Count One, proximately damaged Plaintiff, are in and affecting commerce, violate public policy, have the capacity to deceive an ordinary consumer, are unscrupulous, immoral, and oppressive, and constitute unfair and deceptive trade practices under NRSXXXXXXXXXX1, thereby entitling Plaintiff to three times her actual damages plus a reasonable attorney’s fee pursuant to NRSXXXXX and XXX. The remedy requested pursuant to this count which relates to acts or practices described in Count One is plead in the alternative to the relief requested pursuant to Count One, as prescribed in XXXXXXE(d). Defendant R & B, together with Defendants J.P. Morgan are liable as holders of interests in Plaintiff’s loan.

Count Three
BREACH OF FIDUCIARY DUTIES(Against Defendant Royal Mortgage)
37. All paragraphs of this complaint are incorporated herein as if fully restated.
38. Defendant, Royal Mortgage, upon information and belief, was the employer of and had as its agent Steve Smith, who solicited and intentionally induced the trust, confidence and reliance of Plaintiff as her mortgage loan counselor and guide, and Smith and Royal Mortgage occupied the position of Plaintiff’s mortgage broker. The position of trust, confidence and reliance that Steve Smith and Royal Mortgage occupied with respect to Plaintiff and the position they occupied as Plaintiff’s mortgage broker created fiduciary duties owed by Smith and Royal Mortgage to Plaintiff which were breached by the conduct set forth above, that was done for the sake of self dealing and unjustified profits taken by Smith and Royal Mortgage through the broker fee of $1424.50.
39. Plaintiff is entitled to remedies that include imposition of a constructive trust upon the proceeds of the transaction as were paid to Defendant, Royal Mortgage and Steve Smith, to an order requiring disgorgement of all proceeds paid to Royal Mortgage and Smith and to other legal and equitable remedies to be imposed jointly and severally upon Defendant Royal Mortgage.
Count Four
UNFAIR AND DECEPTIVE ACTS AND PRACTICES
AS DEFINED IN NRSXXXXXXXXXX1(Against Defendant Royal Mortgage)
40. All paragraphs of this complaint are incorporated herein as if fully restated.
41. The acts of Defendant Royal Mortgage as described above, and particularly those acts specifically set out in Count Three, proximately damaged plaintiff, are in and affecting commerce, violate public policy, have the capacity to deceive an ordinary consumer, are unscrupulous, immoral, and oppressive, and constitute unfair and deceptive trade practices under N.RSXXXX, thereby entitling plaintiff to three times her actual damages plus a reasonable attorney’s fee pursuant to N.RSXXXXXXX§§ 75-16 and 7.
Request for ReliefWHEREFORE, Plaintiff requests:
1. That Plaintiff be awarded, pursuant to Count One, monetary damages in the amount of double recovery of any interest paid on this loan together with a Declaratory Order that the remaining interest due under the loan is forfeited.
2. That Plaintiff be awarded, pursuant to Count Two, three times her actual damages plus a reasonable attorney’s fee pursuant to NRSXXXXXXC.G.S. 75-16 and 75-16.1, upon the condition that the remedy pursuant to Count Two, is in the alternative to the relief requested pursuant to Count One, as may NRSXXXXXXC.G.S. 24-1.1E(d);
3. That Plaintiff be awarded, pursuant to Counts Three, an Order that Defendant Royal Mortgage disgorge and pay to Plaintiff all proceeds paid to it and by any party in connection with the transaction.
4. That Plaintiff be awarded, pursuant to Count Four, three times her actual damages plus a reasonable attorney’s fee to be paid by Defendant Royal Mortgage;
5. That the foreclosure action brought by the substitute trustees on behalf of Defendant JP Morgan Chase Bank against the Plaintiff be temporarily and preliminary enjoined pending a final adjudication of this action;
6. That the Court award such other relief as it deems just and proper;
7. That this case be tried by a jury.

This the ______ day of November, 2009.

Dated this [Date]

[Attorneys' address]
[Attorneys' names]

Complaint Against Servicer of Loan (Education purposes only)

This is just a sample complaint for educational purposes and it is not intended to be used in its current form. For all questions, please contact a Nevada Licensed attorney.

———————–
XXXXXXXXXXXXX, Esq.
Nevada Bar No. XXXXXX
XXXXXXXXX
XXXXX Mead Blvd.
Las Vegas, Nevada, 89128
(702) 000-000(Phone)
(702) 384-0000 (Fax)
Attorney for Plaintiffs

DISTRICT COURT
CLARK COUNTY NEVADACCCCCCCC,

Plaintiffs,

Vs.

SLB,

Defendants.
)
) Case No.:
)
COMPLAINT
1. This is an action by a low-income homeowner against a mortgage servicing company seeking a proper accounting of her mortgage and statutory damages under the Fair Debt Collection Practices Act and the Real Estate Settlement Procedures Act.
2. Jurisdiction over this matter is conferred upon this Court by 12 U.S.C. 2614, 15 U.S.C. 1692 and 28 U.S.C. 1331. The court has supplemental jurisdiction over her state law claims.
3. Venue lies in this judicial district in that the events which gave rise to this claim occurred here and the property which is the subject of the action is situated within this district.
4. Plaintiff Mrs. XXXXXX is a natural person residing at [Address].
5. The Defendant, BillClinton Loan Servicing, LP (“BillClinton”), is a corporation with its principal offices at XXXXXXX West Central Drive, xxxxxxx Texas. BillClinton is the servicing agent for the holder of Mrs. XXXXXX’s mortgage. The mortgage on Mrs. XXXXXX’s home is held by WFM Bank Minnesota, NA as the trustee for an investor-owned trust that holds a large pool of mortgage loans sold by Owens Federal Savings Bank.
6. Andrea XXXXXX and her husband, Joe XXXXXX, purchased their home in North LAS VEGAS in 1994.
7. In December 1998 Mr. and Mrs. XXXXXX refinanced their mortgage and entered into a loan with XXXXX, Inc., trading as BYunnyside Mortgage Company. The mortgage was later sold to Owens FraUDERl Savings Bank, who in turn sold it to XXXXXBank of Minnesota, trustee. Owens continued to service the mortgage.
8. Mrs. XXXXXX eventually filed a civil suit against Owens, seeking to rescind the 1998 loan and seeking other relief.
9. The civil suit against Owens was settled by a December 2000 settlement and loan modification agreement that, among other things, called for Owens to reduce the loan principal to $25,984 and the interest rate to 8%, and for Mrs. XXXXXX to make monthly payments of principal and interest of $190.66. A copy of the December 2000 loan modification agreement is attached as Exhibit “A”.
10. At some time on or about April 29, 2002 the servicing of the mortgage loan was transferred from Owens Federal Savings Bank to Defendant BillClinton.
11. Shortly after the servicing transfer, BillClinton demanded that Mrs. XXXXXX make monthly payments of $394.79, which was the payment prior to the December 2000 modification.
12. On May 21, 2002, Mrs. XXXXXX, through her lawyer, reminded BillClinton of the terms of the loan modification, including the $190.66 payment amount, enclosed another copy of the modification agreement, and asked BillClinton to correct Mrs. XXXXXX’s account records accordingly.
13. Nevertheless, BillClinton failed and refused to revise its account records to reflect the loan modification agreement.
14. On or about July 21, 2004 BillClinton mailed a statement to Mrs. XXXXXX incorrectly asserting that the mortgage payments were delinquent.
15. On or about August 10, 2004 Mrs. XXXXXX wrote to BillClinton disputing the alleged delinquency and asking BillClinton to correct its account records to reflect that her payments of $190.66 were paid up to date.
16. On August 18, 2004 BillClinton acknowledged Mrs. XXXXXX’s written request for account information and adjustments. On or about October 8, 2004, BillClinton wrote to Mrs. XXXXXX acknowledging the loan modification and asserting that BillClinton’s records had been updated to reflect the loan modification. The same letter stated that Mrs. XXXXXX’s payment was in fact $190.66, and was due for October 1, 2004, in other words, her payments were current.
17. Mrs. XXXXXX subsequently received a letter dated September 22, 2004, asserting that she had an escrow deficit of $5285.17, and that effective November 1, 2004 her mortgage payment would increase to 455.8 (sic).
18. At about the same time in September 2004 Mrs. XXXXXX received her monthly statement dated September 15, 2004 showing the amount due by October 1 as $190.66. This statement also, however, reflected an escrow deficit of $5,285.17 and “other fees due” of $40,927.12. No explanation was provided for the escrow deficit or the other fees.
19. In November, 2004, Mrs. XXXXXX received a letter from BillClinton asserting that her loan was past due for November and December, 2004, and that the total due was $1461. No explanation was provided for this curious arithmetic. Meanwhile Mrs. XXXXXX continued sending the $190.66 monthly payments to BillClinton.
20. In December 2004 Mrs. XXXXXX received her monthly statement dated December 15 which called for a current payment amount of $666.96, and a total amount due by January 1 2005 of $2,118.43. The “other fees due” had increased slightly to $40,936.12.
21. Mrs. XXXXXX received another letter from BillClinton dated January 5, 2005 asserting that she owed three payments, and must send $2,444.96 “today”. This amount was apparently calculated on the same basis as the December statement amount, with the January 17 late fee added in advance. A copy of the January 5 letter is attached as Exhibit “B”. This letter also falsely stated or implied that foreclosure was imminent and could begin “immediately” or “today” if payment was not made.
22. Also dated January 5, 2008 were two additional letters sent by BillClinton. One, entitled “Notice of Default and Intent to Accelerate”, demanded $2,127.96, and stated that after 45 days BillClinton could accelerate the mortgage balance and foreclose the property. This letter is attached as Exhibit “C”.
23. The other January 5, 2005 letter, entitled “Appendix A”, is similar to the notice required by Pennsylvania law prior to foreclosure. This letter is attached as Exhibit “D”.
24. Exhibit D says that the monthly payments due were in the amount of $455.80 each, contradicting the statements calling for $666.96. Exhibit D also contains mathematically inconsistent amounts needed to be paid by Mrs. XXXXXX, on page three. The letter asserts that three payments of $455.80 are due, plus $19.06 in late charges and $319.18 in deferred late charges. These amounts total $12805.64. However the total amount demanded is $2,127.96.
25. Mrs. XXXXXX received another letter dated January 27, 2005, purporting to respond to her attorney’s written request for account information. Exhibit “E”. The January 27 letter states that the payment amount is $666.96 effective October 1, and is attributable to advances for insurance and taxes. The letter includes an escrow analysis that makes reference to an annual payment of $417.39 for insurance, but does not explain the escrow deficit in excess of $5,000.
26. It is mathematically impossible for annual insurance payments of $417.39 from 2002 to 2004 to accumulate to a deficit of $5,000. Mrs. XXXXXX pays her own real estate taxes, which are about $500 per year. Even if BillClinton had paid the taxes from 2002 through 2004, that would account only for $1,500 of the asserted escrow advances.
27. The January 29 letter also includes a payment history, but only from September 2004 through December 2004. The history printout included is incomprehensible, does not identify transactions as payments, advances or charges, does not begin to address the questions and concerns expressed by Mrs. XXXXXX and her attorney, and is completely unresponsive to her qualified written requests, which asked for an explanation of the $5,000 escrow deficit.
28. On or about May 18, 2005 BillClinton, through its attorneys Utrech Law Office, P.C., mailed a “Reinstatement Quote” to Mrs. XXXXXX. The May 13, 2005 reinstatement is attached as Exhibit “F”. The total amount claimed to be due is shown as $47,103.60. This document calls for monthly payments of $362.61, an amount that does not correspond to the $190.66 payment for principal and interest, the $666.96 payment shown on the December statement, or the $455.80 referred to on Exhibit D.
29. Exhibit E includes a demand for payment for numerous inspections of the property, despite the fact that Mrs. XXXXXX has been in constant communication with BillClinton, has a working telephone, and BillClinton has no basis to believe there is any danger of the property being abandoned.
30. Exhibit E includes a demand for $400 for a BPO, that is, a broker price opinion. This amount is not properly chargeable to Mrs. XXXXXX under the contract or Pennsylvania law.
31. Having no way to determine the correct amount due, Mrs. XXXXXX sent $1,400 to BillClinton on May 6, 2005 (enough to cover the principal and interest payments due from November 2004 through May 2005) in an effort to show her good faith and desire to maintain her mortgage payments.
32. BillClinton has, for the past two years, provided Mrs. XXXXXX with inconsistent, incomprehensible statements and correspondence and has made it impossible for her to maintain her monthly mortgage payments. To the extent BillClinton has made advances for taxes and insurance BillClinton has failed to identify the amounts advanced in a clear and simple manner and to establish a reasonable plan for Mrs. XXXXXX to repay those amounts.
33. Mrs. XXXXXX has suffered severe emotional distress and anxiety as a result of BillClinton’s conduct, and has expended money to travel to and from her attorney’s office and to copy documents in her vain efforts to resolve this account dispute.
COUNT I FAIR DEBT COLLECTION PRACTICES ACT
34. BillClinton was a debt collector within the meaning of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692a, at the time it became the servicing agent for Mrs. XXXXXX’s loan, in that it regularly collects debts owed to another, and the debt was asserted by BillClinton to be contractually in default at the time it became the servicer of the debt.
35. Each of the letters described above incorrectly stated the amount and the status of Mrs. XXXXXX’s debt.
36. BillClinton failed to provide verification of the alleged debt to Mrs. XXXXXX in response to her timely written request for such written verification.
37. Due to the repeated and continuing violations of the FDCPA, Mrs. XXXXXX is entitled to actual and statutory damages under15. U.S.C. 1692k.
COUNT II
RESPA 38. BillClinton is a servicer of a federally related mortgage loan within the meaning of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605.
39. Each of Mrs. XXXXXX’s (and her attorney’s) written requests for information about her account and correction of BillClinton’s numerous errors were “qualified written requests” within the meaning of RESPA.
40. BillClinton failed to respond in a proper and timely way to Mrs. XXXXXX’s “qualified written requests” for information about, and corrections to, her mortgage account, in violation of 12 U.S.C. § 2605(e).
COUNT III
XXXXXXXXXX ACT 6 of 1974
41. Mrs. XXXXXX’s mortgage is a “residential mortgage obligation” covered by XXXXXXXX Act 6 of 1974, 41 Pa. Stat. 101-605.
42. BillClinton has repeatedly failed to provide Mrs. XXXXXX with an accurate notice of the amount required to cure her mortgage default, as required by 41 P.S. 403, and has improperly demanded payment of improper amounts and has thwarted her right to cure her default, under 41 P.S. 404, and has applied some of her payments to amounts not due under her mortgage and Act 6.
WHEREFORE, Plaintiff requests judgment in her favor and against BillClinton for three times the amount of the illegal charges.
COUNT IV
XXXXXX PROTECTION LAW
43. BillClinton’s conduct described above constituted unfair and deceptive acts and practices, as defined by 73 Pa. Stat. § 201-2(4).
44. Mrs. XXXXXX has suffered an ascertainable loss of money as a result of BillClinton’s unfair and deceptive practices.
WHEREFORE, Plaintiff requests that the court enter judgment in her favor and against defendants, for a proper accounting and application of her mortgage payments and for actual, statutory, treble and/or punitive damages, and attorney’s fees and costs, along with any other and further relief as the court deems just and proper.
Attorney for Plaintiff
____________________

Another Super Complaint from Ohio

http://livinglies.files.wordpress.com/2009/01/whittiker_v_deutsche_bank_complaint.pdf

Sample Answer to Complaint of Illegal Detainer

This is a sample answer which I used for one of my client. This is not good for all the situations. Furthermore, this is only and exclusively meant for education purposes and not a substitute for a licensed (and that too a Nevada Licensed Attorney) attorney help. Please do not use it for any other purpose other than educating yourself for the current homeowners issues. Only hire a licensed attorney for all such questions.————

XYZ
Attorney for Plaintiff
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXX
xxxxxxx

Justice Court,
CLARK COUNTY NEVADA

US BANK NATIONAL ASSOCIATION AS INDENTURE TRUSTEE,
Plaintiff,

Vs.

XYZZZ, and DOE OCCUPANTS,1 through X, inclusive,
Defendant. Case No.:

Dept No.: 12

DEFENDANT ANSWER FOR UNLAWFUL DETAINER AND DAMAGES

Upon reading the Complaint of Plaintiff US Bank National Association As Indenture Trustee (“Plaintiff”) charging Defendant with unlawful detainer, and sufficient cause appearing therefore, Defendant XYZZZ through his attorney XYZZZAAA of the Law Office of XYZZZ _____________________, Las Vegas, Nevada 89128, hereby submits its answers and denies being in an unlawful detainer, as follows.
WHEREFORE, Defendant prays that this Court enter an Order: Dismissing the Complaint in this case with prejudice and entering judgment in favor of Defendant and against Plaintiff. Alternately, this Court should not proceed without the proper Joinder of Proper Party. Furthermore, because the complexity of issues involved, Defendant requests the transfer of this case to a more appropriate forums like District Court, Clark County, Nevada, US District Court, Las Vegas, Nevada.
1. The Defendant inter alia requests a trial date on the merits of this complaint. This complaint requires complete hearing because there are various issues of jurisdiction, joinder of proper and indispensable parties, breach of contract, violations of RESPA, TILA, HOEPA, as well as breach of fiduciary duties and deceptive trade practices by Plaintiff US Bank National Association as Indenture Trustee, and American Home Mortgage Servicing (hereafter “AHM”).
2. Furthermore, Defendant likes to file motion to include joinder of the proper and indispensable parties AHM and Dux Fin. in this lawsuit. AHM is a proper party in this lawsuit as the original contract for this loan was between Defendant and AHM. Dux Fin. is a mortgage broker and worked for XYZ Homes, Inc. Defendant US National does not carry a Note, had not shown a note in their possession, and is an unauthorized party in this potentially complex case. Furthermore, because of the domicile of US Bank in California, domicile and incorporation of AHM, and the presence of other federal subject matter issue, this case should be a proper case for a federal subject matter jurisdiction. The defense of Defendant shall be fully illustrative in a proper forum for this complex case.
3. Duxxxford Fin. is a mortgage broker affiliated with William Lyon Home and their address is Duxford Fin. Inc._________________, Nevada 89119-3624. Duxx Fin. is a Proper and Indispensable Party in this case.
4. Plaintiff US National Association as Indenture Trustee (hereafter “Indenture Trustee”) has initiated this Complaint on behalf of AHM. Defendant cannot replace a proper and indispensable party in this lawsuit. Plaintiff Indenture Trustee cannot be a proper party in this action because Plaintiff and Defendant have no contractual agreement at any time. If there was any contract, it was only between American Home Mortgage Servicing (“AHM”) and Defendant.
SPECIFIC OBJECTIONS
5. Defendant admits the facts given in Paragraph 1.
6. Defendant lacks knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraph 2 of the Complaint, and, upon that basis, denies each and every allegations of said paragraph.
7. Defendants deny the facts contained in paragraph 3 of the Complaint owing to lack of knowledge.
8. Defendants deny the allegations contained in paragraph 4 of the Complaint and have no knowledge or beliefs of any information to that effect.
9. Defendants deny the allegations contained in paragraph 5 of the Complaint and have no knowledge or beliefs of any information to that effect.
10. Defendants deny the allegations contained in paragraph 6 of the Complaint and have no knowledge or beliefs of any information to that effect.
11. Defendants deny the allegations contained in paragraph 7 of the Complaint and have no knowledge or beliefs of any information to that effect.
12. Defendants deny the allegations contained in paragraph 8 of the Complaint and have no knowledge or beliefs of any information to that effect.
FACTUAL OBJECTIONS
13. Proper Party AHM has refused to honor Modification Agreement entered into between the parties and as a result has overcharged the Plaintiff and failed to properly credit payments on his mortgage account. In addition to its breach of contract Proper Party AHM has engaged in abusive, deceptive and unfair debt collection practices in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.
14. Proper Party AHM has also failed to make appropriate corrections to the mortgage account despite Plaintiff’s dispute of the overcharges and misapplication of payments, in violation of the mortgage servicer provisions of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605. This Answer can be amended and can be instituted under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (“RESPA”), seeking to recover actual damages, treble damages, and court costs, by reason of both Defendant and Proper Party AHM’s’ violations of RESPA and Regulation X, 24 C.F.R. § 3500.1 et seq. (“Regulation X”).
15. Proper Party AHM has breached fiduciary duty, and interfered in contractual relationship, for money had and received, and also violated the Nevada Deceptive Trade Practices (“UDAP”).
16. Proper Party AHM negligently, willfully, and intentionally offered and made illicit payments to various loan officers including the loan agency for this loan and influenced to abandon its statutory, contractual and fiduciary duties to the Defendant and to serve Proper Party AHM’s interests instead, by steering Defendant for a mortgage loan.
17. Proper Party AHM has refused to follow any federal guidelines including various loan modification program announced by federal government including HOPE, Federal Programs.
18. Proper Party AHM is a corporation with its principal place in Irving Texas as follows:
American Home Mortgage Servicing Inc.,
_______________________________
________________________________TX 75063-1730.

19. Proper Party AHM maintains a website and provides interstate information on under: https://online.AHM3.com/servicing/AHM_aboutus.asp, as follows:
“American Home XXXXX Mortgage Servicing Inc. (AHM) provides services to homeowners and loan investors. Whether a borrower holds a traditional, Alt A, payment option or subprime loan, our highly trained experts are committed to providing high levels of service as they work to address each customer’s needs. Similarly, we carefully manage the loan portfolios of investors, giving them the attentive service that they appreciate.

Established in April 2008, XXXXXAHM brought together two mortgage loan servicing platforms, each with strong capabilities and specialized expertise. By multiplying these strengths, the company has achieved more than the sum of its parts – it has taken servicing to new levels. With a multibillion portfolio under management, AHM is one of the country’s largest servicers of Alt-A and subprime loans.

AHM is based in Irving, Texas, with servicing operations in Irvine, Calif., Jacksonville, Fla., and Pune, India. It is funded by Wilbur Ross & Co. LLC., a private equity firm based in New York, and holds membership in the Mortgage Bankers Association and the HOPE NOW Alliance. Differentiated by a focus on creative solutions and innovative ideas, the company credits its success to a talented team who do the best possible job for its customers.”

20. At all times material to this action, Proper Party AHM regularly transacted business in the State of Nevada.
21. Proper Party AHM is a “debt collector” of the Plaintiff’s “debt” as those terms are defined in the FDCPA, 15 U.S.C. § 163. At all times material to this action, Defendant AHM was and is a corporation organized and existing under the laws of the state of Texas with its principal place of business located as above.
22. Proper Party AHM is authorized to receive service of process through its registered agent, “The Corporate Trust Company of Nevada, 6100 Neil Road, Suite 500, Reno NV 89511”.
23. Proper Party AHM is a loan “servicer” of the Plaintiff’s “federally related mortgage loan” as those terms are defined in the RESPA, 12 U.S.C. § 2602(1) and 12 U.S.C. § 2605(i)(2).
24. Plaintiff US National Bank is not a proper party in this lawsuit, and cannot be a proper party because it has no contractual obligation with Defendant and is not the proper assignor of the property at _____________________ Drive, Las Vegas Nevada 89138.
25. Without joining Proper Party AHM, this law suit cannot be adjudicated properly on meritorious grounds.
FIRST AFFIRMATIVE DEFENSES
26. The Complaint fails to state a claim upon which relief can be granted.
SECOND AFFIRMATIVE DEFENSE
27. Plaintiff’s claims are barred, in whole or in part, by the applicable statutes of limitations, statutes of repose, and/or the doctrine of laches.
THIRD AFFIRMATIVE DEFENSE
28. If Plaintiff suffered any damages as alleged, which is specifically denied, such injuries were caused, in whole or in part, by the actions or inactions of third parties, and not Defendant and for which Defendant is not liable.
FOURTH AFFIRMATIVE DEFENSE
29. Defendants are not liable because it did not act with requisite intent.
FIFTH AFFIRMATIVE DEFENSE
30. Plaintiff’s claims are barred under the doctrine of estoppel and/or waiver.
SIXTH AFFIRMATIVE DEFENSE
31. Plaintiff’s damages, if any, are speculative, and thus are not recoverable.
SEVENTH AFFIRMATIVE DEFENSE
32. Defendants acted at all times in good faith and, therefore, cannot be liable for punitive or exemplary damages.
EIGHTH AFFIRMATIVE DEFENSE
33. Plaintiff did not act in an actionable manner because there is a genuine good faith issue in dispute regarding the amounts.
NINTH AFFIRMATIVE DEFENSE
34. Defendants are not liable because they did not act with requisite intent.
TENTH AFFIRMATIVE DEFENSE
35. Plaintiff’s damages, if any, are speculative, and thus are not recoverable.
ELEVENTH AFFIRMATIVE DEFENSE
36. Defendant did not act in an actionable manner because there is a genuine good faith issue in dispute regarding the amounts.
TWELVETH AFFIRMATIVE DEFENSE
37. This defendant incorporates herein his statement of facts set out above and affirmatively defends this foreclosure based on the Plaintiff’s failure to comply with the forbearance, mortgage modification, and other foreclosure prevention loan servicing requirements imposed on Plaintiff and the subject FHA mortgage by federal regulations promulgated by HUD, pursuant to the National Housing Act, 12 U.S.C. § 1710(a). As a result, Plaintiff has failed to establish compliance with a statutory and contractual condition precedent to this foreclosure because of Plaintiff’s failure to comply with the federal regulations more particularly described below:
a. Defendant defaulted on this residential mortgage which is the subject of this cause due to reasons beyond his control due to a period of unemployment.
b. The Plaintiff is required under federal law to adapt its collection and loan servicing practices to this Defendant’s individual circumstances and failed to do so.
c. The Plaintiff did not make a reasonable effort as required by federal law to arrange a face to face meeting with the Defendant before three full monthly installments were unpaid. 24 C.F.R. § 203.604.
d. The Plaintiff is required by federal law to evaluate all available loss mitigation techniques and to re-evaluate these techniques each month after default and failed to do so. 24 C.F.R. § 203.605.
e. The Department of Housing and Urban Development has determined that the requirements of 24 C.F.R. Part 203(C) are to be followed before any mortgagee commences foreclosure.
f. Plaintiff has no valid cause of action for foreclosure unless and until Plaintiff can demonstrate compliance with the regulations in 24 C.F.R. Part 203(C).
g. This Defendant made significant efforts to access foreclosure prevention services from the plaintiff and to make payments but Plaintiff denied this Defendant the required opportunity to access and obtain mortgage servicing options designed to avoid foreclosure of this HUD insured mortgage. See Norwest Mortgage Inc. v. Rhoads, 5 Fla. L. Weekly 361 (Fla. 12th Judicial Circuit 1998).
38. The Plaintiff comes to Court with unclean hands as a result of its failures and omissions as set forth in the statement of facts set forth above and incorporated herein. Plaintiff is prohibited by reason thereof from obtaining the equitable relief of foreclosure from this Court. The Plaintiff’s unclean hands result from the Plaintiff’s intentional and reckless failure to properly service this mortgage pursuant to the federal regulations and specifically, by filing this foreclosure before offering Defendant any of the federally required foreclosure avoidance options. As a matter of equity, this Court should refuse to foreclose this mortgage because acceleration of the note would be inequitable, unjust, and the circumstances of this case render acceleration unconscionable. This Court should refuse the acceleration and deny foreclosure because Plaintiff has waived the right to acceleration or is estopped from proceeding with this action because of misleading conduct and unfulfilled conditions.
COUNTERCLAIMS OF DEFENDANT AGAINST PLAINTIFF
STATEMENT OF FACTS
39. Defendant is a 64-year-old man, cab driver by profession and owned the property at _______________ Drive, Las Vegas, Nevada 89138 since 2004.
40. The home was purchased for approximately $550,073 in 2004.
41. At all relevant times, Defendant has resided in the home with his sons and grandchildren.
42. Defendant put down an amount of $113,335 in this home as down payment, and spent another $50,000 in upgrades and other remodeling.
43. Defendant, as a senior citizen with limited education and income, but substantial equity in his home, was a prime target for predatory mortgage lenders and brokers.
44. Defendant was an unsophisticated borrower who did not understand many of the basic terms and costs of a typical mortgage loan transaction.
45. At the closing, Defendant was presented with a myriad of loan documents to sign. A man showed Defendant the documents and told him where to sign them. He stated that he did not need to read the documents because the signing was a mere formality. Defendant, with limited education and little ability to understand the complicated financial documents placed before him, signed all the documents.
46. The transaction created a 30-year loan which by Countrywide Home Loans Inc. Countrywide Home Mortgage declared bankruptcy in 2008. Innumerable lawsuits were filed against Countrywide throughout United States and in Nevada, and following these lawsuits Countrywide entered into a settlement with the Nevada State Attorney General to modify loans and stops its predatory lending practices (Exhibit—-)
47. Countrywide started its loan with the so called “Teaser Rate” of 1.00 percent. The interest rate was subject to change on every month. It would be based on Index. The “Index” is the Twelve-Month Average” of the annual yields on actively traded United States Treasury Securities adjusted to a constant maturity of one year as published by the Federal Reserve Board in the Federal Reserve Statistical Release entitled “Selected Interest Rates (h.15)” (the “Monthly Yields”). Before each Interest Rate Change Date, the Note Holder will calculate my new interest rate by adding two points 65/100 to the Current Index. There was a complex formula for interest change beyond the understanding and comprehension of Defendant.
48. The loan also carried a prepayment penalty which would require Defendant to pay an amount equal to six months interest if he paid off the loan within five years.
49. Defendant had no idea that he would still owe $547,686.62 after making payments for 4 years and would not have agreed to the loan had he known.
50. Defendant relied on Duxford Fin.’s representation that the loan would provide him with a lower monthly payment and interest rate. He would not have entered into the transaction had he been aware of the true nature of the loan.
51. Defendant’s reliance was reasonable under all of the circumstances, given his age; limited education and lack of financial sophistication, and the fact that Dux Fin. was a professional mortgage broker which undertook to assist and advise Defendant in obtaining a loan.
52. According to the Itemization of Amount Financed attached to the Truth In Lending Statement, Duxford Fin. received more than $7800 from the loan proceeds for arranging the loan.
53. Dux Fin. received at least $5597 from the loan proceeds.
54. Dux Fin. received additional payment from xxxxCountrywidexxx, denominated “Broker’s Compensation.”
55. On information and belief, based on counsel’s familiarity with mortgage industry practices, the additional commission was measured or calculated based on the rate of interest which Dux Fin. was able to get Defendant to sign for, i.e., Dux Fin.’s compensation was increased by an amount corresponding to a higher rate of interest on the loan. The higher the rate, the more Dux Fin. could receive. Such a payment is sometimes known in the mortgage industry as a “yield spread premium.”
56. As part of the transaction, Defendant paid thousands of dollars in fees to the mortgage broker for obtaining a balloon loan with an interest rate of 11% that increased him mortgage payments without providing him with any real economic benefit.
57. On information and belief, based on counsel’s familiarity with the mortgage industry, the 11% interest rate exceeded Countrywide’s par rate on 15 year balloon loans for borrowers with similar credit histories to Defendant’s.
58. Dux Fin. was more than adequately compensated for its services by Defendant from the loan proceeds. The mortgage broker provided no goods or services for the additional “yield spread premium” fee.
59. With respect to the loan transaction, Countrywide was a “creditor” as that term is defined in the Truth-in-Lending Act, 15 U.S.C. § 1602(f), and Regulation Z, 12 C.F.R. § 226.2(a)(17).[nn]1@
60. The transaction between Countrywide and Defendant was a “consumer credit transaction” as that term is defined in the Truth-in-Lending Act, 15 U.S.C. § 1602(h), and Regulation Z, 12 C.F.R. § 226.2(a).
61. The transaction between Countrywide and Defendant was a “closed-end credit transaction” as the term is defined in 12 C.F.R. § 226.2(10), and is subject to the requirements for such transactions set forth in 15 U.S.C. § 1638 and 12 C.F.R. §§ 226.17 – 226.24.
62. The transaction between Countrywide and Defendant was one in which a security interest was taken in Defendant’s principal place of residence.
63. The transaction between Countrywide and Defendant was for the principal amount of $120,000.
64. The transaction between Countrywide and Defendant was for the Amount Financed of $111,705.66.
65. As such, the “total loan amount” for the transaction, as defined in 15 U.S.C. § 1602(aa)(1)(B) and 12 C.F.R. § 226.32(a)(1)(ii) was therefore a maximum of $111,705.66.
66. The total points and fees paid by Defendant in connection with the loan exceeded 8% of the total loan amount.
67. When the total points and fees are greater than 8% of the total loan amount, the mortgage is defined as a high rate mortgage pursuant to 15 U.S.C. § 1602(aa).
68. The transaction between Countrywide and Defendant was therefore a high rate mortgage.
69. Defendant has suffered economic and emotional damages as a result of the Third-Party Defendants’ conduct described herein. He is faced with the loss of his because of wrongful foreclosure.
70. Proper Party AHM subsequently became the owner of the subject Note and Mortgage (hereinafter referred to as the “original Loan”). At the time Defendant AHM obtained an interest in the Plaintiff’s original Loan, Defendant AHM deemed the mortgage account to be in default and serviced the account as a debt in default.
71. In January, 2009, Proper Party AHM all of a sudden broke the loan modification negotiations and oral agreement to that effect and accelerated foreclosure proceedings against the Plaintiff claiming that he was in default on the original loan.
72. Prior to this time, the Plaintiff had attempted to resolve a long-standing dispute with Defendant AHM over whether this payment he had made had been properly credited to his account.
73. Plaintiff had innumerably called AHM and its various telephone call centers scattered in different parts of the world (mostly India) and tried to elicit such information and resolve the outstanding issues.
74. Plaintiff such communication quite often broken down due to bad phone system in call centers outside USA (mainly India), due to language difficulties and breach communication at such call centers, their inability to help and help provided only by reading strictly the prepared script, and due to lack of prompt and quite often rude and arrogant customer service and bad debt collection policies maintained by AHM.
75. Plaintiff has submitted various documents to the given fax number 1-866-452-1837 few times and sent all the supporting documents for any loan modification agreement including his bank statements, monthly pay stubs, previous year tax return and hardship letter.
76. Plaintiff made handwritten notes of such conversation and spoke with Desiree Ford, (one of such representative) by calling 1-877-304-3100 and innumerably transfers of phone from one extension to other and finally to an extension No. 66393.
77. It was an ordeal to talk to various call centers either in USA and mostly in India because each time the representative was different and would always starts the conversation without any significant knowledge of the previous conversation and progress made.
78. The Plaintiff and Defendant AHM subsequently entered into a Modification Agreement subject to written ratification effective January1, 2009. This modification was about to be send to Plaintiff for formal signature and exchange.
79. Plaintiff hired the Law Office of XYZZZAAA for this loan modification ratification and a formal letter of acknowledgement was sent to the Law Office of XYZZZ on December 17, 2008 by Defendant AHM (Exhibit 1).
“Dear XYZZZAAA, Esq
American Home Mortgage Servicing, Inc. (AHM) received an inquiry regarding the above-referenced mortgage loan. We appreciate the opportunity to be of assistance.
In accordance with your request, AHM is ceasing all telephone communication with our borrower(s). We have updated our records to communicate with your office directly regarding the above mortgage loan.”

80. A similar letter was sent by AHM to Plaintiff’s attorney on December 24, 2008. (Exhibit 2)

“Dear XYZZZAAA, Esq
American Home Mortgage Servicing, Inc. (AHM) received an inquiry regarding the above-referenced mortgage loan. We appreciate the opportunity to be of assistance.
In accordance with the request, the following party/parties are authorized to receive information regarding the mortgage loan:
The Law Office of XYZZZAAA, Attorney at law.” (Exhibit 2)

81. The Plaintiff further submits that despite the alleged default and based on the Plaintiff’s request to modify the original Loan, the Defendant AHM agreed to adjust the terms of the original Loan, including reduction in interest, an amortization and reduction in principal balance.
82. The intention of the parties as evidenced by the terms of the Modification Agreement was that the Plaintiff’s loan was reinstated as current and that the total outstanding balance, including all accrued interest, charges and fees owing on the loan as of the effective date shall be put back at the end of the loan with a lower interest rate.
83. This modification or potential loan modification was completely in accordance with the federal guidelines printed in various federal programs including HOPE.
First Claim of Defendant
Plaintiff’s Assignor’s Failure to Provide Required Truth in Lending Disclosures
84. As described above, the transaction between plaintiff’s assignor and Defendant was a high rate mortgage. 15 U.S.C. § 1602(aa)(1)(B).
85. The transaction of May 27, 2006, between plaintiff’s assignor and Defendant, was therefore one in which the provisions of 15 U.S.C. § 1639 and 12 C.F.R. § 226.32 were applicable.
86. Plaintiff’s assignor violated the Truth-in-Lending, inter alia,
a. by failing to provide the disclosures to the consumer required by 15 U.S.C. §§ 1639(a)(1) and (a)(2)(A) and 12 C.F.R. § 226.32(c)(1)/-/(3);
b. by failing to provide the above disclosures to the consumer required at least three business days prior to the consummation of the transaction, in violation of 15 U.S.C. §§ 1639(b)(1) and 12 C.F.R. § 226.31(c).
c. by failing to provide accurate disclosures as required by 15 U.S.C. § 1638(a), and Reg. Z §§ 226.17 and 226.18.
87. The failure to comply with any provision of 15 U.S.C. § 1639 is deemed a failure to deliver material disclosures for the purpose of 15 U.S.C. § 1635. See 15 U.S.C. § 1639(j).
88. Pursuant to the Truth-in-Lending Act, Defendant had an absolute right to cancel the transaction for three business days after the transaction, or within three days of receiving proper disclosures from the plaintiff, after which he would not be responsible for any charge or penalty.
89. Plaintiff’s assignor’s violations of 15 U.S.C. §§ 1638, 1639 and 12 C.F.R. §§ 226.17, 226.18, 226.31 and 226.32, which are considered to be a failure to give all material disclosures, give rise to a continuing right of rescission on the part of Defendant.
90. Defendant hereby elects to rescind the transaction between himself and plaintiff’s assignor, pursuant to him continuing right of rescission.
91. When a consumer elects to rescind pursuant to the Truth-in-Lending Act, any security interest taken in connection with the transaction becomes void. 15 U.S.C. § 1635(b).
92. When a consumer elects to rescind pursuant to the Truth-in-Lending Act, the consumer is not liable for any finance or other charge. 15 U.S.C. § 1635(b).
93. The mortgage that is the subject of this foreclosure action was taken in connection with the transaction that Defendant has elected to rescind.
Second Claim
Recoupment for Violation of the Real Estate Settlement and Procedures Act
94. The transaction between plaintiff’s assignor and Defendant was a “federally related mortgage loan” as that term is defined in the Real Estate Settlement and Procedures Act (“RESPA”), 12 U.S.C. § 2602(1).
95. Plaintiff’s assignor’s funding and origination of this transaction are “settlement services” as that term is defined in RESPA, 12 U.S.C. § 2601(3).
96. As part of the transaction, Defendant paid fees to the mortgage broker of at least $10,000.00 for obtaining a balloon loan with an interest rate of 9. % or more, that increased his mortgage payments without providing him with any real economic benefit.
97. This interest rate exceeded plaintiff’s assignor’s par rate on 30 year balloon loans.
98. In exchange for submitting an above par rate loan, plaintiff’s assignor believed to have paid the mortgage broker $5,000 or more. This payment was in addition to the money paid by Defendant, and was not for any services provided by the mortgage broker to plaintiff’s assignor or Defendant.
99. The mortgage broker was more than adequately compensated for its services by Defendant.
100. The mortgage broker provided no goods or services for this fee.
101. Plaintiff’s assignor’s payment of this fee to the mortgage broker violates RESPA’s prohibition against providers of settlement services from paying referral fees and kickbacks. 12 U.S.C. § 2607.
102. Plaintiff’s violation of RESPA is a violation that subjects Plaintiff to a civil penalty of three times the amount of any charge paid for settlement services. 12 U.S.C. § 2607(d)(2).
Third Claim
Nevada Consumer Fraud and Deceptive Practices Act
103. Defendant realleges paragraphs 1 to 102.
104. This defense is asserted pursuant to the Nevada Consumer Fraud and Deceptive Laws.
105. Dux Fin. Mortgage, and other unidentified employees and/or agents of Dux Fin. Mortgage made misrepresentations to Defendant, as set forth above, including but not limited to statements that they would act in his best interest, obtain a loan which would be to him benefit, lower him monthly payment, and provide additional cash to repair him roof.
106. Dux Fin. and its agents or employees also misrepresented the amount it was charging Defendant for its purported services.
107. Countrywide (plaintiff’s assignor) misrepresented the terms and finance charges imposed on the loan.
108. Countrywide’s closing agent misrepresented the import and contents of the documents which he asked Defendant to sign, and concealed the terms of the loan while requiring Defendant to sign the documents.
109. Countrywide and Dux Fin. entered into a conspiracy to defraud Defendant by agreeing to the payment of a kickback (the “yield spread premium”) from Countrywide to Dux Fin. for the purpose of getting Defendant to accept the loan at a higher rate than Countrywide was prepared to impose, without disclosing to Defendant the purpose and nature of the kickback.
110. The misrepresentations were material in nature, as they concerned the basic terms and benefits of the loan.
111. Dux Fin. and its employee agents knew that their representations were false at the time they were made.
112. Countrywide knew that its Truth In Lending disclosures were inaccurate. Countrywide’s agent knew that representations to Defendant at the closing were false.
113. The misrepresentations and omissions were made with the intent to induce Defendant’s reliance and thereby to enter into the transaction.
114. Defendant reasonably relied on Dux Fin.’s misrepresentations to his detriment.
115. Plaintiff’s assignor is a mortgage company with extensive experience and sophistication in transactions involving residential mortgages.
116. Conversely, Defendant is a single family homeowner who is inexperienced and unsophisticated in matters involving consumer lending.
117. The fees charged to Defendant far exceed the fees normally charged to consumers in home mortgage transactions.
118. In addition to the fees paid by Defendant for the loan, plaintiff’s assignor paid an illegal kick back to the mortgage broker of $11,654.57 in violation of RESPA.
119. Furthermore, plaintiff’s assignor failed to properly notify Defendant about the high cost nature of the loan, and failed to provide accurate Truth In Lending disclosures.
120. Plaintiff’s assignor’s practices as described above are unfair, immoral, unethical, and unscrupulous.
121. Theses practices offend public policy.
122. Plaintiff, as holder of a high cost loan, is liable for all claims and defenses that can be raised against its assignor. 15 U.S.C. § 1641(d)(1).
123. On information and belief, based on documents found in plaintiff’s loan files, plaintiff knew that the terms of the loan had been misrepresented to Defendant.
124. Plaintiff knew that the Truth In Lending disclosures given to Defendant were inaccurate. Such inaccuracy was apparent on the face of the documents assigned to plaintiff.
Fourth Claim
Common Law Fraud
125. Defendant incorporates paragraphs 1 to 124 above by reference herein.
126. Dux Fin. Mortgage, and other unidentified employees and/or agents of Dux Fin. Mortgage made misrepresentations to Defendant, as set forth above, including but not limited to statements that they would act in him best interest, obtain a loan which would be to him benefit, lower him monthly payment, and provide additional cash to repair him roof.
127. Dux Fin. and its agents or employees also misrepresented the amount it was charging Defendant for its purported services.
128. Countrywide (plaintiff’s assignor) misrepresented the terms and finance charges imposed on the loan.
129. Countrywide’s closing agent misrepresented the import and contents of the documents which he asked Defendant to sign, and concealed the terms of the loan while requiring Defendant to sign the documents.
130. Countrywide and Dux Fin. entered into a conspiracy to defraud Defendant by agreeing to the payment of a kickback (the “yield spread premium”) from Countrywide to Dux Fin. for the purpose of getting Defendant to accept the loan at a higher rate than Countrywide was prepared to impose, without disclosing to Defendant the purpose and nature of the kickback.
131. The misrepresentations were material in nature, as they concerned the basic terms and benefits of the loan.
132. Dux Fin. and its employee agents knew that their representations were false at the time they were made.
133. Countrywide knew that its Truth In Lending disclosures were inaccurate. Countrywide’s agent knew that representations to Defendant at the closing were false.
134. The misrepresentations and omissions were made with the intent to induce Defendant’s reliance and thereby to enter into the transaction.
135. Defendant reasonably relied on Countrywide’s and Dux Fin.’s misrepresentations to him detriment.
136. Plaintiff knew that the loan terms had been misrepresented to Defendant, and knew that the Truth In Lending disclosures given to Defendant were inaccurate. Such inaccuracy was apparent on the face of the documents assigned to plaintiff.
137. Plaintiff accepted assignment of the note with notice that the documents contained therein were inaccurate and that the loan violated TILA and RESPA. Therefore plaintiff is subject to the defense of fraud raised herein.
138. Plaintiff, as holder of a high cost loan, is liable for all claims and defenses that can be raised against its assignor. 15 U.S.C. § 1641(d)(1).
FIFTH CLAIM OF DEFENDANT
139. This defendant contacted the plaintiff or plaintiff’s agent for servicing and collection of the subject loan and advised plaintiff or plaintiff’s agent about his loss of income due to reasons beyond his control and requested a temporary forbearance, loss mitigation assistance and/or a special repayment plan to avoid acceleration of the subject debt and the loss of his home through foreclosure.
140. In response, the plaintiff or plaintiff’s agent advised this defendant that his only option was to bring his mortgage payments current in their entirety with a lump sum payment of the full arrearage amount.
141. This defendant affirmatively contacted the plaintiff and/or the plaintiff’s agent on more than one occasion to work out a repayment or forbearance agreement, but each time this defendant was advised by the plaintiff or plaintiff’s agent that nothing could be done to assist him to avoid the default, acceleration of the subject mortgage debt or foreclosure unless he had the ability to make lump sum payments to get current on the mortgage in amounts that far exceeded his income or his ability to pay.
142. This defendant was advised by plaintiff and/or plaintiff’s agent that partial payments toward the arrearage in the mortgage debt would not be accepted.
143. Defendant’s mortgage loan is an FHA-insured loan, therefore, the plaintiff must comply with the payment forbearance must comply with the payment forbearance, mortgage modification, and other foreclosure prevention loan servicing or collection requirements imposed on Plaintiff and the subject FHA mortgage by federal regulations promulgated by HUD, pursuant to the National Housing Act, 12 U.S.C. § 1710(a). These requirements must be followed before a mortgagee may commence foreclosure. 24 C.F.R. Part 203(C), Servicing Responsibilities Mortgagee Action and Forbearance.
144. Plaintiff is required by HUD regulation to ensure that all of the servicing requirements of 24 C.F.R. Part 203(C) have been met before initiating foreclosure. 24 C.F.R.§ 203.606, published August 2, 1982, 47 FR 33252.
145. Plaintiff and/or its agent for servicing, failed to carry out its federally-imposed duties which are owed to this defendant and are also incorporated into the terms of his mortgage to adapt effective collection techniques designed to meet this defendant’s individual differences and take account of his peculiar circumstances to minimize the default in his mortgage payments as required by 24 C.F.R. §203.600.
146. Plaintiff and/or its agent for servicing failed to make any reasonable efforts as required by federal regulation to arrange a face to face meeting with this defendant before three full monthly installments were unpaid to discuss his circumstances and possible foreclosure avoidance. 24 C.F.R. § 203.604, published June 16, 1986, 51 FR 21866.
147. Plaintiff and/or its agent for servicing, failed to inform this defendant that it would make loan status and payment information available to local credit bureaus and prospective creditors, failed to inform this defendant of other assistance, and failed to inform him of the names and addresses of HUD officials to whom further communication could be addressed as required by federal law. 24 C.F.R. § 203.604
148. Plaintiff and/or its agent for servicing, wholly failed to perform its obligation to explore foreclosure prevention strategies with this defendant; failed to determine the particular circumstances surrounding this defendant’s claimed default; his capacity to pay the monthly payment amount or a modified payment amount; to ascertain the reason for his claimed default, or the extent of his interest in keeping the subject property.
149. Plaintiff is required under federal law to adapt its collection and loan servicing practices to defendant’s individual circumstances and to re-evaluate these techniques each month after default and this plaintiff failed to do. 24 C.F.R. § 203.605, effective August 2, 1996.
150. Plaintiff failed to perform its servicing duty to this defendant to manage the subject mortgage as required by FHA’s special foreclosure prevention workout programs which must include and allow for the restructuring of the loan whereby the borrower pays out the delinquency in installments or advances to bring the mortgage current.
151. Plaintiff denied this defendant access to special forbearance in the form of a written agreement that would reduce or suspend him monthly mortgage payments for a specific period to allow him time to recover from the financial hardship he was suffering through no fault of his own. Such a plan can involve changing one or more terms of the subject mortgage in order to help this defendant bring the claimed default current thereby preventing foreclosure.
152. Plaintiff’s failure to comply with the FHA repayment plan or special forbearance workout programs denied this defendant the required access to explore alternatives to avoid foreclosure prior to the addition of additional foreclosure fees and costs.
153. Further, pursuant to the terms of this defendant’s mortgage, the plaintiff’s right to accelerate payments due under the terms of the subject mortgage is equitably limited by the above-referenced federal regulations. Paragraph 9(a) of the subject mortgage.
154. The subject mortgage “does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.” Paragraph 9(d) of the subject mortgage.
155. This defendant requested that plaintiff or plaintiff’s agent give him access to options to help him save his home. The plaintiff was non-responsive and only answered this defendant requests for access to loss mitigation servicing with threats to foreclose if reinstatement in full with all claimed fees and costs was not made right away.
156. Plaintiff failed to comply with its mortgage servicing responsibilities and the terms of the subject mortgage and as a proximate result, this defendant’s delinquency has been improperly inflated by mortgage foreclosure filing, service and other fees and inspections costs, and by foreclosure attorney’s fees in amounts that this defendant cannot afford to pay. Therefore, this defendant remains at the risk of losing his home.
157. This defendant made good faith efforts to access foreclosure prevention services and to pay the loan, however, the plaintiff or plaintiff’s agents denied this defendant the opportunity to access and obtain the mortgage servicing options required by federal regulations and designed to avoid foreclosure of this HUD insured mortgage.
158. Defendant first foreclosed this home and then filed the subject lawsuit in November, 2004 without first allowing this defendant the right to pursue the federally-required loss mitigation opportunities.
SIXTH CLAIM
DECLARATORY AND INJUNCTIVE RELIEF
159. This is an action for declaratory and injunctive relief against the Plaintiff.
160. Defendant reasserts and alleges his statement of facts set forth hereinabove.
161. Defendant contends that the Plaintiff has no right to pursue this foreclosure because the Plaintiff has failed to provide servicing of this FHA insured residential mortgage in accordance with the federal regulations at 24 C.F.R. Part 203 Subpart C prior to filing this foreclosure action.
162. Defendant contends that he has a right to receive forbearance, mortgage modification, and other foreclosure prevention loan services from the Plaintiff pursuant to and in accordance with the federal regulations before the commencement or initiation of this foreclosure action.
163. Defendant is in doubt as to his rights and status as a borrower under the National Housing Act and the federal regulations made applicable to and incorporated in the subject mortgage because of the Plaintiff’s failure to service the subject loan pursuant to the federal law and because the Defendant is now subject to this foreclosure action, all of which the Defendant contends are the result of the illegal acts and omissions of Plaintiff set forth herein.
164. Defendant is being denied and deprived by Plaintiff of his right to access the special mortgage servicing required under the federal statute and regulations and Defendant is being illegally subjected to this foreclosure action, being forced to defend same, being charged illegal and predatory court costs and related fees and attorney fees, and is having his credit slandered and negatively affected, all of which constitute irreparable harm to this Defendant for the purpose of injunctive relief.
165. As a proximate result of the Plaintiff’s unlawful actions, Defendant continues to suffer the irreparable harm described above for which monetary compensation is inadequate.
PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment and relief as follows:
WHEREFORE, the Plaintiff respectfully requests that this Court:
A. Assume jurisdiction over this action or alternately allow Defendant to move to proper jurisdiction;
B. Declare that the Defendant AHM is in breach of the original Loan and Modification Agreement and that Plaintiff is current and not in default on the terms of the original Loan and Modification Agreement;
C. Enjoin the Defendant AHM from collecting or attempting to collect any attorney’s fees or other charges incurred prior to the effective date of the Modification Agreement that were not included the “New Principal Balance” specified in the Modification Agreement;
D. Award actual and compensatory damages, including those for mental anguish, in an amount to be determined at trial;
E. Award punitive or exemplary damages in an amount to be determined at trial;
F. Declare that Defendant AHMS violated RESPA, enjoin Defendant from committing any future violations of the Act, and award the Plaintiff actual damages and $1,000 in statutory damages pursuant to 12 U.S.C. § 2605(f);
G. Declare that Defendant AHMS violated the FDCPA, enjoin Defendant from committing any future violations of the Act, and award the Plaintiff actual damages and $1,000 in statutory damages pursuant to 15 U.S.C. § 1692k;
H. Award Plaintiff reasonable attorney’s fees and litigation expenses, plus costs of suit, pursuant to 12 U.S.C. § 2605(f) and 15 U.S.C. § 1692k(3);
I. Grant such other or further relief as is appropriate.
a. under Count I against AHM, treble damages and costs for RESPA violations;
b. under Count II against MFN, treble damages and costs for RESPA violations;
c. under Count III against AHM, actual damages and punitive damages for intentional interference with contractual relationship;
d.under Count IV against MFN, actual damages and punitive damages for breach of fiduciary duty;
e.under Count V against AHM, actual damages as restitution for money had and received;
f. under Count VI against AHM, actual damages and punitive damages for fraud by concealment;
g. under Count VII against MFN, actual damages and punitive damages for fraud by concealment;
h. such other relief to which Plaintiff may be entitled, or as determined just and appropriate by this Court.
TRIAL BY JURY DEMANDED.
Dated: February 27th, 2009
_______________________________________
XYZZZAAA, Esq.
Nevada Bar No. 1xxxxxxx
City Center West, Suite 108
7201 West Lake Mead Blvd.
Las Vegas, Nevada, 89128
(702) 270-9100 (Phone)
(702) 384-5900 (Fax)
Malik11397@aol.com
Attorney for Plaintiff
XYZZZ
 
CERTIFICATE OF SERVICE
I HEREBY CERTIFY service of the foregoing was made on this 2nd day of March, 2009, pursuant to NRCP, by personally delivering a copy of same to the following address of the counsel for Plaintiff:

________________
________________
_______________
xxxxxxxxSouth Valley View Blvd.
Las Vegas, Nevada 89107

___________________________
XYZZZAAA

Understanding Foreclosure in Nevada

What is foreclosure and how does it happen?

Does the homeowner have a chance to get back their home? Can I buy a home in foreclosure? Foreclosure is the final step in a process of a lender trying to recoup their money from a borrower who has defaulted on their loan. The first step on the road to foreclosure is the NOD or notice of default. After this there is a reinstatement period in the foreclosure process before the house is put up for auction. If the defaulted loan isn’t taken care of in this time period, a notice of sale is sent to the owner, posted on the property and in the newspaper and the home is put up for auction.

In this turning point in the foreclosure process, the home is either purchased by the highest bidder, meeting the reserve set by the bank to recoup their loan balance, interest and additional fees or the home is repossessed by the bank. At this point, the home becomes, bank or real estate owned (REO) property and can be purchased directly from them, often with a clean title.

Foreclosure is the process of a mortgage or lien holder exercising their legal right to reclaim the property if mortgage loan is in default. The process is a complicated one and sometimes and long drawn out process. Foreclosure laws can vary by area and it’s important to understand the foreclosure law of your state if you are in danger of being foreclosed upon or are an investor looking to cash in.

Foreclosure laws vary state by state and the process of a defaulting loan going into full out foreclosure differs according to your state law. Some states even offer a redemption period, in which one has a legal time period where they can repurchase their home. This is great for the homeowner and gives them kind of a last minute shot at keeping their home, however this can be a nerve wracking stumbling block for those looking to buy a foreclosure or bank owned home.

There are strict time guidelines and procedures to be followed with the courts and the lending institutions when it comes to foreclosure process. Foreclosure laws may offer you some relief and some options though, so check you state’s foreclosure law before proceeding with the process or purchasing a foreclosure home of your own.

Lenders in the state of Nevada may foreclose on a deed of trust or a mortgage in default using a judicial or non-judicial foreclosure process.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property. This type of process is generally used when no power of sale is present in the mortgage or deed of trust. A power of sale is a clause found in a deed of trust or mortgage that authorizes the sale or transfer of land as outlined by the terms of that clause.

In the event that a judicial foreclosure process is used in Nevada, the borrower has one (1) year after the foreclosure sale to redeem the property.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.
Power of Sale Foreclosure Procedure
If the deed of trust or mortgage has a power of sale clause and it details the time, place and terms of sale, then the outlined procedure must be followed. However, if the power of sale clause does not clarify the time, place and terms of sale, then a foreclosure sale is conducted as follows:

The borrower receives a copy of the notice of default and election to sell on the date the notice is recorded in the county where the property is located. Notice is generally sent by certified mail, return receipt requested, to the borrower’s last known address. The property is then advertised and posted pursuant to Nevada law as it pertains to an execution sale.

The borrower has three (3) months from the date a notice of default and election to sell is recorded by the deed of trust’s trustee to perform and cure the default. In order to cure the default, the borrower is often expected to pay the missed payments or other sums due to the lender, but not the accelerated loan balance. The property is sold at foreclosure if the borrower fails to redeem during this time.

The time of sale must be specified in the foreclosure notice and the property sold in the manner required by law for the sale of real property on execution.

The lender may sue for a deficiency within three (3) months after the foreclosure sale or within six (6) months after the date of foreclosure. Borrowers have no rights of redemption.

How to Use Loan Modification to Stop Foreclosure in Nevada?

How Loan Modification Can Be Used To Stop Foreclosure?

Foreclosure is on the rise in Nevada, and everyday scores of homes are foreclosed in Nevada through non-judicial foreclosure process. Remember, there are two kinds of foreclosure: Judicial and Non-judicial and Nevada is a non judicial foreclosure state. In this article, we like to discuss how to avoid an impending foreclosure by starting a loan modification request.

Rule No. 1: Open channels of communication with your bank. Call the Loss Mitigation, or Loan Modification number of your bank right away. Do not hesitate on this issue under any condition.

Rule No. 2: Find and give your financial information right away. Make sure you ask the bank if they have a package for financial information needed to be send to them. Download from their website and sent it to them on the given fax number. Make sure you get the right fax number from Loss Mitigation Department.

Rule No. 3. Tell your lender that you are a primary home owners and have no intention to let this property go to foreclosure.

Rule No. 4: Tell your lender that you have a great payment history.

Rule No. 5: Tell your lender your story, either on phone or via letter. Send a strong hardship letter to them.

Rule No. 6: Ask them again and again if they have received your documentation. If not, send them again.

Rule No. 6: No need to argue, or indulge in heated discussion. Talk on the same level as your representative. Most of these folks are hard working and eager to help. Their education level is slightly above the high school levels, and some of them have this job as the starter job in their career.

Rule No. 7: Do not lose temper under any condition.

Rule No. 8: Write a diary in a systematic way, and write down the name of the representative, name of the supervisors, and date and time.

Rule No. 9: It is hard for your lender to foreclose as well. They will lose half of the value of the home, and they are also trying their best to stop it.

Rule No. 10: Ask them again and again, if they want short sale if loan modification is not possible. A yes answer means more time, and meanwhile you can chalk out other strategy.

More Rules:

1. Make a diary of all the phone calls.

2. Write down the number and name of the person you spoke.

3. Make sure you ask them again, if they are from collection department. Basically, these collectors would give you the impression that they are from loan modification or workout department. They will waste your time by asking you idiotic questions which has no direct link with loss mitigation. At the end, they would try to collect money from you. Because they have no impact, on the overall scheme, and you probably have no money to pay them, so be polite and firm with them, and tell them if they can connect you to loss mitigation. Remember, again Countrywide, they have too many layers to trick you and too many phone number with recording devices.

4. This one bank, or servicer EMC. It is deceptive. Each time you call them, their recording device is full of none sense. Even the recording device tell you the waiting time is 9 minutes. If you call them in the middle of the night, the waiting time is still 9 minutes. Once I waited for about 25 minutes. This is the most crooked customer service. I wonder if someone would take notice of their deception.

5. Oh yeah, City–the mother of all deceptive trade practices. Citi had eaten up close to 70 billion dollar of bailout money, and has one of the horrible customer service. They once gave me a fax number which was busy, and I got at least 30 busy printout from my fax. They are hesitant to talk to attorneys for reasons well known to them. I wish and pray this bank is either nationalized or go bankrupt. I have no compassion for them and of course Countrywide.WaMU is still not a bad bank. Even though they were the most generous people in giving money to every undeserving person but at least their customer service is better than both City and Countrywide.

6. Lots of lenders has their website full of information, and there are some changes coming in their attitude. It is public pressure, and some Congress pressure collectively. Also, they have seen the writing on the wall. Basically, it is the crooked old leadership who was awash with bonuses and big paychecks, who was reluctant to bring any major changes. I say get rid of all these fossils of the past, and start with younger people in major decision making.

More later

Complete List of Your Loss Mitigations Lenders

It is difficult to reach your lender. They have built a Chinese wall around them, and at times they were successful. However, we are publishing the following list of your lenders which can be reached. Some telephone numbers may still be inaccessible. Please let us know so we can change them. Of course, the Law Office of Malik Ahmad continuously change these numbers, and update new numbers. Basically, numbers are the game. Let us give them back some.

Lender/Servicer Loss Mitigation Phone Numbers & Contact InformationABM AMRO Mortgage (800) 783-8900
Web: https://www.mortgage.com/C3/application.bus
Accredited Home Lenders(877) 683-4466AMC Mortgage Services (Also handles loans originated by Ameriquest and Argent) (800) 211-6926
1600 McConnor Parkway
Schaumburg, IL 60173
Web: https://www.myamcloan.com/malwebapp/begin.doAmerican Home Mortgage Corp.(877) 304-3100*Ameriquest Mortgage (Debt collection — see AMC Mortgage Services) (800) 211-6926Aurora Loan Services (Debt collection) (800) 550-0508
By Overnight Mail:
601 5th Avenue
Scottsbluff, NE 69361
Attn: Customer Service
By Regular Mail:
P.O. Box 1706
Scottsbluff, NE 69363
E-mail: ccnmail@alservices.com
Web: https://www.alservices.com/Consumer/UI/SSL/Authentication/Login.aspx?ReturnUrl=%2fConsumer%2fUI%2fSSL%2fServ icing%2fDefault.aspx

Avelo Mortgage LLC (866) 992-8356*Bank of America(800) 846-2222BB&T Mortgage (800) 827-3722*

AmTrust Bank (fka Ohio Savings Bank) (888) 696-4444

Beneficial (800) 333-5848

Central Pacific Bank (800) 342-8422*

Charter One (800) 234-6002

Chase (800) 446-8939
Chase Home Finance (800) 848-9136 (customer service) (858) 605-2181 (delinquency customer service)
Chase Home Finance-New Jersey(800) 446-8939*Chevy Chase Bank(800) 933-9100*
Web: https://chaseonline.chase.com/chaseonline/logon/sso_logon.jsp?fromLoc=ALL&LOB=COLLogon

Chase Manhattan Mortgage
(800) 446-8939 (Ohio Servicing Center)
(800) 526-0072 (Florida Servicing Center)
(800) 527-3040 x533 (Florida Servicing Center) Chevy Chase Bank (800) 933-9100
Web: https://www.chevychasebank.com/htm/payment.html (Payment Addresses)Citi Financial Mortgage (800) 753-3673Citimortgage (800) 283-7918

Countrywide (800) 262-4218
https://customers.countrywide.com/se…t_login254.asp

Ditech (800) 852-0656 (800) 449-8582Downey Financial Corp.(800) 824-6902, ext. 6696Deutsche Bank National Call Number on Mortgage Statement

EMC 800-723-3004
P.O. Box 141358
Irving, TX 75014-1358
Web: https://www.emcmortgageservicing.com/ccn/ccnsecurity.aspEverBank (800) 669-7724 ext. 4730Equity One (Debt collection) (866) 361-3460

First Horizon Home Loans (800) 489-2966*

Fifth Third Bank (800) 375-1745 Option 3

First Merit Bank (888) 728-9931

Flagstar Bank (800) 968-7700, ext. 9780

Fremont Investment & Loan (866) 484-0291

GMAC Mortgage (800) 850-4622

GreenPoint Mortgage Funding (800) 784-5566, ext. 5383*

Green Tree (877) 816-9125

Homecomings Financial (800) 850-4622*

HomeEq Mortgage Servicing ( Debt collection) (866) 822-1471

Household Finance (A HSBC Co.) (800) 333-5848

Household Mortgage (800) 333-4489
Household Mortgage -(Is now called HSBC Mortgage Services) (800) 365-6730

HSBC Mortgage Corp.(there is a difference between Mortgage Services and Corp. placed new number) (800) 338-6441
Default Resolution Team (if long term problem)
2929 Walden Avenue
Depew, NY 14043
(888) 648-3124 Loss Mit
(732) 352-7519 Fax
Web:http://us.hsbc.com/personal/mortgage HSBC Mortgage (800) 338-6441
Default Resolution Team (if long term problem)
2929 Walden Avenue
Depew, NY 14043
(888) 648-3124 Loss Mit
(732) 352-7519 Fax
Web:http://us.hsbc.com/personal/mortgage/existing/difficulties.aspHuntington National Bank (800) 323-4695 Indymac Bank (877) 736-5556
C/O Loan Resolution Department
P.O Box 7014
Pasadena, CA 91107
(Monday – Friday 6:15am-7:15pm. (Pacific Time))
Web: https://www.indymacbank.com/contactus/loanResolution.asp

Irwin Mortgage (888) 218-1988
P.O Box 7014
Pasadena, CA 91107
Web: https://www.irwinmortgage.com/wps/portal/!ut/p/cxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLN4g3sdAvyHZUBAAqwx 9c
E-mail: deliquency.prevention@irwinmortgage.com

James B. Nutter & Company (800) 315-7334

Key Bank (800) 422-2442

LaSalle National Bank (800) 783-8900

Litton Loan Servicing (800) 999-8501 or (800) 548-8665
Fax (713) 966-8820
4828 Loop Central Drive
Houston, Texas 77081-2226
Web: https://www.littonloan.com/index.asp

Loss Mitigation Department Hours:
Monday Eastern: 9 a.m. – 7 p.m. Central:8 a.m. – 6 p.m. Mountain:7 a.m. – 5 p.m. Pacific:6 a.m. – 4 p.m.
Tuesday-Thursday Eastern:9 a.m. – 9 p.m. Central:8 a.m. – 8 p.m. Mountain:7 a.m. – 7 p.m. Pacific:6 a.m. – 6 p.m.
Friday Eastern:10 a.m. – 6 p.m. Central:9 a.m. – 5 p.m. Mountain:8 a.m. – 4 p.m. Pacific:7 a.m. – 3 p.m.
Default Counseling Department representatives are also available most weekends on Saturday from 8 a.m. to 12 p.m. and Sunday from 10 a.m. to 2 p.m. (CST).Midland Mortgage (800) 552-3000 or (800) 654-4566
Web: https://www.mymidlandmortgage.com/MyMortgage/Login/Login.asp

Mortgage Lenders Network (800) 691-0129
E-mail: customerservice@mlnusa.com
Web: http://www.mlnusa.com/customers/info_credithelp.asp

Mortgage Electronic Registration Systems (888) 679-6377National City (800) 367-9305, Ext. 53221 or (800) 523-8654
Attention: Homeowner’s Assistance
3232 Newmark Dr.
Miamisburg, Ohio 45342
(8AM-10:30PM ET, Monday – Thursday)
(8AM-5PM ET, Friday)
(8AM-Noon, Saturday)
Web: http://www.nationalcitymortgage.com/service_assistance.aspNationwide Advantage Mortgage Company (800) 356-3442, ext. 6002*NationStar Mortgage (888) 850-9398* Press 0 for operator

New Century Financial Now Carrington Mortgage Services (800) 790-9502 or (877) 206-9904
(6:00 a.m. to 7:00 p.m. Pacific Time, Monday – Thursday)
(6:00 a.m. to 6:00 p.m. Pacific Time, Friday)
Web: https://myloan.newcentury.com/webapps/servicing/myloans/index.do

NovaStar Mortgage Loan Resolution Department (888) 743-0774 Non-English: (888) 743-0774, ext. 4523Ocwen Federal Bank (800) 746-2936 or (877) 596-8560
Web: http://www.ocwencustomers.com/csc_fa.cfm

Attention: Financial Information
12650 Ingenuity Drive
Orlando, Florida 32826
or
Ocwen Financial Corporation
1661 Worthington Rd., Suite 100
West Palm Beach, Florida 33409
Phone: 877-226-2936For serving Ocwen with legal process, please send to their registered agent:
Corporation Service Company
2711 Centerville Road, Suite 400
Wilmington, DE 19808
Phone: 561-682-8000, x8386Option One (866) 711-1962 or (888) 275-2648
Web: http://www.oomc.com/servicing/servicing_baifaqs.aspPHH Mortgage (Formerly Cendant) (800) 257-0460
For borrowers facing possible delinquency: (800) 330-0423*
For borrowers in the foreclosure process: (800) 750-2518
Web:https://www.phhmortgage.com/sso/mq/login.jsp?TYPE=33554433&REALMOID=06-9153316d-cf4d-4425-a5d7-c0b20a7b098d&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGE NTNAME=phhmort-stb&TARGET=$SM$https%3a%2f%2fwww%2ephhmortgage%2ec om%2fhome%2flandscape%3fjpid%3dLogIn%26loginmode%3 dregistered&SMSESSION=NO

ResMae Mortgage Corp.(877) 473-7623, ext. 5944Saxon (800) 665-7367Select Portfolio Servicing (888) 818-6032
Fax: (801) 293-3936
Loan Resolution Department
P.O. Box 65250
Salt Lake City, UT 84165-0250
(Monday – Thursday 10:00 a.m. – 10:00 p.m. EST)
(Friday 10:00 a.m. – 7:00 p.m. EST)
(Saturday 9:00 a.m. – 1:00 p.m. EST)
Web: http://www.spservicing.com/services/customer/loanresolution.htm

SkyBank (800) 290-3359Sun Trust Mortgage (800) 634-7928
PO Box 26149
Richmond, VA 23260-6149
Mail Code RVW 3003Web: https://www.suntrustmortgage.com/generalquestions.asp#

Third Federal Savings (888) 844-7333

US Bank (800) 365-7900

Wachovia Bank of Delaware (866) 642-8608

Washington Mutual (866) 926-8937 or (888) 453-3102 or (800) 478-0036 or (800) 254-3677

Waterfirld Mortgage (800) 957-7245
Fax: (260) 459-5390
c/o Loss Mitigation Dept.
7500 W. Jefferson Blvd.
Fort Wayne, IN 46804
(7 am – 10 pm EST Monday – Thursday)
(7 am – 9 pm EST Fridays)
(8 am – 2 pm EST Saturdays)
E-Mail: saveyourhome@waterfield.com
Web: http://www.waterfield.com/scripts/cgiip.exe/WService=wfg/pub/borrowerservices/delqasst

Wells Fargo (877) 216-8448 or (866) 261-5642 or (800)766-0987 or (800) 678-7986 for payment assistance
Borrower Counseling Services
Monday – Friday 8:00 a.m. – 9:00 p.m., CT
Saturday 9:00 a.m. – 2:00 p.m., CT
Web: https://www.wellsfargo.com/mortgage/account/

Wendover Financial Services Corporation (800) 934-1081 or (800) 436-1022
Web: http://www.wendover.com/borrowers.html

Wilshire Credit Corporation (888) 502-0100
P.O. Box 8517
Portland, OR 97207-8517
From 6 a.m. to 5 p.m. (Pacific time) Monday through Friday
Web: http://www.wfsg.com/borrower/borrower.aspx

*No direct line to the loss mitigation or loan modification department. But I am working on it Loan Modification & Loan Workout ApplicationsChase Loan Modification Application

Option One Loan Modification Application

HSBC Online Loan Modification Application

Private Contacts Wendy Knafelc at Washington Mutual Loss Mitigation: (904) 732-8425 — wendy.knafelc@wamv.net

How IRS Would Treat Foreclosure, Short Sales?

Click on this articles which has questions and answers from IRS dealing with your short sales, and foreclosures questions.

How to Defend Foreclosures in Nevada?

Defending Wrongful Foreclosure Actions in Nevada

Foreclosures in Nevada are on the rise, and our law office is contacted everyday by people from all walks of life inquiring about how to stop foreclosure and other foreclosure related questions. It is a complex area of laws, and we do not suggest to go alone or hire an unlicensed attorney or an out of state attorney or their production firm. A Nevada licensed attorney would be an ideal agency to handle such complex legal cases.

Nevada, as we know is a non-judicial foreclosure state. It simply means that your lender does not have to go to court to get a foreclosure status against you. A simple non judicial procedure is enough to foreclose on your property.

In Nevada, a notice of intent to foreclose is followed by a notice of default which is followed by a notice of trustee’s sale. The last step, the actual non-judicial foreclosure sale, usually occurs within approximately 90 days (and in some cases longer from the filing of the notice of default. For the vast majority of loans, the Nevada non-judicial foreclosure process is an effective and relatively inexpensive method for a servicer to obtain its security. In most non-judicial foreclosures, the only court time and court costs involved are those for the usually uncontested municipal court unlawful detainer which is initiated by the servicer in order to obtain possession from former borrowers who refuse to vacate their former homes.

For a small but seemingly growing number of loans, the non-judicial foreclosure process has has almost become judicial. Increasingly, this war has been taken to courts and even in Nevada, a large number of these cases had been filed in court. This war of attrition ranges from bankruptcy, to District Courts Nevada, and to US District Court. It is not a war to stop eviction in municipal courts of Nevada. They are only mean to stop illegal detainer.
Before we go any farther, we like to outline once more the steps taken by your lender in foreclosing your property in Nevada.
Foreclosure Process in General in Nevada:
Most of the loans are premised upon continuous payments to the lenders. If these payments are not timely paid, or not continuously paid, the borrowers can start the foreclosure process. The lender reviews the loan documents and determines about the occurrence of a default. Failure to make loan payments triggers this default process. Also, it is contingent upon events which have not been corrected by payments or failure of a workout package.

A trustee under a deed of trust may exercise its statutory power of sale without the judicial intervention. In Nevada, the foreclosure is mostly a statutory foreclosure. (NRS 107.080(1)). Judicial foreclosures are also permitted under Nevada law (NRS 40.430-40.450) but judicial foreclosures are not the preferred choice in Nevada for most of the lenders because of the looming danger of the right of redemption. Upon default, the initial step is for either the beneficiary or the trustee to execute a notice of breach and election to sell, which is usually accompanied by an unrecorded Declaration of Default. (NRS 107.080(2)(b)). The beneficiary executes the notice, but the trustee records it. The notice of breach and election to see must be recorded in the county in which the property encumbered by the trust deed is situated. This notice must also be mailed (notice of breach and election to sell) by registered or certified mail, return receipt requested with postage prepaid, to the address of the trustor and to the person who holds the title of record, if known, otherwise to the address of the property. (NRS 1076.080(3)

Notice of Default and Election to Sell?
1. Must describe the property
2. Must describe the deficiency in performance of payment.
3. May contain a notice of intent to accelerate the entire unpaid balance if the terms of the obligations so permit (NRS 107.080(3).
4. Within 10 days of recording and mailing the notice of default to the trustor, copies of the notice must also be sent by registered or certified mail, return receipt requested, to each person who has either (1) filed a request for a copy of the notice; or (2) holds a record interest in the property subordinate to the deed of trust being foreclosed. Additionally, 20 or more days before the sale, the trustee must mail a copy of the notice of the time and place of the sale to the same parties by register3ed or certified mail, return receipt requested. (NRS 107.090.)
5. Nevada laws make it immaterial whether the notice is actually received by the trustor. The notice is effective nonetheless. (Turner v. Dewco Services, Inc., 87 Nev. 14, 479 P. Wd 462 (1971)
6. NRS 107.080(2)(a) provides that no power of sale may be exercised unless the trustor or his successor in interest, a beneficiary under a subordinate deed of trust or any other person with a subordinate lien or encumbrance of record (referred to below as “trustor or interested person”) has, for a period of 35 days, “failed to make good the deficiency in performance or payment….” The 35-day period commences on the first day following the day upon which the notice and election is recorded and mailed to the grantor and to the record owner of the property in the manner specified above. (NRS 108.080(3). If the trustor other interested persons “make good” the deficiency in payment or performance within the 35-day period, the trustee’s power of sale may not be exercised, and the obligation may not be accelerated. NRS 107.080(2)(a), (3). The 35-day period in the statute exists independently of any notice or cure periods contained the applicable notes or deeds of trust. If the notice of breach contains a permitted election to accelerate and the breach is not cured within the 35-day period, the trustor or other interested persons can thereafter only prevent the sale by tendering the entire unpaid balance of the obligation, as well as any costs, fees and expenses incidents to the preparation or recordation of the notice and incident to the making good of the deficiency in performance or payment (NRS 107.080(3).

What is the Procedure for Trustee’s Sale?
When three months have elapsed from the date of the recordation of the notice of breach and election to sell, the trustee may give notice of the time and place of the trustee’s sale, which notice must be given in accordance with the statutory provisions for execution sales of real property – posted notice in three public places for 20 successive days and published once a week for three consecutive weeks. (NRS 107.080(4);231.130(1)©. The trustee’s sale may be held at the office of the trustee anywhere in Nevada, even if it is not in the county where the property being sold is located. (NRS 107.080(4).
If the power of sale is exercised in compliance with the Nevada statute, the purchaser is vested with the title of the trustor, without equity or right of redemption NRS 107.080(5).
What are the Guarantor’s Rights to Notice and Subrogation?
The notice of breach and election to sell must be mailed by certified mail, postage prepaid, to each guarantor or surety of the debt at the address of each if known, or at the address of the trust property. The notice must also be mailed to any other obligor who has filed a request for a copy of the notice under NRS107.090. Failure to provide such notice would release that guarantor, surety or obligor from liability on the obligation. (NRS 107.095(1).

Under NRs 107.095(3) a guaranty, surety or other obligor is not released if the required notice is give at least fifteen (15) days before the later of the expiration of the 35-day period described in NRs 107.080 or any extension of that period by the beneficiary, or if the notice of default is rescinded before the sale id advertised.

Upon full satisfaction by the guarantor, surety or other obligor, other than the trustor, of the indebtedness secured by a mortgage or lien, the paying guarantor or obligor is entitled to enforce every remedy which the beneficiary has against the trustor, and is entitled to an assignment from the beneficiary of all of the rights the beneficiary then has by way of security for the payment or performance of the trustor. NRS 40-475 (1989). Such an obligor is also entitled to subrogation, junior only to the secured lender’s rights, in the case of partial satisfaction of the indebtedness. (NRS 40.485 (1989). These rights may only be waived by the guarantor, surety or other obligor after default. NRs 40.495(1)(1989).
What are the rights under One Action Rule?
In Nevada, a deficiency judgment can be filed under non statutory foreclosure provisions without having filed a judicial foreclosure.

What is a deed of Trust in Nevada?
The most common type of security interest in real property in Nevada is a Deed of Trust. A DOT has three parties.
Lender: It is the first party who is referred to as “Beneficiary.”
Borrower: It is the second party who is referred to as the “Maker”, or “Grantor”, or “Trustor” who conveys legal title to the property to the Trustee.
Trustee: This is the third party who holds legal title to the property.
Process: A DOT can be foreclosed in a simple process and cheaper as well. A Trustee sells the property encumbered by the DOT. All the lender needs to do in order to foreclose on a DOT is to determine that an even of default has occurred under the DOT and have the trustee conduct non-judicial foreclosure proceedings. Here, in Nevada, the trustee sale does not entail redemption. The borrower, in Nevada, does not have the statutory rights of redemption unlike the judicial foreclosure where the right of redemption lasts one year. Compare NRs 107.080(5) (no right of redemption in a foreclosure on a DOT ) with NRs 21.210 (one year period of redemption).

Determination of Default.
Your default notice also consists of a determination of default. It can be monetary or non monetary. Monetary is when it is linked to borrowers failure to pay, failure to pay property taxes, failure to pay homeowners association assessments and failure to pay special improvements and other assessments against the property. The non monetary events of default are spelled out in the notice of default and Deed of Trust as well as related loan documents. They can be failure to insure property, the failure to maintain debt service coverage ratios and waste.

Acceleration of Obligation:
A trustee under a deed of trust may exercise its statutory power of sale (commencement of foreclosure process) without judicial intervention in Nevada. NRs 107.080(1). Judicial foreclosure is also permitted under Nevada laws though seldom exercised. (NRs 40.430-40-450). They carry with them a one year right of redemption which lenders does not like it as they like to close this chapter once for all.

Steps in Foreclosure in Nevada?
1. The beneficiary or the trustee to execute a notice of breach and election to sell which is usually accompanied by an unrecorded Declaration of Default. (NRS 107.080(2)(b). The beneficiary executes the notice, but the trustee records it. The notice of breach and election to sell must be recorded in the county in which the property encumbered by the trust deed is situated. The notice of breach and election to sell must also be mailed by registered or certified mail, return receipt requested with postage prepaid, to the address of the trustor and to the person who holds the title of record, if known, otherwise to the address of the property. (NRS 1076.080(3).
2. The notice and election must describe the deficiency in performance or payment, and may contain a notice of intent to accelerate the entire unpaid balance if the terms of the obligation so permit. (NRS 107.080(3).
3. Within ten days of recording and mailing to the trustor the notice of default, copies of the notice must also be sent by registered or certified mail, return receipt requested, to each person who had either (1) filed a request for a copy of the notice; or (2) holds a record interest in the property subordinate to the deed of trust being foreclosed. Additionally, 20 or more days before the sale, the trustee must mail a copy of the notice of the time and place of the sale to the same parties by registered or certified mail, return receipt requested. (NRS 107.90)
4. Under Nevada law, it is immaterial whether the notice is actually received by the trustor. Turner v. Dewco Services, Inc., 87 Nev 14. 479 P.2d 462 (1971).
5. NRS 107.080(2)(a) provides that no power of sale may be exercised unless the trustor or his successor in interest, a beneficiary under a subordinate deed of trust or any other person with a subordinate lien or encumbrance of record (trustor or interested persons) has, for a period of 35 days, “failed to make good the deficiency in performance or payment….” The 35-day period commences on the first day following the day upon which the notice and election is recorded and mailed to the grantor and to the record owner of the property in the manner specified above. NRS 107.080(3). If the trustor or other interested person “make good” the deficiency in payment or performance within 35-day period, the trustee’s power of sale may not be exercised, and the obligation may not be accelerated. NRs 107.80(2)(a), (3). The 35-day period in the statue exists independently of any notice or cure periods contained in the applicable notes or deeds of trust. If the notice of breach contains a permitted election to accelerate and the breach is not cured within the 35-day period, the trustor or other interested persons can thereafter only prevent the sale by tendering the entire unpaid balance of the obligation, as well as any costs, fees and expenses incident to the preparation or recordation of the notice and incident to the making good of the deficiency in performance or payment. NRS 107.080(3).
6. Nevada Revised Statutes Chapter 107 governs Deeds of Trusts. The transfer of real property may be made in trust to secure loans and other obligations. See NRs 107.020. In the event a transfer is made in trust to secure payment, the Trustee is granted a power of sale which may be exercised if an event of default has occurred. See generally NRS 107.080.

How a Foreclosure Process in Nevada is Commenced?

1. The lender must first determine that an event of default has taken place.
2. The lender employs the Trustee or a successor.
3. The Trustee will prepare and record in the Office of the County of Records of the County in which the property is located a Notice of Default and Election To Sell. (NRS 107.080).
4. The Notice of Default and Election to Sell must be mailed by registered or certified mail, return receipt requested Election to Sell must be mailed by registered or certified mail, return receipt requested and postage prepaid, to the grantor of the Deed of Trust, the person who holds title of record on the date of the Notice of Default and Election to Sell, each guarantor or surety of the debt, NRS 107.095(1), and any person who recorded a request for a Notice of Default and Election to Sell. (NRS 107.090.
5. On the first day after the Notice of Default and Election to Sell is recorded and sent by mail to all interested parties, the borrower and the other obligors are then given 35 days to make good the deficiency in payment or performance. NRs 107.080(2)(a)(2). This essentially allows the borrower or other obligors to de-accelerate the default under the Deed of Trust and terminate the foreclosure proceedings.
6. In the event the borrower or other party in interest fails to cure the deficiency in payment or performance, the Trustee must wait until the expiration of three months following the recording of the Notice of Default and Election to Sell (55 days after the 35 day reinstatement period expires) before giving notice of the time and the place for the sale of the real property (NRS 107.080). The notice of the time and place for the sale of the real property must be published in accordance with Nevada’s execution statutes.

Requirements of Publication for the Notice Under Nevada Laws

Nevada statute requires the following publication of the notice of the date, time and place of the sale:
(1) Personal service or service by registered mail to the last known address of each person entitled to Notice of Default and Election to Sell;
(2) The posting of a similar notice particularly describing the property , for twenty days successively, in three public places of the township or city where the property is situated in or where the property is to be sold; and
(3) Publishing a copy of the Notice three times, once each week for three successive weeks, in a newspaper, if there is one the county. (NRS 21.130(c).
(4) In addition to the notice required by Nevada’s execution statutes, the Trustee is required to, at least twenty days before the date of the sale, deposit in the United States mail and envelope, registered or certified, return receipt requested and with postage prepaid, containing a copy of the Notice of time and place of sale, addressed to each person who has recorded a Request for Notice of Default and Sale. See NRS 107.090(4).
(5) If the Trustee fails to give any person liable to the beneficiary or any other person who has requested a Notice of Default and Sale the required notices, that person may be released of its obligation to the lender. NRs 107.095.
(6) NRs 107.080(4) allows the Trustee to conduct the sale at the Trustee’s office.
(7) At the foreclosure sale, the Trustee may sell the real property by public auction. Generally, the lender will provide the trustee with a minimum credit bid before the foreclosure sale. The amount of the credit bid may be for the full amount of the debt owed to the beneficiary or only a portion of what is owed to the beneficiary. Any person or entity may attend the foreclosure sale and bid for the real property.

What is Nevada’s “One Action Rule”?

Nevada has adopted a one-action rule. It provides that there may be only one action to collect a debt secured by a mortgage or other lien. The Nevada One Action rules provides: (NRs 40.430(1)-(3).
1. There may be but one action for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate. That action must be in accordance with the provision of this section and NRS 40.433 to 40.459, inclusive. In that action, the judgment must be rendered for the amount found due the plaintiff, and the court, by its decree or judgment, may direct a sale or the encumbered property, or such part thereof as is necessary, and apply the proceeds of the sale as provided in NRs 40.462.
2. This section must be construed to permit a secured creditor to realize upon the collateral for a debt or other obligation agreed upon by the debtor and creditor when the debt or other obligation was incurred.
3. A sale directed by the court pursuant to subsection 1 must be conducted in the same manner as the sale of real property upon execution, by the sheriff of the county in which the encumbered land is situated, and if the encumbered land is situated in two or more counties, the court shall direct the sheriff of one of the counties to conduct the sale with like proceedings and effect as if the whole of the encumbered land were situated in that county.

What is a Wrongful Foreclosure Action?

A wrongful foreclosure action is an action filed in superior court by the borrower against the servicer, the holder of the note, and usually the foreclosing trustee. The complaint usually alleges that there was an “illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust.” Munger v. Moore (1970) 11 Cal.App.3d. 1. The wrongful foreclosure action is often brought prior to the non-judicial foreclosure sale in order to delay the sale, but the action may also be brought after the non-judicial foreclosure sale.

A borrower in a wrongful foreclosure can allege that the amount stated as due and owing in the notice of default is incorrect for one or more of the following reasons:
- an incorrect interest rate adjustment,
- incorrect tax impound accounts,
- misapplied payments,
- a forbearance agreement which was not adhered to by the servicer, unnecessary forced place insurance,
- improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan.
- Wrongful foreclosure actions are also brought when the servicers accept partial payments after initiation of the wrongful foreclosure process, then continue with the foreclosure.
- Companion allegations for emotional distress and punitive damages usually accompany any wrongful foreclosure action.
- Also, a loan modification process was initiated, but stopped in bad faith by your lender.
- Deceptive trade practice under Nevada Laws.
- Violations of TILA
- Violations of RESPA
- Violations of HOEPA.
- Contractual Breach
- Intentional infliction of emotional distress
- Negligent infliction of emotional distress
- Wrongful foreclosure
- Promissory Estoppel.
Damages available to a borrower in a wrongful foreclosure action are an amount sufficient to compensate for all detriment proximately caused by the servicer or trustee’s wrongful conduct. Damages are usually measured by value of the property at the time of the sale in excess of the mortgage and lien against the property. Munger v. Moore (1970) 11 Cal.App.3d. 1. Additionally, the borrower may also obtain damages for emotional distress in a wrongful foreclosure action. Young v. Bank of America (1983) 141 Cal.App.3d 108; Anderson v. Heart Federal Savings & Loan Assn. (1989) 208 Cal.App.3d. 202. Further, if the borrower can prove by clear and convincing evidence that the servicer or trustee was guilty of fraud, oppression or malice in its wrongful conduct, punitive damages may be awarded.

How Can a Wrongful Foreclosure Action Delay Recovery of the Security?

A wrongful foreclosure suit filed in District court will not necessarily delay a servicer’s recovery of its security. The companion filings to such a suit (notice of pending action, injunction and/or motion to consolidate) however can delay a servicer’s ultimate recovery. Delay caused by a wrongful foreclosure action can be anywhere from forty-five days to two years.

A notice of pending action (“lis pendens”) is the most common companion to a wrongful foreclosure action. A lis pendens is recorded in the county in which the real property security is located at the time the wrongful foreclosure action is filed. The only requirement for a lis pendens to be recorded is an attorney’s signature that the action which is being noticed actually involves a real property claim. The purpose of the lis pendens is to put all third parties on notice that the borrower and the servicer are litigating over the real property security. Once a lis pendens is recorded, no title insurance company will issue a title insurance policy unless and until the lis pendens is removed. Although the servicer may “bond around” the lis pendens without title insurance, the real property security is virtually inalienable.

While a lis pendens can be filed at any time in the foreclosure process, a borrower applies for an injunction prior to the foreclosure sale with the intent of keeping the foreclosure sale at bay until issues in the lawsuit are resolved. The lawsuit can take anywhere from ten to twenty-four months. Generally, an injunction will only be issued if it appears to the court that: (1) the borrower is entitled to the injunction; and (2) that if the injunction is not granted, the borrower will be subject to irreparable harm. Like an action to expunge a lis pendens, a borrower’s application for an injunction is essentially a “mini-trial” on the merits.

There are important issues which are considered in nearly all injunctive relief action applications is the amount due and owing on the note and deed of trust. Again, it is imperative in any injunctive hearing that the servicer provide a detailed analysis of the amount it contends is due and owing on the note and deed of trust at issue. Sometime it is not possible for your servicer and they are unable to provide a breakdown of the amounts due and owing on the note and deed of trust at issue. Again, sometime they only can provide insufficient information to refute the borrower’s allegations, it is likely the injunction will be issued. Now comes the question of producing a bond from the borrowers, and making timely payments. In many cases, judges make their own laws when they experience heart wrenching stories from the borrowers, and their sorrowful tales have a deeper impact upon the judges, the issue injunctions. Of course tough standards are required by Nevada judicial system in issuing these injunctions but sometime the judges issue minimal bonds and little or no debt service requirements. This worst case scenario translates into a servicer being unable to sell the security and receiving no payments on the underlying debt during the life of the lawsuit. In reality, judges are loath to modify an injunction after it is issued and prior to a decision on the merits. Once an injunction with little or no debt service or bond is in place, the wrongful foreclosure suit will be a long and expensive process because the borrower has lost all incentive for a quick resolution of the action.

Another way borrowers delay a servicer’s recovery of its security through a wrongful foreclosure action is by consolidating their wrongful foreclosure action with their unlawful detainer action. Asuncion v. Superior Court (1980) 108 Cal. App. 3d 141. The Asuncion case which is usually relied upon by borrowers for consolidation contains an egregious fact scenario including clear fraud in the inducement of the loan. Judges however, do not limit the application of Asuncion to cases where fraud is alleged by the borrower. In applying Asuncion, a court can allow the unlawful detainer suit to be consolidated with the wrongful foreclosure action if there is a mere similarity of issues in the cases.
If the borrowers plays all the cards tactfully the final disposition of the case can be delayed anywhere from ten months to two years.

Nevada law provides many unique procedural remedies which may be employed in battling a wrongful foreclosure action. Judicious use of these procedures by counsel and close coordination between counsel and client can lessen the pain of defending a wrongful foreclosure action.

Thoughts on Walking Away From Your Home!

Short Sale vs. Foreclosure

Of course both short sale and foreclosure are not appealing to my senses and I detest equally both of them, but here my likings are not in discussion: I have to make distinction between these two often quoted and touted remedies in this national crisis. It is actually a selection between the two lesser evils.

Short-Sale versus Foreclosure.

A short sale is just the opposite of a full sale. Let us say your home has an appraised value of $400,000, and you had placed your house on sale for quite some, and no offer comes, and you get tired. You can tell the bank that heck with it, I want to just get out of it. The Bank would plan along with your knowledgeable broker a sale which should be quick, non cumbersome and in which you would not see a penny. Altogether it is called a Short Sale. It is not as damaging on your credit report as let us say a foreclosure is. Closely related to short sale, of course, a surrender of deed which I will discuss in another time.

Few things you have to remember.

1. Banks would not allow a short sale if there is a second lien attached with it. A short sale is a compromise between you and the bank who has the lien holder of your first principal. A short sale would wipe out the junior interests and that means second lien holder or HELOC. They would not get anything, and they would not agree to short sale.

2. You can compromise with the bank how it should be reported to you credit bureaus.

3. A short sale would stop the bank for a deficiency judgement against you.

4. One problem, if there is a short sale and you declare bankruptcy, it can be treated as a collusive transaction between you and the lender, and your other creditors can contest it and may invalidate it.

5. Of course the solution again lies with your knowledgeable attorney handling your issue.

6. The IRS has very complex tax consequences in a debt renegotiation, such as a short sale, or foreclosure, that are more detrimental for solvent taxpayers than those who are insolvent or bankrupt as each generates Cancellation of Debt Income.

7. A borrower who refinanced their home to take the cash out to buy another home, then let the first home go to foreclosure thinking they are getting off debt and obligation free, are living in a fools paradise.

The first thing to establish is what the home’s basis is. The IRS definition for basis is your investment in the home for tax purposes. It usually starts with the cost to acquire the house. Adjusted basis is the increase or decrease in the original basis according to certain events. Increases to basis include but are not limited to improvements having a useful life of more than a year, assessments for local improvements, sales tax, the cost of extending utility lines to the home, legal fees such as the cost of defending or perfecting title, and zoning costs. Decreases to basis include but are not limited to depreciation, nontaxable corporate distributions, casualty and theft losses, easements, and rebates from the seller.

IRS Pub 551 Basis of Assets is a handy reference. Taxable gain or loss on a house is determined by the difference of the selling price/amount realized and its adjusted basis.

IRC 61(a)(12) CODI, Cancellation of Debt Income other than as a gift, creates taxable income to the debtor unless an exception applies. In a Short Sale, the lender issues a 1099-C to the IRS. In a Short Sale example of a home, whether it be primary, second home, or third home, A bought his home in Reno in November 2004 for $290,000. In November 2005, A refinanced to a new loan for $380,000. Unfortunately, today its Fair Market Value is $260,000. A can no longer make the payments due to his legal split with B, his spousal equivalent. In 2007 A sells the property through a Realtor who successfully negotiated a Short Sale of $120,000 loan reduction with A’s lender, so A walked away with no immediate out-of pocket loss. A has a $120,000 nondeductible loss (adjustment to basis) on his home. The $120,000 principal reduction is taxable income in 2007 to A. (rev. Rul. 82-202) It is reported as “Other Income” on Line 21 of the 1040. If A had bought with seller-financing, there is special rule IRC 108 (e) (5). If three conditions are met, the borrower reduces the property’s basis and does not recognize CODI.

The IRS treats a foreclosure as a sale or exchange from which the borrower may realize gain or loss. In a foreclosure, the lender issues a 1099-A to the IRS. In a recourse state such as Nevada, the lender checks Box 5 as “Yes.” The borrower is personally liable to pay any amount of the debt not covered by the property’s value. The amount realized for borrower’s Federal gain or loss on the transaction is the smaller of debt cancelled or FMV of the transferred property. The borrower’s CODI is ordinary income if the loan balance exceeds the property’s FMV. If A had gone to foreclosure, his adjusted basis is $290,000, the recourse debt cancelled is $380,000 and the FMV of the property is $260,000. Here he realizes $260,000. The cancelled debt ($380,000) up to the property’s FMV ($260,000). Compare amount ($260,000) realized with adjusted basis ($290,000). A has a $30,000 non-deductible loss. He also recognizes ordinary income equal to the CODI of $120,000 ($380,000 debt cancelled less $260,000 FMV). This $120,000 is the part of the cancelled debt not included in the amount realized.

In a short sale example of a rental house, if A had bought and used the house as a rental, if A is not insolvent or bankrupt, if A can meet the required extent of his involvement, A can elect on Form 982 to exclude from gross income any income from the discharge of QRPBD (Qualified Real Property Business Debt). IRC 108(c)(3) QRPBD includes debt 1) that was incurred or assumed in connection with real property used in trade or business and that is secured by such real property, 2) debt incurred or assumed to acquire, construct, reconstruct, or substantially improve real property used in a trade or business. IRC 108(c)(1) Income excluded for the discharge of QRPBD reduces the basis of the taxpayers depreciable real property, first to the property with the discharged debt, then to the taxpayer’s other depreciable real property proportionally, on each property’s relative adjusted basis

NY Man Convicted in Mortgage Fraud

New York Developer Pleads Guilty To Mortgage Investment Scheme
Michael Hershkowitz, 52, New York, New York, a Manhattan real estate developer, pleaded guilty in Manhattan federal court to participating in a $27 million mail and wire fraud conspiracy.
Hershkowitz, working through Manhattan real estate development company, The Kingsland Group, Inc., and related entities, fraudulently induced approximately 70 individuals to lend the Kingsland Group over $27 million, purportedly to fund the renovation of approximately sixteen multi-family apartment buildings located in upper Manhattan.

Hershkowitz and a co-conspirator, Ivy Woolf-Turk, 52, Port Washington, New York, falsely represented that the lenders would hold, as collateral for the loans, interests in bona fide first mortgages in the various properties in which they thought they were investing. In fact, the lenders did not hold recorded, first mortgages in the properties. Instead, the lenders were provided with forged documents falsely reflecting that the mortgages had been properly recorded with the City of New York. Interest was paid on the loans for some years after they were first made, but ultimately the principal on the loans was not repaid when due and it was determined that the lenders did not have valid first mortgages on the properties in question.

Hershkowitz pleaded guilty before United States District Judge P. Kevin Castel to a one count Information charging conspiracy to commit mail and wire fraud — a charge which carries a maximum term of 20 years in prison. The Information also contains a forfeiture allegation for over $27 million, representing the funds obtained through the fraud. Hershkowitz is scheduled to be sentenced on September 9, 2009.

Lev L. Dassin, Acting United States Attorney for the Southern District of New York, made the announcement.

Mr. Dassin praised the investigative work of the Federal Bureau of Investigation in this case.

This investigation is being handled by the Major Crimes Unit of the United States Attorney’s Office. Assistant United States Attorneys Harry A. Chernoff and Marcus A. Asner are in charge of the prosecution.

More Mortgage Fraud News

William A. McDowell, 30, Charlotte, North Carolina, was sentenced in U.S. District Court in Charlotte on Wednesday, March 18, 2009, for crimes in connection with a mortgage fraud scheme that involved numerous mortgage loans and houses in Charlotte, North Carolina, communities.

Convicted by a federal jury at trial in June 2008, McDowell received a term of nine years imprisonment to be followed by a three-year term of supervised release. McDowell was also ordered to pay restitution in the amount of $2.7 million to the affected lending institutions.

The charges against McDowell arose out of a conspiracy which took place from December 2002 through March 2005 in the Western District of North Carolina. The defendants include two promoters and an underwriter for Countrywide Homes Loans. The superseding bill of indictment identifies an attorney, three other promoters and a real estate investor as unindicted co-conspirators in the scheme. Those individuals all pled guilty and cooperated with the prosecution. As part of the scheme the defendants agreed to defraud home mortgage lenders, including federally insured financial institutions across the country. The scheme centered on the submission of false and fraudulent mortgage loan applications in the names of individual straw borrowers solicited to purchase real property through real estate purchase offers. The coconspirators obtained mortgage loans secured by properties throughout North Carolina with inflated values.

Defendant McDowell’s role, generally, was that of recruiter and as part of that activity, he caused prospective buyers (“straw buyers”) to apply for home mortgage loans, typically by promising that (1) the buyers would not be required to provide down payments on the property, (2) the promoter would pay the buyers at or near the time of closing for participating in the scheme, and (3) the promoters would assist the buyers in renting the property bought with the loan proceeds and later selling it at a profit. As part of the scheme, it was further arranged for loans to be approved on the basis of statements the conspirators knew to be false. They misrepresented or concealed, among other things, each of the following during the course of their scheme: (1) the buyers’ income; (2) available funds in buyers’ bank accounts; (3) buyers’ resources; (4) the buyers’ then-current employment and employment histories; (5) the buyers’ intent to occupy the home as their primary residence; and (6) the source or nature of the buyers’ down-payment for the properties.

Trial testimony and court filings show that McDowell recruited straw buyers and brought them to his co-conspirators in order to facilitate the fraudulent transactions. Profits ultimately realized by the group, represented by the difference between appraisal amounts and loan amounts, were shared among the group and the various straw buyers. McDowell and his coconspirators utilized the personal information of the straw buyers to engage in the fraudulent real estate transactions. Generally the transactions involved preparing and submitting fraudulent loan applications and false supporting documents such as bogus employment information and account statements for fictitious bank and brokerage accounts. Trial evidence showed that in one instance, McDowell himself began residing in one of the homes fraudulently purchased by using the personal information of one of the buyers he had recruited. That home was located in Charlotte, North Carolina’s Piper Glen community. McDowell received thousands of dollars in kickbacks from his participation in the scheme. These illegal kickback payments were concealed by falsely classifying the payment as an “assignment fee” on the HUD-1 statement. Trial evidence showed that most of the homes involved in the mortgage fraud scheme went into foreclosure.

McDowell, charged in the indictment with a total of 4 counts, including mortgage fraud conspiracy, mail fraud, and money laundering conspiracy, was placed in federal custody at the time of his conviction on all counts on June 3, 2008. McDowell’s three co-defendants (listed below), all of whom have pled guilty, currently await sentencing. McDowell’s additional named co-conspirators, Gordon George and Duane Montgomery, have been charged, convicted and sentenced in U.S. District Court in Charlotte. On September 14, 2005, George pled guilty to conspiracy, mail fraud, and money laundering charges set forth in a separate Bill of Information (Western District of North Carolina Docket No. 3:05CR326) against him. On August 16, 2005, Montgomery pled guilty to mail fraud conspiracy set forth in a separate Bill of Information (Western District of North Carolina Docket No. 3:05CR292) against him.

The announcement is made by Acting U.S. Attorney Edward R. Ryan for the Western District of North Carolina, joined by Kenneth Moore, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina. The sentence was handed down by U.S. District Judge Frank D. Whitney.

“William McDowell sought to corrupt and exploit the American dream of home ownership by engaging in this complex mortgage fraud scheme,” said Acting U.S. Attorney Ryan. “These types of mortgage fraud schemes have devastating effects on our communities, and as most of us have learned, have a profoundly negative impact on our broader economy. This nine-year sentence sends an unequivocal message that those who participate in mortgage fraud will be severely punished for their conduct,” he added.

Acting U.S. Attorney Edward Ryan said, “This result also highlights the long standing commitment of Charlotte’s Mortgage Fraud Task Force to identify, investigate, and bring to justice those individuals engaged in mortgage fraud schemes.”

This conviction and sentence is part of Operation “Clean Deed,” an undercover investigation initiated by the FBI’s Charlotte Division in 2002. Operation “Clean Deed” has
resulted in over 30 convictions and has identified over $70 million in fraudulent mortgages.

Those convicted include many licensed real estate professionals, including mortgage brokers, attorneys, appraisers, underwriters, and loan brokers, as well as other participants such as home builders and straw buyers.

In addition, Acting U.S. Attorney Ryan announced today that the United States recently turned over more than $400,000 to the clerk of court for distribution to mortgage lenders victimized due to the crimes committed within this mortgage fraud scheme. As set forth in the indictment against William A. McDowell and his co-defendants, Gordon George was a coconspirator of McDowell and the others in their scheme to obtain inflated loans on overvalued Charlotte properties.

As indicated in the bill of information against George, approximately $7 million in proceeds of fraudulent loan applications were diverted to George and his co-conspirators. While white collar criminals often dissipate much of the proceeds of their crimes, in this case the United States was ultimately able to locate and forfeit the roughly $400,000 from George’s accounts.

Forfeiture is the process whereby a criminal defendant is divested of his interest in property and the United States obtains title to the property. Federal statutes authorize forfeiture of assets that are the proceeds of crime, that facilitate crime, and that are involved in crime. The Department of Justice prioritizes the use forfeited assets to provide recompense to all victims, including businesses, government agencies, and individuals. Accordingly, in the case against George, the United States has requested that the clerk of court distribute the forfeited funds to mortgage companies defrauded due to the actions of George and identified as victims due $1,202,961.42 restitution in the Judgment against George.

The convictions of Young, McDowell, Johnson, Griffin, Montgomery, and George, and the subsequent forfeiture of George’s assets and return of the assets to victims resulted from efforts by the United States Attorney’s Office, the Federal Bureau of Investigation, and the United States Marshals Service. Assistant United States Attorney Craig Randall prosecuted George, Assistant United States Attorney Mark T. Odulio prosecuted Young, McDowell, Johnson, and Griffin, and Assistant United States Attorney William Brafford oversaw the forfeiture action.

Anthony Young, 54, Huntersville, NC, Awaiting sentencing;
William A. McDowell, 30, Charlotte, NC, Sentenced Wednesday, March 18, 2009;
Oliver W. Johnson, Jr., 46, Okolona, MS, Awaiting sentencing;
Carla Griffin, 40, Charlotte, NC, Awaiting sentencing.

President of Mortgage Company Pled Guilty in Fraud

President Of Metropolitan Money Store Pleads Guilty In Over $35M Mortgage Fraud Scheme
Joy Jackson, 41, Fort Washington, Maryland, pleaded guilty to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme. The accused promised to help homeowners facing foreclosure to keep their homes and repair their damaged credit.

According to her plea agreement, Jackson was a licensed mortgage broker, but was not licensed to provide credit repair. In May 2005, Jackson and coconspirator Jennifer McCall incorporated Metropolitan Money Store, located in Lanham, Maryland, which offered foreclosure consultation and credit services to financially distressed homeowners. Also at that time, Jackson and other coconspirators incorporated Fordham & Fordham Investment Group, Ltd. (F&F) based in Lanham and Greenbelt, Maryland to assist Metropolitan Money Store in its foreclosure consulting and credit servicing business.

From September 2004 to June 2007, Jackson, McCall and others conspired to fraudulently promise to help homeowners, who had substantial equity in their homes but were facing foreclosure because of their inability to make monthly mortgage payments, avoid foreclosure and repair their damaged credit. The homeowners were directed to allow title to their homes to be put in the names of third party purchasers (the straw buyers) for a year, during which time Metropolitan Money Store promised to improve the homeowners’ credit ratings, help them obtain more favorable mortgages, and eventually return title to their homes to them. The homeowners were told that the equity withdrawn from the properties would be used to pay the mortgage and expenses on their homes and to repair their credit. The straw buyers were paid up to $10,000 to participate in the scheme and allow the properties to be put in their names. Jackson also served as a straw buyer on several properties in Maryland.

Using the homeowners’ properties, the conspirators applied for mortgages to extract the maximum available equity from the homes, and prepared and submitted fraudulent loan applications to mortgage lenders to obtain inflated loans on the target properties in the straw buyers’ names. At settlements, the conspirators imposed numerous fees and required “seller contributions” which were far in excess of industry standards; they imposed fees for services which were not performed, disclosed or explained to the homeowners; and they transferred the sale proceeds out of the escrow accounts into the conspirators’ business and personal bank accounts and converted a substantial portion of those funds to their personal use.

In order to carry out the fraud scheme, Jackson and others obtained large cashier’s checks in the names of straw buyers and Metropolitan Money Store employees in order to conceal transactions from the lenders. Jackson misappropriated the license and bond numbers of other brokerage and credit repair companies and used them to broker loans and fraudulently improve homeowners’ credit scores by adding fictitious lines of credit to their credit histories.

During the conspiracy, Jackson and McCall provided a co-conspirator acting as a closing agent with more than $100,000 in kickback payments to process real estate closings quickly. Moreover, whenever Jackson requested, the closing agent permitted Metropolitan Money Store employees to close loans without him or any other closing agent being present. She directed others to prepare fraudulent settlement documents that contained false information. Jackson also paid bank employees to provide false income balances for straw buyers to lenders; add straw buyers and others onto accounts for lender verification purposes; transfer money into accounts to show a certain amount of money was in a bank account and thereafter return those funds to the original account; and shift money between Metropolitan Money Store and F&F accounts to facilitate loans in straw buyer’s names.

Finally, Jackson directed others to transfer the equity proceeds of homeowners into the general checking accounts of Metropolitan Money Store and F&F, as well as Jackson’s personal accounts. Jackson withdrew these funds and paid for goods and services for herself, including art, cars, clothing, credit card bills, homes, fur coats, furniture, airline trips, gambling expenses, jewelry, limousine services, student tuition and a luxury wedding for herself and a conspirator.

As a result of this scheme, the total loss attributable to Jackson, including the estimated losses to the mortgage lenders, is $16,880,884.86.

Jackson faces a maximum sentence of 30 years in prison and a $1 million fine for the conspiracy. U.S. District Judge Roger W. Titus scheduled sentencing for November 16, 2009 at 9:00 a.m. As part of her plea, Jackson has agreed to pay restitution for the full amount of the victims’ losses, and forfeit three residential properties in Oxon Hill, Capitol Heights and Laurel, Maryland, and three vehicles.

Jackson is the seventh defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. Jennifer McCall, 47, Ft. Washington, Maryland, a chief executive officer of Metropolitan Money Store and owner of JC and JC Investments LLC; Katisha Fordham, 35, Washington, D.C., a loan processor at the Metropolitan Money Store. Richard Allison, 37, Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau; Clifford McCall, 47, Lanham, Maryland, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland; Carlisha Dixon, 31, Hyattsville, Maryland, vice president and a director of Burroughs & Smythe Financial Services, Inc.; and Chandra Jones, 31, Lanham, Maryland, the daughter of co-defendants Jennifer and Clifford McCall, each. pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison. Three defendants remain scheduled for trial on July 7, 2009.

United States Attorney for the District of Marylan. Rod J. Rosenstein made the announcement.

“Joy Jackson presided over a ‘money store’ that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $16 million of loans that were never intended to be repaid,” said U.S. Attorney Rod J. Rosenstein. “Instead of helping financially distressed homeowners keep their homes as promised, she secretly used their home equity to buy luxuries for herself, includin. furs, jewelry and over $800,000 on her wedding.”

“These types of crimes create a significant loss of tax revenue, drive buyers into foreclosure, and leave lenders burdened with bad loans,” stated C. Andre’ Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “IRS-CI is committed to pursuing individuals who create such havoc.”

United States Attorney Rod J. Rosenstein thanked the Federal Bureau of Investigation, U.S. Secret Service, Internal Revenue Service-Criminal Investigation and the Maryland Department of Labor, Licensing and Regulation’s Division of Financial Regulation Investigative Unit for their investigative work. Mr. Rosenstei. commended Assistant United States Attorneys James A. Crowell IV and Christen Sproule, who are prosecuting the case.

Another Loan Modification Company Busted for Advanced Fees

Another “Loan Modification” Company Busted For Advanced Fee

New Hope Property LLC d/b/a New Hope Modifications was charged in a four count complaint, filed in New Jersey Superior Court, in Camden County, with violating the Consumer Fraud Act, state advertising regulations and the Debt Adjustment and Credit Counseling Act. In addition to New Hope, Donna Fisher and Brian Mammoccio, Mullica Hill, Gloucester County, New Jersey, identified as registered agents of the business in New Jersey, are named as individual defendants.

According to the Attorney General’s lawsuit, New Hope has engaged since 2007 in unlicensed debt adjustment in New Jersey, including mortgage loan modification services, and has falsely represented that it has affiliations with government programs including the Hope Now Alliance. The state charges that, through its Web site, and through agreements with other businesses that provide leads, the unlicensed New Hope has sold loan modification help to distressed homeowners, failed to deliver on its promises of mortgage loan assistance, and failed to provide refunds once consumers realized they were getting nothing for their money. In one case
a Linden, Union County, woman facing foreclosure had a total of $1,500 electronically drawn from her bank account to cover the “fee” she owed New Hope, but received no loan modification help in return.

Scam Loan Artists From California: Some Nabbed There

Scam Artists Arrested For Committing Loan Modification Fraud

Mary Alice Yraceburu, 45, Riverdale, California, and Marianne Curtis, 67, Costa Mesa, California, who “coldly and heartlessly” conned over one hundred and sixty victims out of thousands of dollars for non-existent loan modification services, were arrested March 19, 2009.

California Attorney General Brown filed 49 felony charges in Orange County Superior Court against Yraceburu and Curtis.

Yraceburu was arrested in Fresno County and Curtis was arrested in Orange County on the following charges:

- 24-counts of grand theft;
- 25-counts of violations of California’s foreclosure consultant statutes;
- One special allegation that the total value of theft was over $65,000;
- One special allegation that the total value of theft was over $100,000;

Both women are convicted felons who have served time in state and federal prisons.

The two women operated a company called Foreclosure Freedom, which sent hundreds of fliers to Californians promising help in stopping the foreclosure of their homes. The fliers read: “FINAL NOTICE – Respond only to this notice immediately.” This is similar to First Gov scam, which the Attorney General stopped late last year.

When homeowners called the number on the flyer, they were told their mortgages could be renegotiated to a lower monthly payment. Victims, however, were required to pay thousands of dollars in up-front fees and were instructed not to contact their lenders.

Victims were assured the company had “private lenders and specialists exclusive to their company who are very experienced in the options and methods used to renegotiate home loans,” yet neither of the women who operated the company had real estate licenses, legal training, or any experience in the home mortgage market.

Investigators found no evidence of any successful loan modifications and most of the victims were either forced into bankruptcy or lost their homes to foreclosure.

Assets seized through search warrants served at Foreclosure Freedom and the bank accounts held by Mary Alice Yraceburu and Marianne Curtis totaled over $10,000.

If convicted of all charges, Yraceburu and Curtis face 21 years in prison.

Attorney General Edmund G. Brown Jr. made the announcement.

“These scam artists coldly and heartlessly preyed on Californians desperate for help in saving their homes,” Attorney General Brown said. “Homeowners in financial trouble have to be on guard against loan modification fraud, so they don’t make a bad situation worse.”

Three Utah Men Charged in Loan Fraud

Three Utah men charged in mortgage fraud scheme
By Dawn House

The Salt Lake Tribune

Updated: 03/18/2009 08:09:56 PM MDT

Three Utah men have been charged in a $2.9 million mortgage scheme that allegedly took advantage of sloppy lending practices. Federal officials say the fraud is similar to other swindles that helped bring about the nation’s financial crisis.

The 38-count indictment, returned by a grand jury on Wednesday, is the first of 50 other mortgage frauds under investigation involving $150 million in losses, said U.S. Attorney for Utah Brett Tolman.

“Prosecutions can be a great deterrence,” said Tolman, who promised to target mortgage fraud “so we can start rebuilding.”

Defendants named in the federal indictment are Ronald W. Haycock, Sr., 61, Bountiful; Lyle Smith, 43, Roy; and disbarred attorney Jamis Melwood Johnson, 57, Salt Lake City.

The three face 15 counts of money laundering, 12 counts of wire fraud, 10 counts of mail fraud and one conspiracy count. The money laundering counts carry a prison sentence of up to 20 years; the wire and mail fraud up to another 20 years, and the conspiracy charge also has a penalty of up to 20 years.

Haycock said he was shocked by the indictment and must talk to his attorney before making a comment. Smith could not be reached for comment. Johnson said he was not involved in any of the business entities or transactions outlined in the indictment. Johnson was disbarred in 2001 on an unrelated case.

Prosecutors say Haycock and Smith recruited “straw buyers” and used the purchasers’ favorable credit ratings to take out loans on 12 homes in Davis, Salt Lake and Utah counties from 2005 through August 2007. The three men are charged with closing loans by using false information that inflated the straw buyers’ income and assets. Cash from the loans were allegedly paid out to joint ventures controlled by the defendants and purportedly deposited into an account to fund other straw-buyer loans.

The defendants also took out loan proceeds from an account they referred to as the “slush fund,” according to the indictment. Tolman said the men “siphoned off” assets totaling nearly $2.9 million while leaving the straw buyers with mortgage payments they could not afford.

Haycock allegedly formed four companies, referred to as Haycock Properties. Prosecutors say the straw buyers were told that the companies would be making loan payments for them, buyers would not have to make a down payment and the homes, whose appraisals had been rigged for more than they were worth, would be quickly sold. Buyers were allegedly paid from $7,000 to $20,000 to sign purchase and loan documents.

The companies stopped making loan payments, leaving mortgage lenders with non-performing loans secured by properties worth far less than the outstanding loan balances, prosecutors said.

Mortgage companies that purportedly lost money in the scheme included the Utah offices of Countrywide Bank and Countrywide Home Loans, names that became synonymous with the mortgage industry meltdown, America’s Wholesale Lender, Argent Mortgage, Paragon Home Lending, Shoreline Lending and Mountain States Mortgage.

Attorney Sentenced for Loan Fraud

Attorney Sentenced For Assisting In $5M Mortgage Fraud Scheme

Howard Gaines, Deerfield Beach, Florida, has been sentenced for his role in a complex mortgage fraud scheme. Gaines, an attorney and a licensed title agent with Your Title Choice, Inc., in Deerfield Beach, Florida, was sentenced by U.S. District Judge William Dimitrouleas to 8 years in prison, to be followed by 3 years of supervised release. In addition, Gaines was ordered to pay restitution in the amount of $422,465 to three lenders.

A jury convicted Gaines in December 2008 on one count of conspiracy to commit mail and wire fraud and two counts of mail fraud.

This is the sixth conviction in this case, following five earlier guilty pleas by other conspirators. According to the evidence presented at trial, Gaines, as a title agent, aided co-conspirator Anthony Dehaney and others to close on fraudulent loans. Among the fraudulent documents presented at closings were HUD 1 Settlement Forms, which falsely represented that buyers were using their own money to close on the purchases. The evidence showed that Gaines helped Dehaney close more than $10,000,000 in loans during 2004, 2005, and 2006, including $5,000,000 in fraudulent mortgages.

R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, and Alex Hager, Acting Commissioner, Florida Department of Financial Regulation, made the announcement.

Mr. Acosta commended the investigative efforts of the FBI, U.S. Postal Inspection Service, and the State of Florida Office of Financial Regulation for their work on this case. The case is being prosecuted by Assistant United States Attorneys Jeffrey Kay and Jennifer Keene of the Fort Lauderdale Office.

CA Attorney General Sues Loan Modification Companies

http://www.mortgagefraudblog.com/ee-assets/my-uploads/felonycomplaint.pdf

How Federal Laws Can Stop Wrongful Foreclosures?

What happens if a lender fails to comply with the TILA rules?

The borrowers are allowed to RESCIND THE LOANS AND THIS WOULD VOID THE MORTGAGES ON THEIR HOMES. OF COURSE, THIS IS THE EXCELLENT REMEDY. BUT IT HAS A SHORTER STATUTORY TIME PERIOD. The mortgage lender becomes just another unsecured creditor, who must get in line behind everyone else who may have filed a lien on the property. Who ever files first (Credit card, auto finance, doctors, etc.) has first priority.

That makes the mortgage loan itself unsecuritized — and worth a lot less — due to the increased risk of loss of collateral:

A growing number are suing lenders over inaccurate disclosure papers, and if they win they get to rescind the loans. Rescission is a powerful remedy provided under the federal laws. While that’s good news for individuals, it’s a potential problem for investors exposed to subprime mortgages.

The subprime market has been known for its lax standards in documentation and the proliferation of these loans in recent years is now fueling significantly more complaints. The subprime share of first mortgages rose to 13.4% in the first quarter of 2007 from 10.9% in the first quarter of 2004.”
Let us see how the various federal laws helps stopping predatory lending and cures many of its ills. Of course, it is never too late to hire an attorney. The Law Office of Malik Ahmad is very knowledgeable in helping homeowerns against such predatory lending practices:

The Act Requires:

(1) SPECIFIC DISCLOSURES.–In addition to other disclosures required under this title, for each mortgage referred to in section 103(aa), the creditor shall provide the following disclosures in conspicuous type size:
(2) ANNUAL PERCENTAGE RATE.–In addition to the disclosures required under paragraph (1), the creditor shall disclose
(A) in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or
(B) in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section 1204 of the Competitive Equality Banking Act of 1987.

This seems to be where many of the subprime 2/28 ARMs ran afoul: They failed to meet the disclosure laws regarding actual interest amounts and payments.

Who has gotten tagged with these cases so far? Subprime lender NovaStar Financial Inc. (NFI) in Kansas City settled a class action suit for $5.1 million. And, consumers in Wisconsin recently won a class-action TILA suit (its under appeal). Between 1998 and 2006, approximately 2.2 million (nominal) home owners with subprime loans are expected to lose their homes, according to the Center for Responsible Lending. The consumers in this group who a) could not afford those loans and b) did not receive the proper disclosures are “talking with lawyers in an effort to prevent foreclosures.”

Overview of Truth in Lending Act (TILA)

The purpose of the Truth In Lending Act is to require a meaningful disclosure of credit terms so that the borrower will be able to compare the terms of different loans available to him and to protect the consumer against unfair lending practices.
Sources of Law
• 15 U.S.C. § 1601, et seq.
• Regulation Z (12 C.F.R. 226).
• The Federal Reserve Board’s Official Staff Commentary on Regulation Z (12 C.F.R. 226.36, Supplement I). Ford Motor Credit v. Milhollin, 444 U.S. 555, 565 (1980) (“Unless demonstrably irrational, Federal Reserve Board staff opinions construing the Act or Regulation should be dispositive”).

Substantive Requirements
There must be clear, conspicuous, and accurate disclosures of loan terms as set forth in 12 C.F.R. 226.18 (“Content of Disclosures”).
Every loan charge must be properly disclosed as either part of the “amount financed,” which represents “the amount of credit provided to you or on your behalf,” 12 C.F.R. 226.18(b), or as part of the “finance charge,” which represents “the dollar amount the credit will cost you,” 12 C.F.R. 226.18(d). The “annual percentage rate” (APR) combines the interest rate and additional up-front (prepaid) finance charges to yield the total “cost of your credit as a yearly rate.” 12 C.F.R. 226.18(e).
The finance charge is computed according to the rules set forth in 12 C.F.R. 226.4 (“Finance Charge”). The finance charge includes “any charge payable directly or indirectly by the creditor as an incident to or a condition of the extension of credit,” 12 C.F.R. 226.4(a), unless a charge is specifically excluded. The most pertinent exclusions in the context of real-estate loan transactions are as follows:
Some real-estate related fees are excluded from the finance charge “if the fees are bona fide and reasonable in amount” (e.g., title, document preparation, credit report, appraisal, and escrow fees). 12 C.F.R 226.4(c)(7).

Tip: This is where most TILA violations occur. If there is a misdisclosure, it is usually because of an understated finance charge, i.e., there was a charge which should have counted as a prepaid finance charge and was not (most common: an arbitrarily inflated appraisal fee [e.g., over $500] or a title insurance charge [e.g., over $600] which was therefore not “bona fide and reasonable.”)
• In deciding whether a title insurance charge is reasonable, the court should look to the fair market rate, and a refi rate should be cheaper than a purchase-money mortgage rate. Johnson v. Know Fin. Group, 2004 WL 1170335 (E.D. Pa. May 26, 2004);
• Where information as to reasonability of the rate is more likely to be in the control of the lender, the lender has the burden of proof on that issue.
• Where a fee is not bona fide or reasonable, the portion which is not bona fide or reasonable (i.e., the “upcharge”) is a finance charge, Credit insurance premiums are excluded from the finance charge if they are voluntary, if this fact and other specified information is disclosed to the borrower, and if the borrower signs that, having been given these disclosures, s/he still wants the insurance. 12 C.F.R. 226.4(d). In re Duffy, 32 B.R. 497 (D.R.I. 1983);
• Taxes and fees “prescribed by law that are or will be paid to public officials,” such as for a release of lien. 12 C.F.R. 226.4(e).

There must be delivery to each borrower of two copies of a 3-day notice of right to rescind the loan transaction (non-purchase money mortgages only). The notice must meet all the requirements specified in 12 C.F.R. 226.23(b)(1), including setting forth the date the rescission period expires, how to exercise the right, how to contact the creditor, and the effects of rescission. The three-day right to rescind is absolute; unless the borrower waives the right as set forth in 12 C.F.R. 226.23(e), the creditor cannot take any action to undermine that right. 12 C.F.R. 226.23(c). Rodash v. AIB Mort. Co., 16 F.3d 1142 (11th Cir. 1994); Jenkins v. Landmark Mortgage Co., 696 F. Supp. 1089 (W.D.Va. 1988).

The creditor must deliver TILA disclosures to each person whose ownership interest in a dwelling is subject to the security interest, and each such person has the right to rescind. 12 C.F.R. 226.2(a)(11), 226.15(a) and (b), 226.17(d), 226.23(a)(1). Westbank v. Maurer, 658 N.E.2d 1381 (Ill.App. 2nd Dist. 1995).

Remedies
–Failure to deliver a proper 3-day notice of right to rescind triggers an extended right of rescission. 12 C.F.R. 226.23(a)(3). Westbank v. Maurer, 658 N.E.2d 1381 (Ill.App. 2nd Dist. 1995).

–Failure to make clear, conspicuous, and accurate material disclosures also triggers an extended right of rescission. 12 C.F.R. 226.23(a)(3). Material disclosures include the: (1) annual percentage rate, (2) finance charge, (3) amount financed, (4) total payments, (5) or payment schedule. 12 C.F.R. 226.23(a)(3) n.48.

–There are statutory “tolerances” for the APR and the amount financed and finance charge. Violations are deemed non-material if they fall within these tolerances.
The APR tolerance is .125% for regular loans and .25% for irregular (variable-rate) loans. 12 C.F.R. 226.22(a);

–The finance charge tolerance for defendants in foreclosure actions is $35 (for rescission), 12 C.F.R. 226.23(h), and $100 (for monetary damages), 12 C.F.R. 226.18(d)(1)

–The extended right of rescission lasts 3 years from the date of the closing of the loan. 12 C.F.R. 226.23(a)(3). Semar v. Platte Valley Fed. S&L. Assn., 791 F.2d 699 (9th Cir. 1986)
The rescission remedy runs against any assignee: “Any consumer who has the right to rescind a transaction under section 1635 of this title may rescind the transaction as against any subsequent holder of the mortgage.

–Tip: It is crucial to comply with the technical TILA rescission procedures in full. First, the notice of rescission must be sent within 3 years of the loan closing–no exceptions. Second, you should send the notice of rescission all parties.

–Upon rescission, “the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge” (step one). 12 C.F.R. 226.23(d)(1). Within 20 days the creditor must take any action required to cancel the security interest and must return any money paid on the loan (step two). 12 C.F.R. 226.23(d)(2). If and when the creditor does so, the consumer must tender to the creditor the value of the money or property received (step three). 12 C.F.R. 226.23(d)(3). The tender amount is reduced by any amount paid on the loan (unless previously returned). White v. WMC Mortgage, 2001 U.S. Dist. LEXIS 15907, at * 5 (E.D. Pa. July 31, 2001); Williams v. Gelt, 237 B.R. 590, 598-99 (E.D. Pa. 1999). Courts can modify steps two and three of the above rescission process. 12 C.F.R. 226.23(d)(4).

–Tip: Once the right to rescind is affirmed by the court and amount owed (the “tender”) is determined, borrower must pay tender within time frame set by court. All loan payments previously made by the borrower will reduce the tender amount–so, the more payments made, the better the case. Because tender is inevitable (the borrower doesn’t just get to “walk away from the loan”), you have to start working on your proposed tender strategy from the very beginning of the case. This may be a good use of “Hard Money” lenders. The principle of the mortgage will be much less then the original mortgage and may make up for the increased rate. This is used as a bridge to a “real” loan after the credit is cleared from the offending bank.
Creditors are also liable for actual damages, statutory damages in the amount of twice the finance charge, up to $2,000, and attorney’s fees and costs. 15 U.S.C. § 1640(a). Failure to respond to the rescission notice as spelled out above results in another violation and an addition award of statutory damages. White v. WMC Mortgage, 2001 U.S. Dist. LEXIS 15907, at * 5 (E.D. Pa. July 31, 2001); Mayfield v. Vanguard Savings & Loan, 710 F. Supp. 143, 145 (E.D. Pa. 1989).

–Liability for TILA claims for monetary damages runs against assignees where the violation is apparent on the face of the loan documents. 15 U.S.C. § 1641(a).
To fulfill the congressional purpose of TILA, material violations, as set forth above, are to be “strictly construed”: there is no such thing as a mere “technical” violation which does not give rise to liability: “[T]he Seventh Circuit, like most courts interpreting TILA, maintains that disclosures made pursuant to the statute should be viewed from the vantage point of an ordinary consumer as opposed to that of a skilled or informed business person. TILA is aimed at deceptive practices by lenders, not the subjective beliefs or actions of borrowers. Moreover, a plaintiff need not show actual harm to recover from technical violations of TILA, as they are strict liability offenses.” Adams v. Nationscredit Financial Services Corp., 351 F. Supp.2d 829 (N.D. Ill. 2004) (citations omitted).
Statute of Limitations
• 1 year for affirmative claims. 15 U.S.C. § 1640(e);
• 3 years for rescission. Beach v. Ocwen, 523 U.S. 410 (1998);
Unlimited as a defense to foreclosure in the nature of a recoupment or setoff.

Avoid Foreclosure
Mortgage Litigation Under the Federal Truth In Lending Act

In many cases, it is possible for a borrower in foreclosure to keep possession of their property without making mortgage payments for a period of time due to violations of Federal Law by the mortgage company.

The Truth In Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”) are violated daily by lenders and mortgage companies. These loss mitigation laws are in place to protect you, the homeowner, but they are often completely disregarded. Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you’re currently in foreclosure.

Not only can the Truth In Lending Act be used to immediately stop the foreclosure process (if you currently are in foreclosure), but it also lets you avoid bankruptcy and it puts money in your pocket. Once TILA and/or RESPA violations are discovered in your loan documents, your lender will be eager to discontinue the unlawful foreclosure process and settle the dispute.

The Federal Truth in Lending Act is a very specialized area of law, and only a few attorneys in the country are able to take on mortgage companies in this regard.
Most loans (especially those in foreclosure) will qualify for our program, but time is critical. We need time to fully analyze and evaluate your mortgage documents and then prepare the lawsuit. Here is an overview of how our program works:

The Law Office of Malik Ahmad likes to see your mortgage documents you received upon the closing of your loans(s) and look for TILA, RESPA and/or HOEPA violations by your lender. Nearly every loan has at least some violations.

We immediately file a Federal lawsuit on your behalf, and place a Lis Pendens on the property to stop foreclosure (if applicable) and begin litigating your causes of action against the lender(s).

We reach a settlement agreement with the lender (most cases) or continue on to trial (rare situations) and demonstrate to a judge or jury how the lender has willfully failed to comply with Federal Law.

It is NOT necessary for you to make mortgage payments while the lawsuit is pending.
It is also unlawful for the lender to report negative information about you to the Credit Reporting Agencies while the lawsuit is pending under the Fair Credit Reporting Act.
Our program is also affordable, we represent you on a hybrid contingency arrangement to keep out-of-pocket costs low.

Predatory Lending: How to Stop It? (Acid test: Is too good to be true?)

Predatory Lending
Predatory lending occurs when a mortgage loan with unwarranted high interest rates and fees is set up to primarily benefit the lender or broker. The loan is not made in the best interest of the borrower, often locks the borrower into unfair terms, and tends to cause severe financial hardship or default. To determine if a loan is predatory in nature, ask yourself these questions:

Does your past credit history justify the high rate and fees charged?

- Is the loan being made on the basis of your ability to repay the loan and not solely on the value of the property?
- Have the loan’s terms been fairly represented and explained to you?
Does the type of loan and the loan services provided meet your need and interests?
- If you answered “NO” to any of these questions, there is a possibility the loan is predatory in nature. In order to avoid falling prey to these abusive practices, you must be a smart and informed shopper.

What is Predatory Lending?
In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

–Use false appraisals to sell properties for much more than they are worth.
–Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
–Knowingly lend more money than a borrower can afford to repay.
–Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
–Charge fees for unnecessary or nonexistent products and services.
–Pressure borrowers to accept higher-risk loans such as balloon loans, interest-only payments, and steep pre-payment penalties.
–Target vulnerable borrowers to cash-out refinance offers when they know borrowers are in need of cash due to medical, unemployment, or debt problems.
–”Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
–Use high-pressure sales tactics to sell home improvements and then finance them at high interest rates.

What Tactics Do Predators Use?

–A lender or investor tells you that he or she is your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
–The house you are buying costs a lot more than other homes in the neighborhood but isn’t any bigger or better.
–You are asked to sign a sales contract or loan documents that are blank or that contain information that is not true.
–You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud. It does not.
–The cost or loan terms at closing are not what you agreed to.
–You are told that refinancing can solve your credit or money problems.
–You are told that the only way you can obtain a good deal on a home improvement loan is if you finance or refinance with a particular lender.

Tips to Avoid Predatory Lending
–Only deal with licensed mortgage lenders, mortgage brokers and loan officers operating under and subject to federal and/or state regulators. To determine if your broker of lender is licensed by the State of Nevada, contact the Nevada Division of Mortgage Lending (MLD). Read my total blog to get more information.

–Read and get copies of everything you sign in connection with your mortgage.
–Beware of “bait & switch” tactics where the lender or broker makes an offer with one set of terms and then pressures you to sign a loan with more expensive rates and hidden costs.
–DO NOT sign blank forms. Forms should be completely filled out with no blank boxes or spaces.
–Make sure your monthly payments are affordable, and that you are NOT comparing apples with oranges when looking at the old vs. the new payment. Be sure that if the escrow of taxes and insurance has been part of your old payment, it is included in your new payment when comparing price savings.
–Make sure the rate and terms quoted by your lender and/or broker are given to you in writing and do not vary significantly from those presented at closing.
–DO NOT shop based solely on lower monthly payments. Payments may be lower if the loan has a balloon payment or a variable rate. Unless you expect falling mortgage rates, a higher income, or a better credit rating in the future, these loans eventually cost you more.
–Beware of door-to-door home improvement offers where the contractor offers to find you the necessary financing to make the improvements.
–DO NOT fall for scams from out-of-state businesses claiming to arrange mortgage loans for an advanced fee or with the advanced purchase of special loan insurance. Sending them a money order to a post office box or mail drop will likely be the last time you see your money.
–Never falsely state or allow others to falsely state your income. You won’t have your dream home very long if you can’t afford to make the payments.
–Borrow only what you need and can afford to pay back. If you need $5,000 to pay for a home improvement, there is usually little sense refinancing your existing mortgage and paying $6,000 in closing fees to arrange the loan.
–Remain current on your present mortgage obligations until closing and disbursement of new loan proceeds. If you are paying other debts off as part of the loan, remain current on them as well. Falling behind on your current debt while waiting to get your new loan will hurt you in the long run.
–Understand that if you consolidate your credit card debt and other consumer debt into your mortgage or home equity line of credit to have one lower overall monthly payment, nonpayment of the loan could cause you to lose your home. Also, any monthly savings will disappear if you accumulate credit card debt again.
–Know your credit rating and qualify for the loan you deserve. There is no reason to pay high rates and fees if you can qualify for better terms.

Remember:
If a deal to buy, repair or refinance a house sounds too good to be true, it usually is!

Foreclosure News: Obama Targets California

Protection of Renters

This is an interesting article (editorial) published in New York times about the safety of renters and their situations in reference to the mortgage crisis we are facting.

Foreclosure cartoons

<a href=”http://www.cartoonstock.com/directory/f/foreclosure.asp”>

Latest Foreclsoure Numbers of Nevada

Nevada Foreclosures: Impact & Opportunities
Without aggressive action, foreclosures will continue to be a major problem for the state
Projected Foreclosures
Projected new foreclosures in 2009 a
72,157
Projected homes lost through foreclosure over next four years b
240,239
Housing Market Decline to Date
Change in state homeownership rate (2004-3Q 2008) c
-3.2%
Change in home prices (3Q 2008 vs. 3Q 2007) d
Las Vegas- Paradise: -28.4%
Reno-Sparks: -20.1%
Change in home sales (3Q 2008 compared to 3Q 2007) e
76%
Decline in housing contribution to state economy (gross state product) 2005-2008 f
-$5.1 billion
Loans With Two or More Payments Past Due in Nevada010,00020,00030,00040,00050,00060,00070,0003Q 20043Q 20053Q 20063Q 20073Q 2008(Source: MBA Delinquency Survey)# of Loans
However, one proposed solution offers some remedy Nevada Conservative estimate of homes saved through court-supervised modifications g17,700 fewer homes lost
(see note below)
Based on a national savings of 800,000 homes projected by Moody’s Economy.com in early January 2009. Credit Suisse has since estimated that court-supervised modifications could reduce foreclosures by 20%.h On a base of 8.1 MM foreclosures, this would be 1.6 million homes saved—twice the Moody’s projection– so the number of saved homes shown above is very conservative.

Sources & Notes
a Estimated as annualized run rate of foreclosure starts reported in 3Q 2008 MBA National Delinquency Survey, grossed up to reflect entire mortgage market (MBA National Delinquency Survey covers 80% of market).
b Based on Credit Suisse projected national foreclosures of 8.1MM over next four years, and state proportion of 3Q2008 foreclosure starts as reported in 3Q 2008 MBA National Delinquency Survey. See Rod Dubitsky, Larry Yang, Stevan Stevanovic and Thomas Suehr, Foreclosure Update: over 8 million foreclosures expected, Credit Suisse (December 4, 2008)
c Housing Vacancies and Homeownership Data, U.S. Census Bureau available at http://www.census.gov/hhes/www/housing/hvs/hvs.html
d Metropolitan Area Prices, National Association of Realtors available at http://www.realtor.org/research/research/metroprice
e State Existing-Home Sales, National Association of Realtors available at http://www.realtor.org/research/research/metroprice
f Natalia Siniavskaia, The Effect of Home Building Contraction on State Economies, National Association of Home Builders (August 1, 2008) available at http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=99676&channelID=311
g Based on Moody’s Economy.com estimate of 800,000 borrowers benefitting from court-supervised modifications and state proportion of 3Q 2008 seriously delinquent loans as reported in 3Q 2008 MBA National Delinquency Survey; See Elizabeth Williamson and Ruth Simon, Plan to Cut Foreclosure Rate Clears Key Hurdle, The Wall Street Journal (January 9, 2009) available at http://online.wsj.com/article/SB123144562914865337.html?mod=todays_us_page_one
h Rod Dubitsky, Larry Yang, Stevan Stevanovic and Thomas Suehr, Bankruptcy Law Reform: A New Tool for Foreclosure Avoidance, Credit Suisse (January 26, 2009).

How to Get Rid of Second Loan?

You Can Modify Or Lien Strip Your Wholly Unsecured Second Mortgage In Chapter 13 Under The Current Law

There is a powerful tool in Chater 13 that is not widely reported. A second mortgage that is completely unsecured can be stripped in Chapter 13.

Let me give you an example: if your home is worth $500,000 and your fiirst mortgage payoff balance is $525,000, you have no equity. If you have a second mortgage loan balance of $50,000, this second loan is a wholly unsecured mortgage. You can commence proceedings within a Chapter 13 case to strip or remove the lien. If, however, the home is worth $530,000 in this scenario, you cannot strip off the second lien because it is merely undersecured, not wholly unsecured. In other words, if the second lien is partially secured you cannot remove it. The current law (Bankruptcy Code 1322) also prohibits modification or stipping of first mortgages on residential property.

This may help homeowners with 80/20 loans or HELOCs where the 2d lien is completely underwater. If such a lien is stripped, it can be treated as an unsecured debt in the plan and paid a fraction over 5 years, just like credit cards. The actual percentage paid will depend on several factors, including the value of unencumbered assets and disposable income. The best person to handle it again would be your bankruptcy attorney. Always, consult a licensed Nevada attorney in this regard.

How to Fight Foreclosure in Nevada?

Absolutely no attorney clients relationship are established. This is not a legal advice but an article on general education. For a personalized legal help, please contact a NV licensed attorney.
——–
Challenging Wrongful Foreclosure in Nevada

This is a brief guide for lay persons about how to challenge foreclosure successfully, a feat that is possible though difficult. This memo is not a substitute for legal assistance, which is usually essential in this complex area of the law. It is divided into the following parts:

• Filing Bankruptcy before Foreclosure Occurs

• Suing to Enjoin Foreclosure before It Occurs

• Suing to Set Aside a Foreclosure that Has Already Taken Place

• Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred

• Filing Bankruptcy after Foreclosure

• Procedural Grounds for Challenging the Foreclosure

• Substantive Grounds for Challenging the Foreclosure

<em>Filing Bankruptcy before Foreclosure Occurs

This is often the shortest and simplest procedure. It has the following advantages: a bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently; you have the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period; you may be able to reduce or eliminate the fees of the lender’s attorney; and you may be able to avoid interest on the amount you are delinquent (though not interest on the loan itself).

Generally, you will need a lawyer in bankruptcy. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.

<strong>Suing to Enjoin Foreclosure before It Occurs

To obtain an injunction, you must file a complaint in a court. You will need a lawyer.

Temporary injunctions require a “clear” showing of “immediate and irreparable injury, loss or damage” or “that the acts or omissions of the adverse party will tend to render [the] final judgment ineffectual.” Judges take this requirement seriously.

The most difficult requirement of all may be the need to give a bond “in such sum as the court … deems proper” unless you successfully obtain permission to bring the action as an indigent person. A homeowner with only modest amounts of other assets and income may be unable to qualify as indigent and may also be unable to find anyone willing to provide a bond, especially one on short notice.

Suing to Set Aside a Foreclosure that Has Already Taken Place

The grounds for setting aside a foreclosure are limited to “some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price.” Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.

You have the burden of proof in a lawsuit to set aside a foreclosure. Damages are the only remedy. There is nothing to prevent a third-party purchaser from keeping your house even if he knows of your claim against the lender and even if he believes that your claim is meritorious.

Does Your Loan Mod Agenices Complies with NV Laws?

Attorney Malik Ahmad is admitted to Supreme Court of Nevada, and outlines the basic laws governing loan modification, mortgagor/mortgagee and other related issues. This is in fact the law without any commentary. Everything is prima facie in this outline. This is in continuation of educating Nevada and Las Vegas communities, in their quest to modify their loans. Because of an insurmountable people, agencies, and companies involved in this endless pursuit, the Nevadan needs to know, if these companies who are calling and soliciting their businesses, are in fact genuine, and are complying Nevada laws.

[Rev. 10/5/2007 10:49:58 AM]

CHAPTER 645B – MORTGAGE BROKERS AND MORTGAGE AGENTS
GENERAL PROVISIONS
NRS 645B.010 Definitions.
NRS 645B.0105 “Commissioner” defined.
NRS 645B.0107 “Construction control” defined.
NRS 645B.0109 “Depository financial institution” defined.
NRS 645B.0111 “Division” defined.
NRS 645B.0113 “Escrow agency” defined.
NRS 645B.0115 “Escrow agent” defined.
NRS 645B.0117 “Escrow officer” defined.
NRS 645B.0119 “Financial services license or registration” defined.
NRS 645B.0121 “Investor” defined.
NRS 645B.0123 “Licensee” defined.
NRS 645B.0125 “Mortgage agent” defined.
NRS 645B.0127 “Mortgage broker” defined.
NRS 645B.0129 “Policy of title insurance” defined.
NRS 645B.01305 “Private investor” defined.
NRS 645B.0131 “Relative” defined.
NRS 645B.0133 “Title agent” defined.
NRS 645B.0135 “Title insurer” defined.
NRS 645B.0137 Requirements before initial licensing for mortgage brokers and mortgage agents. [Effective July 1, 2008.]
NRS 645B.0138 Courses of continuing education: Adoption of regulations by Commissioner. [Effective July 1, 2008.]
NRS 645B.0145 Statutory and common-law rights, remedies and punishments unaffected; limitation on actions against State and its officers and employees.
EXEMPTIONS
NRS 645B.015 Exemptions for certain persons and entities.
NRS 645B.016 Certificate of exemption required for certain persons and entities; application; fee; automatic expiration; prohibitions; administrative fine.
NRS 645B.018 Exemptions for certain loans; application; grounds for granting exemption; powers and duties of Commissioner.

LICENSING OF MORTGAGE BROKERS

NRS 645B.020 Application for license; application for branch offices; requirements for issuance of license.

NRS 645B.021 Mortgage broker who is not natural person to designate natural person as qualified employee; regulations. [Effective July 1, 2008.]

NRS 645B.023 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective until the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

NRS 645B.023 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings and expires by limitation 2 years after that date.]

NRS 645B.0243 Grounds for denial of license: Employing or associating with certain persons who are ineligible to be mortgage agents.

NRS 645B.0245 Grounds for denial of license: Control by relative who would be ineligible to be licensed; act or omission of partner, officer or director.

NRS 645B.0247 Grounds for denial of license: Authority of Commissioner not limited.

NRS 645B.025 Posting of license; restrictions on transfer or assignment of license.

NRS 645B.035 Activities authorized by license; dual licensure as mortgage banker and mortgage broker.

EXPIRATION AND RENEWAL OF BROKER’S LICENSE OR CERTIFICATE OF EXEMPTION; FEES

NRS 645B.050 Annual expiration of license or certificate of exemption; procedure for renewal; fees.

NRS 645B.051 Continuing education required for renewal of license. [Effective through June 30, 2008.]

NRS 645B.051 Continuing education required for renewal of license. [Effective July 1, 2008.]

SUPERVISION BY COMMISSIONER

General Provisions

NRS 645B.060 Duties of Commissioner: Regulations; investigations; annual examinations; periodic and special audits; hearings; related fees; biennial examinations.

NRS 645B.070 Subpoenas; oaths; examination of witnesses; penalty; assessment of costs.

NRS 645B.075 Payment of statutory assessment by mortgage broker; duty of mortgage broker and agents to cooperate fully with audits and examinations.

Records and Financial Statements

NRS 645B.080 Records relating to mortgage transactions, financial condition and trust accounts; monthly report to Commissioner; accounting procedures for trust accounts; regulations.

NRS 645B.085 Annual financial statement; audit of trust accounts; regulations.

NRS 645B.090 Records of Commissioner: General provisions governing public inspection, confidentiality and disclosure of information relating to investigations and disciplinary action.

NRS 645B.092 Records of Commissioner: Certain records relating to investigation deemed confidential; certain records relating to disciplinary action and orders imposing discipline deemed public records.

Commingling Money

NRS 645B.093 Commingling certain money prohibited.

Transfer of Stock

NRS 645B.095 Notification of certain transfers required; application to Commissioner for approval of change of control; investigation; waiver.

Net Worth

NRS 645B.115 Minimum net worth required for certain mortgage brokers; initial and annual determination of net worth; examination by Commissioner; regulations.

ESCROW AND TRUST ACCOUNTS

NRS 645B.165 Escrow account required for fee, salary, deposit or money paid in advance; release from escrow; exceptions; refunds; penalty.

NRS 645B.170 Trust account required for money deposited to pay taxes or insurance premiums; fiduciary duty of mortgage broker; accounting to debtor and Commissioner; additional duties and prohibitions.

NRS 645B.175 Trust or escrow account required for money received from investor to fund loan; trust or escrow account required for money received from debtor to repay loan; release of money; accounting to investor, debtor and Commissioner; additional conditions, limitations and prohibitions.

NRS 645B.180 Limitations on execution or attachment of money in trust account; commingling of money prohibited.

DISCLOSURES AND ADVERTISING

NRS 645B.185 Use of disclosure forms required; release of financial statements; duties of mortgage broker and agents; prohibitions; powers of Commissioner; regulations.

NRS 645B.186 Disclosure of certain business and personal relationships required.

NRS 645B.187 Prohibition on making certain guarantees in advertisements and solicitations; limitations on payment of premium interest; penalty.

NRS 645B.189 Statements of disclosure required in certain advertisements; review of advertisements by Commissioner; advertisements must comply with state and federal laws concerning deceptive trade practices and deceptive advertising; regulations.

NRS 645B.196 Liability of advertising spokesperson for mortgage broker for certain damages.

LOAN PAYMENTS AND DEFAULTS

NRS 645B.240 Limitations on charging late fee, additional amount of interest or other penalty.

NRS 645B.250 Prohibition on advancing payments to investor on behalf of debtor in default; exceptions.

NRS 645B.260 Monthly report to Commissioner on delinquencies in payments and defaults; monthly notice to investors; regulations.

CONDITIONS AND LIMITATIONS ON CERTAIN MORTGAGE TRANSACTIONS

NRS 645B.300 Written appraisal of real property required; persons authorized to perform appraisal; retention and inspection of appraisal; exceptions.

NRS 645B.305 Requirement that fee for servicing loan be specified in loan.

NRS 645B.310 Requirements for mortgage broker to assign interest in loan.

NRS 645B.320 Copy of recorded deed of trust must be mailed to each investor.

NRS 645B.330 Limitations on use of power of attorney.

LICENSING AND REGULATION OF MORTGAGE AGENTS

NRS 645B.400 License required.

NRS 645B.410 Qualifications and procedure for issuance of license; fees.

NRS 645B.420 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective until the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

NRS 645B.420 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings and expires by limitation 2 years after that date.]

NRS 645B.430 Annual expiration of license; procedure for renewal; continuing education; fees.

NRS 645B.450 Conditions and limitations regarding employment of or association with mortgage agent; duties of mortgage broker upon termination of mortgage agent.

NRS 645B.455 License issued on behalf of professional corporation or limited-liability company; limitations on license; automatic expiration of license.

NRS 645B.460 Supervision by mortgage broker; requirements; regulations.

RIGHTS OF BROKERS AND AGENTS DURING MILITARY SERVICE

NRS 645B.490 Right to be placed on inactive status; procedure for reinstatement.

INVESTIGATION OF VIOLATIONS AND UNSAFE PRACTICES; REMEDIAL ACTION

NRS 645B.600 Person may file complaint alleging violation; requirements.

NRS 645B.610 Duties of Commissioner when complaint is filed.

NRS 645B.620 Duties of Commissioner when violation is suspected; referral of violations to Attorney General for criminal prosecution; civil action for injunctive relief.

NRS 645B.630 Duties of Commissioner when unsafe condition or practice is suspected; seizure of property and assets of mortgage broker; duties of Attorney General.

NRS 645B.640 Persons entitled to correct unsafe conditions and practices; effect of failure to correct; receivership and liquidation of assets.

DISCIPLINARY ACTION

NRS 645B.670 Authorized disciplinary action; grounds for disciplinary action.

NRS 645B.680 Suspension of license for failure to pay child support or comply with certain subpoenas or warrants; reinstatement of license. [Effective until 2 years after the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

NRS 645B.690 Duty of Commissioner to take disciplinary action for certain violations.

NRS 645B.700 Categorization of major and minor violations; regulations.

NRS 645B.710 Act or omission of partner, officer or director deemed act or omission of partnership, corporation or unincorporated association.

NRS 645B.720 Authority of Commissioner to order summary suspension of license and take other action to protect public before conducting hearing.

HEARINGS; APPEALS

NRS 645B.750 Duty of Commissioner to provide written notice of disciplinary action or denial of license; right to administrative hearing; entry of final order; appeals.

NRS 645B.760 Effect of failure to appear at hearing; penalty.

ENFORCEMENT BY ATTORNEY GENERAL

NRS 645B.800 Attorney General has primary criminal jurisdiction; duty to provide Attorney General with information to assist prosecution; penalty.

NRS 645B.810 Attorney General may bring civil action; recovery of costs in civil action.

ADVISORY COUNCIL ON MORTGAGE INVESTMENTS AND MORTGAGE LENDING

NRS 645B.860 Creation; members; appointment; terms and vacancies; no compensation or per diem allowance; protections afforded members who are public officers or employees.

NRS 645B.865 Chairman and Vice Chairman; meetings; quorum; subcommittees.

NRS 645B.870 Purpose.

UNLAWFUL ACTS; PENALTIES

NRS 645B.900 Unlawful to conduct business of mortgage broker or mortgage agent without being licensed or exempt from licensing.

NRS 645B.910 Unlawful for foreign corporation, association or business trust to conduct business of mortgage broker without meeting certain requirements.

NRS 645B.950 Penalties for general violations.

NRS 645B.960 Penalties for violations relating to escrow or trust accounts.

_________

GENERAL PROVISIONS

NRS 645B.010 Definitions. As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 645B.0105 to 645B.0135, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 1973, 1536; A 1975, 961; 1977, 1635; 1981, 1785; 1983, 1378, 1700; 1985, 2186; 1987, 498, 1876; 1989, 965; 1995, 1097; 1999, 3779; 2001, 2464; 2003, 3546)

NRS 645B.0105 “Commissioner” defined. “Commissioner” means the Commissioner of Mortgage Lending.

(Added to NRS by 1999, 3765; A 2003, 3546)

NRS 645B.0107 “Construction control” defined. “Construction control” has the meaning ascribed to it in NRS 627.050.

(Added to NRS by 1999, 3765)

NRS 645B.0109 “Depository financial institution” defined. “Depository financial institution” means a bank, savings and loan association, thrift company or credit union.

(Added to NRS by 1999, 3765)

NRS 645B.0111 “Division” defined. “Division” means the Division of Mortgage Lending of the Department of Business and Industry.

(Added to NRS by 1999, 3765; A 2003, 3546)

NRS 645B.0113 “Escrow agency” defined. “Escrow agency” has the meaning ascribed to it in NRS 645A.010.

(Added to NRS by 1999, 3765)

NRS 645B.0115 “Escrow agent” defined. “Escrow agent” has the meaning ascribed to it in NRS 645A.010.

(Added to NRS by 1999, 3765)

NRS 645B.0117 “Escrow officer” defined. “Escrow officer” has the meaning ascribed to it in NRS 692A.028.

(Added to NRS by 1999, 3765)

NRS 645B.0119 “Financial services license or registration” defined. “Financial services license or registration” means any license or registration issued in this State or any other state, district or territory of the United States that authorizes the person who holds the license or registration to engage in any business or activity described in the provisions of this chapter, title 55 or 56 of NRS or chapter 604A, 645, 645A, 645C, 645E, 645G or 649 of NRS.

(Added to NRS by 1999, 3765; A 2005, 1712)

NRS 645B.0121 “Investor” defined. “Investor” means a person who wants to acquire or who acquires ownership of or a beneficial interest in a loan secured by a lien on real property.

(Added to NRS by 1999, 3765)

NRS 645B.0123 “Licensee” defined. “Licensee” means a person who is licensed as a mortgage broker pursuant to this chapter. The term does not include a person issued a license as a mortgage agent pursuant to NRS 645B.410.

(Added to NRS by 1999, 3765; A 2003, 3546)

NRS 645B.0125 “Mortgage agent” defined.

1. “Mortgage agent” means a natural person who:

(a) Is an employee or independent contractor of a mortgage broker who is required to be licensed pursuant to this chapter; and

(b) Is authorized by the mortgage broker to engage in, on behalf of the mortgage broker, any activity that would require the person, if he were not an employee or independent contractor of the mortgage broker, to be licensed as a mortgage broker pursuant to this chapter.

2. The term does not include a person who:

(a) Is licensed as a mortgage broker;

(b) Is a general partner, officer or director of a mortgage broker; or

(c) Performs only clerical or ministerial tasks for a mortgage broker.

(Added to NRS by 1999, 3765)

NRS 645B.0127 “Mortgage broker” defined.

1. “Mortgage broker” means a person who, directly or indirectly:

(a) Holds himself out for hire to serve as an agent for any person in an attempt to obtain a loan which will be secured by a lien on real property;

(b) Holds himself out for hire to serve as an agent for any person who has money to lend, if the loan is or will be secured by a lien on real property;

(c) Holds himself out as being able to make loans secured by liens on real property;

(d) Holds himself out as being able to buy or sell notes secured by liens on real property; or

(e) Offers for sale in this State any security which is exempt from registration under state or federal law and purports to make investments in promissory notes secured by liens on real property.

2. The term does not include a person who is licensed as a mortgage banker, as defined in NRS 645E.100, unless the person is also licensed as a mortgage broker pursuant to this chapter.

(Added to NRS by 1999, 3765; A 2003, 3546)

NRS 645B.0129 “Policy of title insurance” defined. “Policy of title insurance” has the meaning ascribed to it in NRS 692A.035.

(Added to NRS by 1999, 3766)

NRS 645B.01305 “Private investor” defined. “Private investor” means:

1. An investor who is a natural person and who provides his own money for investment in a loan secured by a lien on real property; and

2. Two or more investors who are relatives and who jointly provide their own money for investment in a loan secured by a lien on real property, unless the investors are acting on behalf of a partnership, a corporation or some other separate legal entity.

(Added to NRS by 2001, 2463)

NRS 645B.0131 “Relative” defined. “Relative” means a spouse or any other person who is related within the second degree by blood or marriage.

(Added to NRS by 1999, 3766)

NRS 645B.0133 “Title agent” defined. “Title agent” has the meaning ascribed to it in NRS 692A.060.

(Added to NRS by 1999, 3766)

NRS 645B.0135 “Title insurer” defined. “Title insurer” has the meaning ascribed to it in NRS 692A.070.

(Added to NRS by 1999, 3766)

NRS 645B.0137 Requirements before initial licensing for mortgage brokers and mortgage agents. [Effective July 1, 2008.]

1. In addition to any other requirements provided by this chapter, a person who wishes to receive an initial license as a mortgage broker or mortgage agent must:

(a) Complete education on mortgage lending as required by this chapter; or

(b) Successfully pass a written examination as determined by the Division.

2. If the applicant for an initial license as a mortgage broker is not a natural person, the applicant must designate a natural person to be the qualified employee of the applicant and meet the requirements of subsection 1.

3. The Division:

(a) May hire a testing organization to create, administer and score a written examination; and

(b) May create waivers for a written examination.

4. The Commissioner may adopt regulations to carry out the provisions of this section, including, without limitation, regulations relating to the content of a written examination, the scoring of a written examination or any possible waivers of a written examination.

(Added to NRS by 2007, 950, effective July 1, 2008)

NRS 645B.0138 Courses of continuing education: Adoption of regulations by Commissioner. [Effective July 1, 2008.]

1. A course of continuing education that is required pursuant to this chapter must meet the requirements set forth by the Commissioner by regulation.

2. The Commissioner shall adopt regulations:

(a) Relating to the requirements for courses of continuing education, including, without limitation, regulations relating to the providers and instructors of such courses, records kept for such courses, approval and revocation of approval of such courses, monitoring of such courses and disciplinary action taken regarding such courses.

(b) Allowing for the participation of representatives of the mortgage lending industry pertaining to the creation of regulations regarding such courses.

(Added to NRS by 2007, 951, effective July 1, 2008)

NRS 645B.0145 Statutory and common-law rights, remedies and punishments unaffected; limitation on actions against State and its officers and employees. The provisions of this chapter do not:

1. Limit any statutory or common-law right of a person to bring a civil action against a mortgage broker or mortgage agent for any act or omission involved in the transaction of business by or on behalf of the mortgage broker or mortgage agent;

2. Limit the right of the State to punish a person for the violation of any law, ordinance or regulation; or

3. Establish a basis for a person to bring a civil action against the State or its officers or employees for any act or omission in carrying out the provisions of this chapter, including, without limitation, any act or omission relating to the disclosure of information or the failure to disclose information pursuant to the provisions of this chapter.

(Added to NRS by 1973, 1543; A 1999, 3801)—(Substituted in revision for NRS 645B.200)

EXEMPTIONS

NRS 645B.015 Exemptions for certain persons and entities. Except as otherwise provided in NRS 645B.016, the provisions of this chapter do not apply to:

1. Any person doing business under the laws of this State, any other state or the United States relating to banks, savings banks, trust companies, savings and loan associations, consumer finance companies, industrial loan companies, credit unions, thrift companies or insurance companies, including, without limitation, a subsidiary or a holding company of such a bank, company, association or union.

2. A real estate investment trust, as defined in 26 U.S.C. § 856, unless the business conducted in this State is not subject to supervision by the regulatory authority of the other jurisdiction, in which case licensing pursuant to this chapter is required.

3. An employee benefit plan, as defined in 29 U.S.C. § 1002(3), if the loan is made directly from money in the plan by the plan’s trustee.

4. An attorney at law rendering services in the performance of his duties as an attorney at law.

5. A real estate broker rendering services in the performance of his duties as a real estate broker.

6. Any person doing any act under an order of any court.

7. Any one natural person, or husband and wife, who provides money for investment in loans secured by a lien on real property, on his own account, unless such a person makes a loan secured by a lien on real property using his own money and assigns all or a part of his interest in the loan to another person, other than his spouse or child, within 5 years after the date on which the loan is made or the deed of trust is recorded, whichever occurs later.

8. Agencies of the United States and of this State and its political subdivisions, including the Public Employees’ Retirement System.

9. A seller of real property who offers credit secured by a mortgage of the property sold.

(Added to NRS by 1973, 1542; A 1975, 962; 1977, 618; 1981, 1791; 1983, 1314, 1381; 1985, 2190; 1987, 499; 1989, 966, 1762; 1993, 494; 1995, 1098; 1999, 3779; 2003, 3546; 2007, 951)

NRS 645B.016 Certificate of exemption required for certain persons and entities; application; fee; automatic expiration; prohibitions; administrative fine. Except as otherwise provided in subsection 2 and NRS 645B.690:

1. A person who claims an exemption from the provisions of this chapter pursuant to subsection 1 of NRS 645B.015 must:

(a) File a written application for a certificate of exemption with the Office of the Commissioner;

(b) Pay the fee required pursuant to NRS 645B.050;

(c) Include with the written application satisfactory proof that the person meets the requirements of subsection 1 of NRS 645B.015; and

(d) Provide evidence to the Commissioner that the person is duly licensed to conduct his business and such license is in good standing pursuant to the laws of this State, any other state or the United States.

2. The provisions of subsection 1 do not apply to the extent preempted by federal law.

3. The Commissioner may require a person who claims an exemption from the provisions of this chapter pursuant to subsections 2 to 9, inclusive, of NRS 645B.015 to:

(a) File a written application for a certificate of exemption with the Office of the Commissioner;

(b) Pay the fee required pursuant to NRS 645B.050; and

(c) Include with the written application satisfactory proof that the person meets the requirements of at least one of those exemptions.

4. A certificate of exemption expires automatically if, at any time, the person who claims the exemption no longer meets the requirements of at least one exemption set forth in the provisions of NRS 645B.015.

5. If a certificate of exemption expires automatically pursuant to this section, the person shall not provide any of the services of a mortgage broker or mortgage agent or otherwise engage in, carry on or hold himself out as engaging in or carrying on the business of a mortgage broker or mortgage agent unless the person applies for and is issued:

(a) A license as a mortgage broker or mortgage agent, as applicable, pursuant to this chapter; or

(b) Another certificate of exemption.

6. The Commissioner may impose upon a person who is required to apply for a certificate of exemption or who holds a certificate of exemption an administrative fine of not more than $10,000 for each violation that he commits, if the person:

(a) Has knowingly made or caused to be made to the Commissioner any false representation of material fact;

(b) Has suppressed or withheld from the Commissioner any information which the person possesses and which, if submitted by him, would have rendered the person ineligible to hold a certificate of exemption; or

(c) Has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner that applies to a person who is required to apply for a certificate of exemption or who holds a certificate of exemption.

(Added to NRS by 1999, 3767; A 2003, 3547; 2007, 952)

NRS 645B.018 Exemptions for certain loans; application; grounds for granting exemption; powers and duties of Commissioner.

1. A person may apply to the Commissioner for an exemption from the provisions of this chapter governing the making of a loan of money.

2. The Commissioner may grant the exemption if he finds that:

(a) The making of the loan would not be detrimental to the financial condition of the lender, the debtor or the person who is providing the money for the loan;

(b) The lender, the debtor or the person who is providing the money for the loan has established a record of sound performance, efficient management, financial responsibility and integrity;

(c) The making of the loan is likely to increase the availability of capital for a sector of the state economy; and

(d) The making of the loan is not detrimental to the public interest.

3. The Commissioner:

(a) May revoke an exemption unless the loan for which the exemption was granted has been made; and

(b) Shall issue a written statement setting forth the reasons for his decision to grant, deny or revoke an exemption.

(Added to NRS by 1989, 965; A 1999, 3800)—(Substituted in revision for NRS 645B.197)

LICENSING OF MORTGAGE BROKERS

NRS 645B.020 Application for license; application for branch offices; requirements for issuance of license.

1. A person who wishes to be licensed as a mortgage broker must file a written application for a license with the Office of the Commissioner and pay the fee required pursuant to NRS 645B.050. An application for a license as a mortgage broker must:

(a) State the name, residence address and business address of the applicant and the location of each principal office and branch office at which the mortgage broker will conduct business within this State.

(b) State the name under which the applicant will conduct business as a mortgage broker.

(c) List the name, residence address and business address of each person who will:

(1) If the applicant is not a natural person, have an interest in the mortgage broker as a principal, partner, officer, director or trustee, specifying the capacity and title of each such person.

(2) Be associated with or employed by the mortgage broker as a mortgage agent.

(d) Include a general business plan and a description of the policies and procedures that the mortgage broker and his mortgage agents will follow to arrange and service loans and to conduct business pursuant to this chapter.

(e) State the length of time the applicant has been engaged in the business of a broker.

(f) Include a financial statement of the applicant and, if applicable, satisfactory proof that the applicant will be able to maintain continuously the net worth required pursuant to NRS 645B.115.

(g) Include all information required to complete the application.

(h) Include any other information required pursuant to the regulations adopted by the Commissioner or an order of the Commissioner.

2. If a mortgage broker will conduct business at one or more branch offices within this State, the mortgage broker must apply for a license for each such branch office.

3. Except as otherwise provided in this chapter, the Commissioner shall issue a license to an applicant as a mortgage broker if:

(a) The application is verified by the Commissioner and complies with the requirements of this chapter; and

(b) The applicant and each general partner, officer or director of the applicant, if the applicant is a partnership, corporation or unincorporated association:

(1) Has a good reputation for honesty, trustworthiness and integrity and displays competence to transact the business of a mortgage broker in a manner which safeguards the interests of the general public. The applicant must submit satisfactory proof of these qualifications to the Commissioner.

(2) Has not been convicted of, or entered a plea of nolo contendere to, a felony relating to the practice of mortgage brokers or any crime involving fraud, misrepresentation or moral turpitude.

(3) Has not made a false statement of material fact on his application.

(4) Has not had a license that was issued pursuant to the provisions of this chapter or chapter 645E of NRS suspended or revoked within the 10 years immediately preceding the date of his application.

(5) Has not had a license that was issued in any other state, district or territory of the United States or any foreign country suspended or revoked within the 10 years immediately preceding the date of his application.

(6) Has not violated any provision of this chapter or chapter 645E of NRS, a regulation adopted pursuant thereto or an order of the Commissioner.

(Added to NRS by 1973, 1536; A 1981, 1786; 1983, 1701; 1985, 2186; 1987, 1877; 1989, 1763; 1993, 495; 1997, 2171; 1999, 3780; 2001, 2464; 2003, 2721; 2005, 2781, 2807, 2816; 2007, 2852)

NRS 645B.021 Mortgage broker who is not natural person to designate natural person as qualified employee; regulations. [Effective July 1, 2008.]

1. If a mortgage broker is not a natural person, the mortgage broker must designate a natural person as a qualified employee to act on behalf of the mortgage broker.

2. The Division shall adopt regulations regarding a qualified employee, including, without limitation, regulations that establish:

(a) A definition for the term “qualified employee”;

(b) Any duties of a qualified employee; and

(c) Any requirements regarding a qualified employee.

(Added to NRS by 2007, 950, effective July 1, 2008)

NRS 645B.023 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective until the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

1. In addition to any other requirements set forth in this chapter:

(a) A natural person who applies for the issuance of a license as a mortgage broker shall include the social security number of the applicant in the application submitted to the Commissioner.

(b) A natural person who applies for the issuance or renewal of a license as a mortgage broker shall submit to the Commissioner the statement prescribed by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statement required pursuant to subsection 1 in:

(a) The application or any other forms that must be submitted for the issuance or renewal of the license; or

(b) A separate form prescribed by the Commissioner.

3. A license as a mortgage broker may not be issued or renewed by the Commissioner if the applicant is a natural person who:

(a) Fails to submit the statement required pursuant to subsection 1; or

(b) Indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order.

4. If an applicant indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order, the Commissioner shall advise the applicant to contact the district attorney or other public agency enforcing the order to determine the actions that the applicant may take to satisfy the arrearage.

(Added to NRS by 1997, 2170; A 1999, 3782; 2005, 2783, 2807, 2810)

NRS 645B.023 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings and expires by limitation 2 years after that date.]

1. In addition to any other requirements set forth in this chapter, a natural person who applies for the issuance or renewal of a license as a mortgage broker shall submit to the Commissioner the statement prescribed by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statement required pursuant to subsection 1 in:

(a) The application or any other forms that must be submitted for the issuance or renewal of the license; or

(b) A separate form prescribed by the Commissioner.

3. A license as a mortgage broker may not be issued or renewed by the Commissioner if the applicant is a natural person who:

(a) Fails to submit the statement required pursuant to subsection 1; or

(b) Indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order.

4. If an applicant indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order, the Commissioner shall advise the applicant to contact the district attorney or other public agency enforcing the order to determine the actions that the applicant may take to satisfy the arrearage.

(Added to NRS by 1997, 2170; A 1999, 3782; 2005, 2783, 2807, 2810, effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings)

NRS 645B.0243 Grounds for denial of license: Employing or associating with certain persons who are ineligible to be mortgage agents. The Commissioner may refuse to issue a license to an applicant if the Commissioner has reasonable cause to believe that the applicant or any general partner, officer or director of the applicant has, after October 1, 1999, employed or proposed to employ a person as a mortgage agent or authorized or proposed to authorize a person to be associated with a mortgage broker as a mortgage agent at a time when the applicant or the general partner, officer or director knew or, in light of all the surrounding facts and circumstances, reasonably should have known that the person:

1. Had been convicted of, or entered a plea of nolo contendere to:

(a) A felony relating to the practice of mortgage agents; or

(b) Any crime involving fraud, misrepresentation or moral turpitude; or

2. Had a financial services license or registration suspended or revoked within the immediately preceding 10 years.

(Added to NRS by 1999, 3768; A 2003, 2723)

NRS 645B.0245 Grounds for denial of license: Control by relative who would be ineligible to be licensed; act or omission of partner, officer or director.

1. If an applicant is a natural person, the Commissioner may refuse to issue a license to the applicant if the Commissioner has reasonable cause to believe that the applicant would be subject to control by a relative who would be ineligible to be licensed pursuant to this chapter.

2. If an applicant is a partnership, corporation or unincorporated association, the Commissioner may refuse to issue a license to the applicant if:

(a) Any member of the partnership or any officer or director of the corporation or unincorporated association has committed any act or omission that would be cause for refusing to issue a license to a natural person; or

(b) The Commissioner has reasonable cause to believe that any member of the partnership or any officer or director of the corporation or unincorporated association would be subject to control by a relative who would be ineligible to be licensed pursuant to this chapter.

(Added to NRS by 1999, 3769)

NRS 645B.0247 Grounds for denial of license: Authority of Commissioner not limited. The provisions of NRS 645B.0243 and 645B.0245 do not limit the authority of the Commissioner to refuse to issue a license to an applicant for any other lawful reason or pursuant to any other provision of law.

(Added to NRS by 1999, 3769)

NRS 645B.025 Posting of license; restrictions on transfer or assignment of license.

1. A mortgage broker shall post each license in a conspicuous place in the office to which it pertains.

2. A mortgage broker may not transfer or assign a license to another person, unless the Commissioner gives his written approval.

(Added to NRS by 1983, 1376; A 1983, 1843; 1987, 1877; 1999, 3782)

NRS 645B.035 Activities authorized by license; dual licensure as mortgage banker and mortgage broker.

1. A license as a mortgage broker entitles a licensee to engage only in the activities authorized by this chapter.

2. The provisions of this chapter do not prohibit a licensee from:

(a) Holding a license as a mortgage banker pursuant to chapter 645E of NRS; or

(b) Conducting the business of a mortgage banker and the business of a mortgage broker in the same office or place of business.

(Added to NRS by 1999, 3770; A 2003, 3548)

EXPIRATION AND RENEWAL OF BROKER’S LICENSE OR CERTIFICATE OF EXEMPTION; FEES

NRS 645B.050 Annual expiration of license or certificate of exemption; procedure for renewal; fees.

1. A license as a mortgage broker issued pursuant to this chapter expires each year on June 30, unless it is renewed. To renew such a license, the licensee must submit to the Commissioner on or before May 31 of each year:

(a) An application for renewal;

(b) The fee required to renew the license pursuant to this section;

(c) The information required pursuant to NRS 645B.051; and

(d) All information required to complete the renewal.

2. If the licensee fails to submit any item required pursuant to subsection 1 to the Commissioner on or before May 31 of any year, the license is cancelled as of June 30 of that year. The Commissioner may reinstate a cancelled license if the licensee submits to the Commissioner:

(a) An application for renewal;

(b) The fee required to renew the license pursuant to this section;

(c) The information required pursuant to NRS 645B.051;

(d) Except as otherwise provided in this section, a reinstatement fee of not more than $200; and

(e) All information required to complete the reinstatement.

3. Except as otherwise provided in NRS 645B.016, a certificate of exemption issued pursuant to this chapter expires each year on December 31, unless it is renewed. To renew a certificate of exemption, a person must submit to the Commissioner on or before November 30 of each year:

(a) An application for renewal that includes satisfactory proof that the person meets the requirements for an exemption from the provisions of this chapter; and

(b) The fee required to renew the certificate of exemption.

4. If the person fails to submit any item required pursuant to subsection 3 to the Commissioner on or before November 30 of any year, the certificate of exemption is cancelled as of December 31 of that year. Except as otherwise provided in NRS 645B.016, the Commissioner may reinstate a cancelled certificate of exemption if the person submits to the Commissioner:

(a) An application for renewal that includes satisfactory proof that the person meets the requirements for an exemption from the provisions of this chapter;

(b) The fee required to renew the certificate of exemption; and

(c) Except as otherwise provided in this section, a reinstatement fee of not more than $100.

5. Except as otherwise provided in this section, a person must pay the following fees to apply for, to be issued or to renew a license as a mortgage broker pursuant to this chapter:

(a) To file an original application for a license, not more than $1,500 for the principal office and not more than $40 for each branch office. The person must also pay such additional expenses incurred in the process of investigation as the Commissioner deems necessary.

(b) To be issued a license, not more than $1,000 for the principal office and not more than $60 for each branch office.

(c) To renew a license, not more than $500 for the principal office and not more than $100 for each branch office.

6. Except as otherwise provided in this section, a person must pay the following fees to apply for or to renew a certificate of exemption pursuant to this chapter:

(a) To file an application for a certificate of exemption, not more than $200.

(b) To renew a certificate of exemption, not more than $100.

7. To be issued a duplicate copy of any license or certificate of exemption, a person must make a satisfactory showing of its loss and pay a fee of not more than $10.

8. Except as otherwise provided in this chapter, all fees received pursuant to this chapter must be deposited in the Fund for Mortgage Lending created by NRS 645F.270.

9. The Commissioner may, by regulation, adjust any fee set forth in this section if the Commissioner determines that such an adjustment is necessary for the Commissioner to carry out his duties pursuant to this chapter. The amount of any adjustment in a fee pursuant to this subsection must not exceed the amount determined to be necessary for the Commissioner to carry out his duties pursuant to this chapter.

(Added to NRS by 1973, 1538; A 1975, 814; 1977, 1636; 1979, 120, 1094; 1981, 1788; 1983, 1320, 1379, 1702; 1985, 2187; 1987, 86, 1878; 1989, 1764; 1991, 177, 1803, 1825; 1993, 496; 1997, 2172; 1999, 3782; 2001, 2465; 2003, 3229, 3548; 2003, 20th Special Session, 265; 2005, 2784, 2807, 2817; 2007, 953)

NRS 645B.051 Continuing education required for renewal of license. [Effective through June 30, 2008.]

1. Except as otherwise provided in this section, in addition to the requirements set forth in NRS 645B.050, to renew a license as a mortgage broker:

(a) If the licensee is a natural person, the licensee must submit to the Commissioner satisfactory proof that the licensee attended at least 10 hours of certified courses of continuing education during the 12 months immediately preceding the date on which the license expires.

(b) If the licensee is not a natural person, the licensee must submit to the Commissioner satisfactory proof that each natural person who supervises the daily business of the licensee attended at least 10 hours of certified courses of continuing education during the 12 months immediately preceding the date on which the license expires.

2. The Commissioner may provide by regulation that any hours of a certified course of continuing education attended during a 12-month period, but not needed to satisfy a requirement set forth in this section for the 12-month period in which the course was taken, may be used to satisfy a requirement set forth in this section for a later 12-month period.

3. As used in this section, “certified course of continuing education” means a course of continuing education which relates to the mortgage industry or mortgage transactions and which is certified by:

(a) The National Association of Mortgage Brokers or any successor in interest to that organization; or

(b) Any organization designated for this purpose by the Commissioner by regulation.

(Added to NRS by 2001, 2464; A 2003, 3551)

NRS 645B.051 Continuing education required for renewal of license. [Effective July 1, 2008.]

1. Except as otherwise provided in this section, in addition to the requirements set forth in NRS 645B.050, to renew a license as a mortgage broker:

(a) If the licensee is a natural person, the licensee must submit to the Commissioner satisfactory proof that the licensee attended at least 10 hours of certified courses of continuing education during the 12 months immediately preceding the date on which the license expires.

(b) If the licensee is not a natural person, the licensee must submit to the Commissioner satisfactory proof that each natural person who supervises the daily business of the licensee attended at least 10 hours of certified courses of continuing education during the 12 months immediately preceding the date on which the license expires.

2. The Commissioner may provide by regulation that if a person attends more than 10 hours of certified courses of continuing education during a 12-month period, the extra hours may be used to satisfy the requirement for the immediately following 12-month period and for that immediately following 12-month period only.

3. As used in this section, “certified course of continuing education” means a course of continuing education which relates to the mortgage industry or mortgage transactions and which meets the requirements set forth by the Commissioner by regulation pursuant to NRS 645B.0138.

(Added to NRS by 2001, 2464; A 2003, 3551; 2007, 954, effective July 1, 2008)

SUPERVISION BY COMMISSIONER

General Provisions

NRS 645B.060 Duties of Commissioner: Regulations; investigations; annual examinations; periodic and special audits; hearings; related fees; biennial examinations.

1. Subject to the administrative control of the Director of the Department of Business and Industry, the Commissioner shall exercise general supervision and control over mortgage brokers and mortgage agents doing business in this State.

2. In addition to the other duties imposed upon him by law, the Commissioner shall:

(a) Adopt regulations:

(1) Setting forth the requirements for an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property. The regulations must include, without limitation, the minimum financial conditions that the investor must comply with before becoming an investor.

(2) Establishing reasonable limitations and guidelines on loans made by a mortgage broker to a director, officer, mortgage agent or employee of the mortgage broker.

(b) Adopt any other regulations that are necessary to carry out the provisions of this chapter, except as to loan brokerage fees.

(c) Conduct such investigations as may be necessary to determine whether any person has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner.

(d) Except as otherwise provided in subsection 4, conduct an annual examination of each mortgage broker doing business in this State. The annual examination must include, without limitation, a formal exit review with the mortgage broker. The Commissioner shall adopt regulations prescribing:

(1) Standards for determining the rating of each mortgage broker based upon the results of the annual examination; and

(2) Procedures for resolving any objections made by the mortgage broker to the results of the annual examination. The results of the annual examination may not be opened to public inspection pursuant to NRS 645B.090 until any objections made by the mortgage broker have been decided by the Commissioner.

(e) Conduct such other examinations, periodic or special audits, investigations and hearings as may be necessary for the efficient administration of the laws of this State regarding mortgage brokers and mortgage agents. The Commissioner shall adopt regulations specifying the general guidelines that will be followed when a periodic or special audit of a mortgage broker is conducted pursuant to this chapter.

(f) Classify as confidential certain records and information obtained by the Division when those matters are obtained from a governmental agency upon the express condition that they remain confidential. This paragraph does not limit examination by:

(1) The Legislative Auditor; or

(2) The Department of Taxation if necessary to carry out the provisions of chapter 363A of NRS.

(g) Conduct such examinations and investigations as are necessary to ensure that mortgage brokers and mortgage agents meet the requirements of this chapter for obtaining a license, both at the time of the application for a license and thereafter on a continuing basis.

3. For each special audit, investigation or examination, a mortgage broker or mortgage agent shall pay a fee based on the rate established pursuant to NRS 645F.280.

4. The Commissioner may conduct biennial examinations of a mortgage broker instead of annual examinations, as described in paragraph (d) of subsection 2, if the mortgage broker:

(a) Received a rating in the last annual examination that meets a threshold determined by the Commissioner;

(b) Has not had any adverse change in financial condition since the last annual examination, as shown by financial statements of the mortgage broker;

(c) Has not had any complaints received by the Division that resulted in any administrative action by the Division; and

(d) Does not maintain any trust accounts pursuant to NRS 645B.170 or 645B.175 or arrange loans funded by private investors.

(Added to NRS by 1973, 1538; A 1973, 1669; 1981, 1789; 1983, 1380, 1703; 1987, 1878, 2224; 1993, 497, 1893; 1995, 526; 1999, 3784; 2001, 2467; 2003, 3552; 2003, 20th Special Session, 220; 2007, 955)

NRS 645B.070 Subpoenas; oaths; examination of witnesses; penalty; assessment of costs.

1. In the conduct of any examination, periodic or special audit, investigation or hearing, the Commissioner may:

(a) Compel the attendance of any person by subpoena.

(b) Administer oaths.

(c) Examine any person under oath concerning the business and conduct of affairs of any person subject to the provisions of this chapter and in connection therewith require the production of any books, records or papers relevant to the inquiry.

2. Any person subpoenaed under the provisions of this section who willfully refuses or willfully neglects to appear at the time and place named in the subpoena or to produce books, records or papers required by the Commissioner, or who refuses to be sworn or answer as a witness, is guilty of a misdemeanor and shall be punished as provided in NRS 645B.950.

3. In addition to the authority to recover attorney’s fees and costs pursuant to any other statute, the Commissioner may assess against and collect from a person all costs, including, without limitation, reasonable attorney’s fees, that are attributable to any examination, periodic or special audit, investigation or hearing that is conducted to examine or investigate the conduct, activities or business of the person pursuant to this chapter.

(Added to NRS by 1973, 1538; A 1981, 1789; 1983, 1703; 1987, 1879; 1999, 3785; 2003, 3468)

NRS 645B.075 Payment of statutory assessment by mortgage broker; duty of mortgage broker and agents to cooperate fully with audits and examinations. Each mortgage broker shall pay the assessment levied pursuant to NRS 645F.180. Each mortgage broker and mortgage agent shall cooperate fully with the audits and examinations performed pursuant thereto.

(Added to NRS by 1987, 826; A 1999, 3799; 2003, 3552)

Records and Financial Statements

NRS 645B.080 Records relating to mortgage transactions, financial condition and trust accounts; monthly report to Commissioner; accounting procedures for trust accounts; regulations.

1. Each mortgage broker shall keep and maintain at all times at each location where the mortgage broker conducts business in this state complete and suitable records of all mortgage transactions made by the mortgage broker at that location. Each mortgage broker shall also keep and maintain at all times at each such location all original books, papers and data, or copies thereof, clearly reflecting the financial condition of the business of the mortgage broker.

2. Each mortgage broker shall submit to the Commissioner each month a report of the mortgage broker’s activity for the previous month. The report must:

(a) Specify the volume of loans arranged by the mortgage broker for the month or state that no loans were arranged in that month;

(b) Include any information required pursuant to NRS 645B.260 or pursuant to the regulations adopted by the Commissioner; and

(c) Be submitted to the Commissioner by the 15th day of the month following the month for which the report is made.

3. The Commissioner may adopt regulations prescribing accounting procedures for mortgage brokers handling trust accounts and the requirements for keeping records relating to such accounts.

(Added to NRS by 1973, 1538; A 1981, 1789; 1985, 2187; 1987, 1879; 1989, 1765; 1995, 136; 1999, 3786)

NRS 645B.085 Annual financial statement; audit of trust accounts; regulations.

1. Except as otherwise provided in this section, not later than 120 days after the last day of each fiscal year for a mortgage broker, the mortgage broker shall submit to the Commissioner a financial statement that:

(a) Is dated not earlier than the last day of the fiscal year; and

(b) Has been prepared from the books and records of the mortgage broker by an independent public accountant who holds a permit to engage in the practice of public accounting in this State that has not been revoked or suspended.

2. The Commissioner may grant a reasonable extension for the submission of a financial statement pursuant to this section if a mortgage broker requests such an extension before the date on which the financial statement is due.

3. If a mortgage broker maintains any accounts described in subsection 1 of NRS 645B.175, the financial statement submitted pursuant to this section must be audited. If a mortgage broker maintains any accounts described in subsection 4 of NRS 645B.175, those accounts must be audited. The public accountant who prepares the report of an audit shall submit a copy of the report to the Commissioner at the same time that he submits the report to the mortgage broker.

4. The Commissioner shall adopt regulations prescribing the scope of an audit conducted pursuant to subsection 3.

(Added to NRS by 1999, 3772; A 2001, 2467; 2007, 956)

NRS 645B.090 Records of Commissioner: General provisions governing public inspection, confidentiality and disclosure of information relating to investigations and disciplinary action.

1. Except as otherwise provided in this section or by specific statute, all papers, documents, reports and other written instruments filed with the Commissioner pursuant to this chapter are open to public inspection.

2. Except as otherwise provided in subsection 3, the Commissioner may withhold from public inspection or refuse to disclose to a person, for such time as the Commissioner considers necessary, any information that, in his judgment, would:

(a) Impede or otherwise interfere with an investigation that is currently pending against a mortgage broker;

(b) Have an undesirable effect on the welfare of the public or the welfare of any mortgage broker or mortgage agent; or

(c) Give any mortgage broker a competitive advantage over any other mortgage broker.

3. Except as otherwise provided in NRS 645B.092, the Commissioner shall disclose the following information concerning a mortgage broker to any person who requests it:

(a) The findings and results of any investigation which has been completed during the immediately preceding 5 years against the mortgage broker pursuant to the provisions of this chapter and which has resulted in a finding by the Commissioner that the mortgage broker committed a violation of a provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner; and

(b) The nature of any disciplinary action that has been taken during the immediately preceding 5 years against the mortgage broker pursuant to the provisions of this chapter.

(Added to NRS by 1973, 1543; A 1983, 1704; 1987, 1880; 1999, 3786; 2003, 3469)

NRS 645B.092 Records of Commissioner: Certain records relating to investigation deemed confidential; certain records relating to disciplinary action and orders imposing discipline deemed public records.

1. Except as otherwise provided in this section and NRS 239.0115, a complaint filed with the Commissioner, all documents and other information filed with the complaint and all documents and other information compiled as a result of an investigation conducted to determine whether to initiate disciplinary action are confidential.

2. The complaint or other document filed by the Commissioner to initiate disciplinary action and all documents and information considered by the Commissioner when determining whether to impose discipline are public records.

3. An order that imposes discipline and the findings of fact and conclusions of law supporting that order are public records.

(Added to NRS by 2003, 3468; A 2007, 2147)

Commingling Money

NRS 645B.093 Commingling certain money prohibited.

1. A mortgage broker who is a broker-dealer or a sales representative licensed pursuant to NRS 90.310 or who is exempt from licensure pursuant to NRS 90.320:

(a) Shall not commingle money received for mortgage transactions and money received for securities transactions; and

(b) Shall ensure that all money received for mortgage transactions is accounted for separately from all money received for securities transactions.

2. A mortgage broker who is an investment adviser or a representative of an investment adviser licensed pursuant to NRS 90.330 or exempt from licensure pursuant to NRS 90.340:

(a) Shall not commingle money received for mortgage transactions and money received for securities transactions; and

(b) Shall ensure that all money received for mortgage transactions is accounted for separately from all money received for securities transactions.

(Added to NRS by 2007, 951)

Transfer of Stock

NRS 645B.095 Notification of certain transfers required; application to Commissioner for approval of change of control; investigation; waiver.

1. As used in this section, “change of control” means:

(a) A transfer of voting stock which results in giving a person, directly or indirectly, the power to direct the management and policy of a mortgage broker; or

(b) A transfer of at least 25 percent of the outstanding voting stock of a mortgage broker.

2. The Commissioner must be notified of a transfer of 5 percent or more of the outstanding voting stock of a mortgage broker and must approve a transfer of voting stock of a mortgage broker which constitutes a change of control.

3. The person who acquires stock resulting in a change of control of the mortgage broker shall apply to the Commissioner for approval of the transfer. The application must contain information which shows that the requirements of this chapter for obtaining a license will be satisfied after the change of control. Except as otherwise provided in subsection 4, the Commissioner shall conduct an investigation to determine whether those requirements will be satisfied. If, after the investigation, the Commissioner denies the application, he may forbid the applicant from participating in the business of the mortgage broker.

4. A mortgage broker may submit a written request to the Commissioner to waive an investigation pursuant to subsection 3. The Commissioner may grant a waiver if the applicant has undergone a similar investigation by a state or federal agency in connection with the licensing of or his employment with a financial institution.

(Added to NRS by 1983, 1376; A 1983, 1843; 1985, 1344; 1987, 1880; 1999, 3787)

Net Worth

NRS 645B.115 Minimum net worth required for certain mortgage brokers; initial and annual determination of net worth; examination by Commissioner; regulations.

1. If a mortgage broker maintains any accounts described in NRS 645B.175, the mortgage broker and his mortgage agents shall not engage in any activity that is authorized pursuant to this chapter, unless the mortgage broker maintains continuously a minimum net worth in the following amount based upon the average monthly balance of the accounts maintained by the mortgage broker pursuant to NRS 645B.175:

AVERAGE MONTHLY BALANCE MINIMUM NET

WORTH REQUIRED

$100,000 or less…………………………………………………………………………………….. $25,000

More than $100,000 but not more than $250,000…………………………………….. 50,000

More than $250,000 but not more than $500,000…………………………………… 100,000

More than $500,000 but not more than $1,000,000………………………………… 200,000

More than $1,000,000……………………………………………………………………………. 250,000

The Commissioner shall determine the appropriate initial minimum net worth that must be maintained by the mortgage broker pursuant to this section based upon the expected average monthly balance of the accounts maintained by the mortgage broker pursuant to NRS 645B.175. After determining the initial minimum net worth that must be maintained by the mortgage broker, the Commissioner shall, on an annual basis, determine the appropriate minimum net worth that must be maintained by the mortgage broker pursuant to this section based upon the average monthly balance of the accounts maintained by the mortgage broker pursuant to NRS 645B.175.

2. If requested by the Commissioner, a mortgage broker who is subject to the provisions of this section and his mortgage agents shall submit to the Commissioner or allow the Commissioner to examine any documentation or other evidence that is related to determining the net worth of the mortgage broker.

3. The Commissioner:

(a) Shall adopt regulations prescribing standards for determining the net worth of a mortgage broker; and

(b) May adopt any other regulations that are necessary to carry out the provisions of this section.

(Added to NRS by 1999, 3771)

ESCROW AND TRUST ACCOUNTS

NRS 645B.165 Escrow account required for fee, salary, deposit or money paid in advance; release from escrow; exceptions; refunds; penalty.

1. Except as otherwise provided in subsection 3, the amount of any advance fee, salary, deposit or money paid to a mortgage broker and his mortgage agents or any other person to obtain a loan which will be secured by a lien on real property must be placed in escrow pending completion of the loan or a commitment for the loan.

2. The amount held in escrow pursuant to subsection 1 must be released:

(a) Upon completion of the loan or commitment for the loan, to the mortgage broker or other person to whom the advance fee, salary, deposit or money was paid.

(b) If the loan or commitment for the loan fails, to the person who made the payment.

3. Advance payments to cover reasonably estimated costs paid to third persons are excluded from the provisions of subsections 1 and 2 if the person making them first signs a written agreement which specifies the estimated costs by item and the estimated aggregate cost, and which recites that money advanced for costs will not be refunded. If an itemized service is not performed and the estimated cost thereof is not refunded, the recipient of the advance payment is subject to the penalties provided in NRS 645B.960.

(Added to NRS by 1977, 618; A 1979, 1397; 1989, 1442; 1991, 178; 1995, 1313; 1999, 3793)

NRS 645B.170 Trust account required for money deposited to pay taxes or insurance premiums; fiduciary duty of mortgage broker; accounting to debtor and Commissioner; additional duties and prohibitions.

1. All money paid to a mortgage broker and his mortgage agents for payment of taxes or insurance premiums on real property which secures any loan arranged by the mortgage broker must be deposited in an insured depository financial institution and kept separate, distinct and apart from money belonging to the mortgage broker. Such money, when deposited, is to be designated as an “impound trust account” or under some other appropriate name indicating that the accounts are not the money of the mortgage broker.

2. The mortgage broker has a fiduciary duty to each debtor with respect to the money in an impound trust account.

3. The mortgage broker shall, upon reasonable notice, account to any debtor whose real property secures a loan arranged by the mortgage broker for any money which that person has paid to the mortgage broker for the payment of taxes or insurance premiums on the real property.

4. The mortgage broker shall, upon reasonable notice, account to the Commissioner for all money in an impound trust account.

5. A mortgage broker shall:

(a) Require contributions to an impound trust account in an amount reasonably necessary to pay the obligations as they become due.

(b) Within 30 days after the completion of the annual review of an impound trust account, notify the debtor:

(1) Of the amount by which the contributions exceed the amount reasonably necessary to pay the annual obligations due from the account; and

(2) That the debtor may specify the disposition of the excess money within 20 days after receipt of the notice. If the debtor fails to specify such a disposition within that time, the mortgage broker shall maintain the excess money in the account.

Ê This subsection does not prohibit a mortgage broker from requiring additional amounts to be paid into an impound trust account to recover a deficiency that exists in the account.

6. A mortgage broker shall not make payments from an impound trust account in a manner that causes a policy of insurance to be cancelled or causes property taxes or similar payments to become delinquent.

(Added to NRS by 1973, 1543; A 1983, 1708; 1987, 1884; 1989, 1765; 1999, 1539, 3793)

NRS 645B.175 Trust or escrow account required for money received from investor to fund loan; trust or escrow account required for money received from debtor to repay loan; release of money; accounting to investor, debtor and Commissioner; additional conditions, limitations and prohibitions.

1. Except as otherwise provided in this section, all money received by a mortgage broker and his mortgage agents from an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property must:

(a) Be deposited in:

(1) An insured depository financial institution; or

(2) An escrow account which is controlled by a person who is independent of the parties and subject to instructions regarding the account which are approved by the parties.

(b) Be kept separate from money:

(1) Belonging to the mortgage broker in an account appropriately named to indicate that the money does not belong to the mortgage broker.

(2) Received pursuant to subsection 4.

2. Except as otherwise provided in this section, the amount held in trust pursuant to subsection 1 must be released:

(a) Upon completion of the loan, including proper recordation of the respective interests or release, or upon completion of the transfer of the ownership or beneficial interest therein, to the debtor or his designee less the amount due the mortgage broker for the payment of any fee or service charge;

(b) If the loan or the transfer thereof is not consummated, to each investor who furnished the money held in trust; or

(c) Pursuant to any instructions regarding the escrow account.

3. The amount held in trust pursuant to subsection 1 must not be released to the debtor or his designee unless:

(a) The amount released is equal to the total amount of money which is being loaned to the debtor for that loan, less the amount due the mortgage broker for the payment of any fee or service charge; and

(b) The mortgage broker has provided a written instruction to a title agent or title insurer requiring that a lender’s policy of title insurance or appropriate title endorsement, which names as an insured each investor who owns a beneficial interest in the loan, be issued for the real property securing the loan.

4. Except as otherwise provided in this section, all money paid to a mortgage broker and his mortgage agents by a person in full or in partial payment of a loan secured by a lien on real property, must:

(a) Be deposited in:

(1) An insured depository financial institution; or

(2) An escrow account which is controlled by a person who is subject to instructions regarding the account which are approved by the parties.

(b) Be kept separate from money:

(1) Belonging to the mortgage broker in an account appropriately named to indicate that it does not belong to the mortgage broker.

(2) Received pursuant to subsection 1.

5. Except as otherwise provided in this section, the amount held in trust pursuant to subsection 4:

(a) Must be released, upon the deduction and payment of any fee or service charge due the mortgage broker, to each investor who owns a beneficial interest in the loan in exact proportion to the beneficial interest that he owns in the loan; and

(b) Must not be released, in any proportion, to an investor who owns a beneficial interest in the loan, unless the amount described in paragraph (a) is also released to every other investor who owns a beneficial interest in the loan.

6. An investor may waive, in writing, the right to receive one or more payments, or portions thereof, that are released to other investors in the manner set forth in subsection 5. A mortgage broker or mortgage agent shall not act as the attorney-in-fact or the agent of an investor with respect to the giving of a written waiver pursuant to this subsection. Any such written waiver applies only to the payment or payments, or portions thereof, that are included in the written waiver and does not affect the right of the investor to:

(a) Receive the waived payment or payments, or portions thereof, at a later date; or

(b) Receive all other payments in full and in accordance with the provisions of subsection 5.

7. Upon reasonable notice, any mortgage broker described in this section shall:

(a) Account to any investor or debtor who has paid to the mortgage broker or his mortgage agents money that is required to be deposited in a trust account pursuant to this section; and

(b) Account to the Commissioner for all money which the mortgage broker and his mortgage agents have received from each investor or debtor and which the mortgage broker is required to deposit in a trust account pursuant to this section.

8. Money received by a mortgage broker and his mortgage agents pursuant to this section from a person who is not associated with the mortgage broker may be held in trust for not more than 45 days before an escrow account must be opened in connection with the loan. If, within this 45-day period, the loan or the transfer therefor is not consummated, the money must be returned within 24 hours. If the money is so returned, it may not be reinvested with the mortgage broker for at least 15 days.

9. If a mortgage broker or a mortgage agent receives any money pursuant to this section, the mortgage broker or mortgage agent, after the deduction and payment of any fee or service charge due the mortgage broker, shall not release the money to:

(a) Any person who does not have a contractual or legal right to receive the money; or

(b) Any person who has a contractual right to receive the money if the mortgage broker or mortgage agent knows or, in light of all the surrounding facts and circumstances, reasonably should know that the person’s contractual right to receive the money violates any provision of this chapter or a regulation adopted pursuant to this chapter.

10. If a mortgage broker maintains any accounts described in subsection 1 or subsection 4, the mortgage broker shall, in addition to the annual financial statement audited pursuant to NRS 645B.085, submit to the Commissioner each 6 calendar months a financial statement concerning those trust accounts.

11. The Commissioner shall adopt regulations concerning the form and content required for financial statements submitted pursuant to subsection 10.

(Added to NRS by 1981, 1784; A 1983, 1708; 1985, 2189; 1987, 1885; 1999, 3794; 2007, 956)

NRS 645B.180 Limitations on execution or attachment of money in trust account; commingling of money prohibited.

1. Money in an impound trust account is not subject to execution or attachment on any claim against the mortgage broker or his mortgage agents.

2. It is unlawful for a mortgage broker or his mortgage agents knowingly to keep or cause to be kept any money in a depository financial institution under the heading of “impound trust account” or any other name designating such money as belonging to the investors or debtors of the mortgage broker, unless the money has been paid to the mortgage broker or his mortgage agents by an investor or debtor and is being held in trust by the mortgage broker pursuant to NRS 645B.170 or 645B.175.

(Added to NRS by 1973, 1543; A 1989, 1766; 1999, 1540, 3796)

DISCLOSURES AND ADVERTISING

NRS 645B.185 Use of disclosure forms required; release of financial statements; duties of mortgage broker and agents; prohibitions; powers of Commissioner; regulations.

1. A mortgage broker or mortgage agent shall not accept money from a private investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property unless:

(a) The private investor and the mortgage broker or mortgage agent sign and date a disclosure form that complies with the provisions of this section; and

(b) The mortgage broker or mortgage agent gives the private investor the original disclosure form that has been signed and dated.

2. A private investor and a mortgage broker or mortgage agent must sign and date a separate disclosure form pursuant to subsection 1 for each loan in which the private investor invests his money. A mortgage broker or mortgage agent shall not act as the attorney-in-fact or the agent of a private investor with respect to the signing or dating of any disclosure form.

3. In addition to the requirements of subsections 1 and 2, a mortgage broker or mortgage agent shall not accept money from a private investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property, unless the mortgage broker or mortgage agent gives the private investor a written form by which the private investor may request that the mortgage broker authorize the Commissioner to release the mortgage broker’s financial statement to the private investor. Such a form must be given to the private investor for each loan. If the private investor, before giving money to the mortgage broker for the loan, requests that the mortgage broker authorize the release of a financial statement pursuant to this subsection, the mortgage broker and his mortgage agents shall not accept money from the private investor for that loan until the mortgage broker receives notice from the Commissioner that the financial statement has been released to the private investor.

4. A private investor and a mortgage broker or mortgage agent may not agree to alter or waive the provisions of this section by contract or other agreement. Any such contract or agreement is void and must not be given effect to the extent that it violates the provisions of this section.

5. A mortgage broker shall retain a copy of each disclosure form that is signed and dated pursuant to subsection 1 for the period that is prescribed in the regulations adopted by the Commissioner.

6. The standard provisions for each such disclosure form must include, without limitation, statements:

(a) Explaining the risks of investing through the mortgage broker, including, without limitation:

(1) The possibility that the debtor may default on the loan;

(2) The nature of the losses that may result through foreclosure;

(3) The fact that payments of principal and interest are not guaranteed and that the private investor may lose the entire amount of principal that he has invested;

(4) The fact that the mortgage broker is not a depository financial institution and that the investment is not insured by any depository insurance and is not otherwise insured or guaranteed by the Federal or State Government; and

(5) Any other information required pursuant to the regulations adopted by the Commissioner; and

(b) Disclosing to the private investor the following information if the information is known or, in light of all the surrounding facts and circumstances, reasonably should be known to the mortgage broker:

(1) Whether the real property that will secure the loan is encumbered by any other liens and, if so, the priority of each such lien, the amount of debt secured by each such lien and the current status of that debt, including, without limitation, whether the debt is being paid or is in default;

(2) Whether the mortgage broker or any general partner, officer, director or mortgage agent of the mortgage broker has any direct or indirect interest in the debtor;

(3) Whether any disciplinary action has been taken by the Commissioner against the mortgage broker or any general partner, officer or director of the mortgage broker within the immediately preceding 12 months, and the nature of any such disciplinary action;

(4) Whether the mortgage broker or any general partner, officer or director of the mortgage broker has been convicted within the immediately preceding 12 months for violating any law, ordinance or regulation that involves fraud, misrepresentation or a deceitful, fraudulent or dishonest business practice; and

(5) Any other information required pursuant to the regulations adopted by the Commissioner.

7. Whether or not a mortgage broker is required to disclose any information to private investors through a disclosure form that complies with the provisions of this section, the Commissioner may order the mortgage broker to disclose to private investors and other investors or to the general public any information concerning the mortgage broker, any general partner, officer, director or mortgage agent of the mortgage broker or any loan in which the mortgage broker is or has been involved, if the Commissioner, in his judgment, believes that the information:

(a) Would be of material interest to a reasonable investor who is deciding whether to invest money with the mortgage broker; or

(b) Is necessary to protect the welfare of the public.

8. In carrying out the provisions of subsection 7, the Commissioner may, without limitation, order a mortgage broker to include statements of disclosure prescribed by the Commissioner:

(a) In the disclosure form that must be given to private investors pursuant to subsection 1;

(b) In additional disclosure forms that must be given to private investors and other investors before or after they have invested money through the mortgage broker; or

(c) In any advertisement that the mortgage broker uses in carrying on his business.

9. The Commissioner:

(a) Shall adopt regulations prescribing the period for which a mortgage broker must retain a copy of each disclosure form that is given to private investors; and

(b) May adopt any other regulations that are necessary to carry out the provisions of this section, including, without limitation, regulations specifying the size of print and any required formatting or typesetting that a mortgage broker must use in any form that is given to private investors.

(Added to NRS by 1985, 2185; A 1987, 1886; 1999, 3796; 2001, 2468)

NRS 645B.186 Disclosure of certain business and personal relationships required.

1. If a licensee or a relative of the licensee is licensed as, conducts business as or holds a controlling interest or position in:

(a) A construction control;

(b) An escrow agency or escrow agent; or

(c) A title agent, a title insurer or an escrow officer of a title agent or title insurer,

Ê the licensee shall fully disclose his status as, connection to or relationship with the construction control, escrow agency, escrow agent, title agent, title insurer or escrow officer to each investor, and the licensee shall not require, as a condition to an investor acquiring ownership of or a beneficial interest in a loan secured by a lien on real property, that the investor transact business with or use the services of the construction control, escrow agency, escrow agent, title agent, title insurer or escrow officer or that the investor authorize the licensee to transact business with or use the services of the construction control, escrow agency, escrow agent, title agent, title insurer or escrow officer on behalf of the investor.

2. For the purposes of this section, a person shall be deemed to hold a controlling interest or position if the person:

(a) Owns or controls a majority of the voting stock or holds any other controlling interest, directly or indirectly, that gives him the power to direct management or determine policy; or

(b) Is a partner, officer, director or trustee.

3. As used in this section, “licensee” means:

(a) A person who is licensed as a mortgage broker pursuant to this chapter; and

(b) Any general partner, officer or director of such a person.

(Added to NRS by 1999, 3770)

NRS 645B.187 Prohibition on making certain guarantees in advertisements and solicitations; limitations on payment of premium interest; penalty.

1. If a mortgage broker or mortgage agent solicits or receives money from an investor, the mortgage broker or mortgage agent shall not:

(a) In any advertisement; or

(b) Before, during or after solicitation or receipt of money from the investor,

Ê make, or cause or encourage to be made, any explicit or implicit statement, representation or promise, oral or written, which a reasonable person would construe as a guarantee that the investor will be repaid the principal amount of money he invests or will earn a specific rate of return or a specific rate of interest on the principal amount of money he invests.

2. If a mortgage broker offers to pay or pays premium interest on money that the mortgage broker receives from a person to acquire ownership of or a beneficial interest in a loan secured by a lien on real property or in full or partial payment of such a loan:

(a) The premium interest must be paid from the assets or income of the mortgage broker; and

(b) The mortgage broker or a mortgage agent shall not:

(1) In any advertisement; or

(2) Before, during or after receipt of money from such a person,

Ê make, or cause or encourage to be made, any explicit or implicit statement, representation or promise, oral or written, which a reasonable person would construe as a guarantee that the mortgage broker will pay the premium interest.

3. A person who violates any provision of this section is guilty of a misdemeanor and shall be punished as provided in NRS 645B.950.

4. As used in this section, “premium interest” means that amount of interest a mortgage broker pays to a person which exceeds the amount which is being obtained from the insured depository financial institution.

(Added to NRS by 1985, 2185; A 1999, 3799)

NRS 645B.189 Statements of disclosure required in certain advertisements; review of advertisements by Commissioner; advertisements must comply with state and federal laws concerning deceptive trade practices and deceptive advertising; regulations.

1. If, in carrying on his business, a mortgage broker uses an advertisement that is designed, intended or reasonably likely to solicit money from private investors, the mortgage broker shall include in each such advertisement a statement of disclosure in substantially the following form:

Money invested through a mortgage broker is not guaranteed to earn any interest or return and is not insured.

2. A mortgage broker shall include in each advertisement that the mortgage broker uses in carrying on his business any statements of disclosure required pursuant to the regulations adopted by the Commissioner or required pursuant to an order of the Commissioner entered in accordance with subsections 7 and 8 of NRS 645B.185.

3. Each mortgage broker who has received his initial license within the past 12 months shall submit any proposed advertisement that the mortgage broker intends to use in carrying on his business to the Commissioner for approval.

4. In addition to the requirements set forth in this chapter, each advertisement that a mortgage broker uses in carrying on his business must comply with the requirements of:

(a) NRS 598.0903 to 598.0999, inclusive, concerning deceptive trade practices; and

(b) Any applicable federal statute or regulation concerning deceptive advertising and the advertising of interest rates.

5. If a mortgage broker violates any provision of NRS 598.0903 to 598.0999, inclusive, concerning deceptive trade practices or any federal statute or regulation concerning deceptive advertising or the advertising of interest rates, in addition to any sanction or penalty imposed by state or federal law upon the mortgage broker for the violation, the Commissioner may take any disciplinary action set forth in subsection 2 of NRS 645B.670 against the mortgage broker.

6. The Commissioner may adopt any regulations that are necessary to carry out the provisions of this section.

(Added to NRS by 1985, 2185; A 1987, 1886; 1999, 3799; 2001, 2470; 2007, 958)

NRS 645B.196 Liability of advertising spokesperson for mortgage broker for certain damages.

1. An advertising spokesperson for a mortgage broker is jointly and severally liable with the mortgage broker for damages caused by the mortgage broker by fraud, embezzlement, misappropriation of property, a violation of the provisions of this chapter or the regulations adopted pursuant thereto, or an action of the mortgage broker that is grounds for disciplinary action, if:

(a) The advertising spokesperson knew or should have known of the fraud, embezzlement, misappropriation of property, violation of the provisions of this chapter or the regulations adopted pursuant thereto, or action of the mortgage broker that is grounds for disciplinary action; or

(b) In advertising for the mortgage broker, the advertising spokesperson knew or should have known that:

(1) The conduct of the advertising spokesperson was likely to deceive, defraud or harm the public or any person who engaged in business with the mortgage broker; or

(2) The advertising spokesperson was disseminating material information concerning the mortgage broker or the business, products or services of the mortgage broker which was false or misleading.

2. As used in this section:

(a) “Advertising for a mortgage broker” means advertising or otherwise promoting a mortgage broker or the business, products or services of the mortgage broker using any medium of communication.

(b) “Advertising spokesperson for a mortgage broker” or “advertising spokesperson” means a person who consents to and receives compensation for using his name or likeness in advertising for a mortgage broker.

(Added to NRS by 2003, 3543)

LOAN PAYMENTS AND DEFAULTS

NRS 645B.240 Limitations on charging late fee, additional amount of interest or other penalty.

1. If a person is required to make a payment to a mortgage broker pursuant to the terms of a loan secured by a lien on real property, the mortgage broker may not charge the person a late fee, an additional amount of interest or any other penalty in connection with that payment if the payment is delivered to the mortgage broker before 5 p.m. on:

(a) The day that the payment is due pursuant to the terms of the loan, if an office of the mortgage broker is open to customers until 5 p.m. on that day; or

(b) The next day that an office of the mortgage broker is open to customers until 5 p.m., if the provisions of paragraph (a) do not otherwise apply.

2. A person and a mortgage broker or mortgage agent may not agree to alter or waive the provisions of this section by contract or other agreement, and any such contract or agreement is void and must not be given effect to the extent that it violates the provisions of this section.

(Added to NRS by 1999, 3773)

NRS 645B.250 Prohibition on advancing payments to investor on behalf of debtor in default; exceptions. Except pursuant to a contract for the collection or servicing of a loan which is governed by the requirements established by the Government National Mortgage Association, Federal Home Loan Mortgage Corporation or Federal National Mortgage Association, a mortgage broker or mortgage agent shall not advance payments to an investor on behalf of a person who has obtained a loan secured by a lien on real property and who has defaulted in his payments.

(Added to NRS by 1985, 2185; A 1989, 966; 1999, 3800)—(Substituted in revision for NRS 645B.191)

NRS 645B.260 Monthly report to Commissioner on delinquencies in payments and defaults; monthly notice to investors; regulations.

1. If a mortgage broker maintains any accounts described in subsection 4 of NRS 645B.175 in which the mortgage broker deposits payments from a debtor on a loan secured by a lien on real property and, on the last day of any month, the debtor has failed to make two or more consecutive payments in accordance with the terms of the loan, the mortgage broker shall:

(a) Include in the report that the mortgage broker submits to the Commissioner pursuant to subsection 2 of NRS 645B.080 the information relating to delinquencies in payments and defaults that is required by the regulations adopted pursuant to subsection 2;

(b) Not later than 15 days after the last day of each such month, mail to the last known address of each investor who owns a beneficial interest in the loan a notice containing the information relating to delinquencies in payments and defaults that is required by the regulations adopted pursuant to subsection 2; and

(c) Comply with the provisions of this section each month on a continuing basis until:

(1) The debtor or his designee remedies the delinquency in payments and any default; or

(2) The lien securing the loan is extinguished.

2. The Commissioner:

(a) Shall adopt regulations prescribing the information relating to delinquencies in payments and defaults that a mortgage broker must include in his report to the commissioner and in the notice mailed to investors pursuant to subsection 1. Such regulations may provide for variations between the information that a mortgage broker must include in his report to the Commissioner and the information that a mortgage broker must include in the notice mailed to investors.

(b) May adopt any other regulations that are necessary to carry out the provisions of this section.

(Added to NRS by 1999, 3773)

CONDITIONS AND LIMITATIONS ON CERTAIN MORTGAGE TRANSACTIONS

NRS 645B.300 Written appraisal of real property required; persons authorized to perform appraisal; retention and inspection of appraisal; exceptions.

1. Except as otherwise provided in subsection 4, a mortgage broker or mortgage agent shall not accept money from an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property, unless the mortgage broker has obtained a written appraisal of the real property securing the loan.

2. The written appraisal of the real property:

(a) Must be performed by an appraiser who is authorized to perform appraisals in this State; and

(b) Must not be performed by the mortgage broker or a mortgage agent, unless the mortgage broker or mortgage agent is certified or licensed to perform such an appraisal pursuant to chapter 645C of NRS.

3. A copy of the written appraisal of the real property must be:

(a) Maintained at each office of the mortgage broker where money is accepted from an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on the real property; and

(b) Made available during normal business hours for inspection by each such investor and the Commissioner.

4. A mortgage broker is not required to obtain a written appraisal of the real property pursuant to this section if the mortgage broker obtains a written waiver of the appraisal from each investor who acquires ownership of or a beneficial interest in a loan secured by a lien on the real property. A mortgage broker or mortgage agent shall not act as the attorney-in-fact or the agent of an investor with respect to the giving of a written waiver pursuant to this subsection.

5. As used in this section, “appraisal” has the meaning ascribed to it in NRS 645C.030.

(Added to NRS by 1999, 3772)

NRS 645B.305 Requirement that fee for servicing loan be specified in loan. A mortgage broker shall ensure that each loan secured by a lien on real property for which he engages in activity as a mortgage broker includes a fee for servicing the loan which must be specified in the loan. The fee must be in an amount reasonably necessary to pay the cost of servicing the loan.

(Added to NRS by 2007, 951)

NRS 645B.310 Requirements for mortgage broker to assign interest in loan. A mortgage broker shall not assign all or a part of his interest in a loan secured by a lien on real property, unless the mortgage broker:

1. Obtains a policy of title insurance for the real property;

2. Obtains the approval of the assignment from each investor who has acquired ownership of or a beneficial interest in the loan if, at the time of the assignment, the debtor on the loan has defaulted in making a payment required for the loan or any portion of the loan; and

3. Records the assignment in the office of the county recorder of the county in which the real property is located.

(Added to NRS by 1985, 2185; A 1999, 3800; 2007, 959)

NRS 645B.320 Copy of recorded deed of trust must be mailed to each investor. If money from an investor is released to a debtor or his designee pursuant to subsection 2 of NRS 645B.175 upon completion of a loan secured by a lien on real property, the mortgage broker that arranged the loan shall, not later than 3 business days after the date on which the mortgage broker receives a copy of the recorded deed of trust, mail to the last known address of each investor who owns a beneficial interest in the loan a copy of the recorded deed of trust.

(Added to NRS by 1999, 3773)

NRS 645B.330 Limitations on use of power of attorney.

1. A mortgage broker or mortgage agent shall not engage in any act or transaction on behalf of a private investor pursuant to a power of attorney unless:

(a) The power of attorney is executed for the sole purpose of providing services for not more than one specific loan in which the private investor owns a beneficial interest; and

(b) The provisions of the power of attorney:

(1) Have been approved by the Commissioner;

(2) Expressly prohibit the mortgage broker and his mortgage agents from engaging in any act or transaction that subordinates the priority of a recorded deed of trust unless, before such an act or transaction, the mortgage broker obtains written approval for the subordination from the private investor;

(3) Expressly prohibit the mortgage broker and his mortgage agents from using or releasing any money in which the private investor owns a beneficial interest with regard to the specific loan for a purpose that is not directly related to providing services for the loan unless, before any such money is used or released for another purpose, the mortgage broker obtains written approval from the private investor to use or release the money for the other purpose; and

(4) Expressly provide that the power of attorney is effective only for the term of the specific loan unless the mortgage broker obtains written approval from the private investor to extend the term of the power of attorney to provide services for not more than one other loan and the written approval:

(I) Identifies the loan for which the power of attorney was executed; and

(II) Identifies the loan for which the written approval is being given.

2. A mortgage broker or mortgage agent shall not act as the attorney-in-fact or the agent of a private investor with respect to the giving of written approval pursuant to paragraph (b) of subsection 1. A private investor and a mortgage broker or mortgage agent may not agree to alter or waive the provisions of this section by contract or other agreement. Any such contract or agreement is void and must not be given effect to the extent that it violates the provisions of this section.

3. Except as otherwise provided in subsection 4, a power of attorney which designates a mortgage broker or mortgage agent as the attorney-in-fact or the agent of a private investor and which violates the provisions of this section is void and must not be given effect with regard to any act or transaction that occurs on or after October 1, 1999, whether or not the power of attorney is or has been executed by the private investor before, on or after October 1, 1999.

4. The provisions of subsection 3 do not apply to a power of attorney that designates a mortgage broker or mortgage agent as the attorney-in-fact or the agent of a private investor if the power of attorney:

(a) Was executed before July 1, 2001; and

(b) Complied with the provisions of this section that were in effect on October 1, 1999.

5. The provisions of this section do not limit the right of a private investor to include provisions in a power of attorney that are more restrictive than the provisions set forth in subsection 1.

(Added to NRS by 1999, 3774; A 2001, 2471)

LICENSING AND REGULATION OF MORTGAGE AGENTS

NRS 645B.400 License required. A person shall not act as or provide any of the services of a mortgage agent or otherwise engage in, carry on or hold himself out as engaging in or carrying on the activities of a mortgage agent unless the person has a license as a mortgage agent issued pursuant to NRS 645B.410.

(Added to NRS by 2003, 3543)

NRS 645B.410 Qualifications and procedure for issuance of license; fees.

1. To obtain a license as a mortgage agent, a person must:

(a) Be a natural person;

(b) File a written application for a license as a mortgage agent with the Office of the Commissioner;

(c) Comply with the applicable requirements of this chapter; and

(d) Pay an application fee set by the Commissioner of not more than $185.

2. An application for a license as a mortgage agent must:

(a) State the name and residence address of the applicant;

(b) Include a provision by which the applicant gives his written consent to an investigation of his credit history, criminal history and background;

(c) Include a complete set of fingerprints which the Division may forward to the Central Repository for Nevada Records of Criminal History for submission to the Federal Bureau of Investigation for its report;

(d) Include a verified statement from the mortgage broker with whom the applicant will be associated that expresses the intent of that mortgage broker to associate the applicant with the mortgage broker and to be responsible for the activities of the applicant as a mortgage agent; and

(e) Include any other information or supporting materials required pursuant to the regulations adopted by the Commissioner or by an order of the Commissioner. Such information or supporting materials may include, without limitation, other forms of identification of the person.

3. Except as otherwise provided in this chapter, the Commissioner shall issue a license as a mortgage agent to an applicant if:

(a) The application is verified by the Commissioner and complies with the applicable requirements of this chapter; and

(b) The applicant:

(1) Has not been convicted of, or entered a plea of nolo contendere to, a felony relating to the practice of mortgage agents or any crime involving fraud, misrepresentation or moral turpitude;

(2) Has not had a financial services license suspended or revoked within the immediately preceding 10 years;

(3) Has not made a false statement of material fact on his application;

(4) Has not violated any provision of this chapter or chapter 645E of NRS, a regulation adopted pursuant thereto or an order of the Commissioner; and

(5) Has a good reputation for honesty, trustworthiness and integrity and displays competence to transact the business of a mortgage agent in a manner which safeguards the interests of the general public. The applicant must submit satisfactory proof of these qualifications to the Commissioner.

4. Money received by the Commissioner pursuant to this section must be deposited in the Fund for Mortgage Lending created by NRS 645F.270.

(Added to NRS by 2003, 3543; A 2007, 2853)

NRS 645B.420 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective until the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

1. In addition to any other requirements set forth in this chapter:

(a) An applicant for the issuance of a license as a mortgage agent pursuant to this chapter shall include the social security number of the applicant in the application submitted to the Commissioner.

(b) An applicant for the issuance or renewal of a license as a mortgage agent pursuant to this chapter shall submit to the Commissioner the statement prescribed by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statement required pursuant to subsection 1 in:

(a) The application or any other forms that must be submitted for the issuance or renewal of a license as a mortgage agent; or

(b) A separate form prescribed by the Commissioner.

3. The license as a mortgage agent may not be issued or renewed by the Commissioner if the applicant:

(a) Fails to submit the statement required pursuant to subsection 1; or

(b) Indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order.

4. If an applicant indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order, the Commissioner shall advise the applicant to contact the district attorney or other public agency enforcing the order to determine the actions that the applicant may take to satisfy the arrearage.

(Added to NRS by 2003, 3545; A 2005, 2785, 2817)

NRS 645B.420 Payment of child support: Submission of certain information by applicant; grounds for denial of license; duty of Commissioner. [Effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings and expires by limitation 2 years after that date.]

1. In addition to any other requirements set forth in this chapter, an applicant for the issuance or renewal of a license as a mortgage agent pursuant to this chapter shall submit to the Commissioner the statement prescribed by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statement required pursuant to subsection 1 in:

(a) The application or any other forms that must be submitted for the issuance or renewal of a license as a mortgage agent; or

(b) A separate form prescribed by the Commissioner.

3. The license as a mortgage agent may not be issued or renewed by the Commissioner if the applicant:

(a) Fails to submit the statement required pursuant to subsection 1; or

(b) Indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order.

4. If an applicant indicates on the statement submitted pursuant to subsection 1 that he is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order, the Commissioner shall advise the applicant to contact the district attorney or other public agency enforcing the order to determine the actions that the applicant may take to satisfy the arrearage.

(Added to NRS by 2003, 3545; A 2005, 2785, 2786, 2817, effective on the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings)

NRS 645B.430 Annual expiration of license; procedure for renewal; continuing education; fees.

1. A license as a mortgage agent issued pursuant to NRS 645B.410 expires 1 year after the date the license is issued, unless it is renewed. To renew a license as a mortgage agent, the holder of the license must submit to the Commissioner each year, on or before the date the license expires:

(a) An application for renewal;

(b) Except as otherwise provided in this section, satisfactory proof that the holder of the license as a mortgage agent attended at least 10 hours of certified courses of continuing education during the 12 months immediately preceding the date on which the license expires; and

(c) A renewal fee set by the Commissioner of not more than $170.

2. If the holder of the license as a mortgage agent fails to submit any item required pursuant to subsection 1 to the Commissioner each year on or before the date the license expires, the license is cancelled. The Commissioner may reinstate a cancelled license if the holder of the license submits to the Commissioner:

(a) An application for renewal;

(b) The fee required to renew the license pursuant to this section; and

(c) A reinstatement fee of $75.

3. To be issued a duplicate copy of a license as a mortgage agent, a person must make a satisfactory showing of its loss and pay a fee of $10.

4. To change the mortgage broker with whom the mortgage agent is associated, a person must pay a fee of $10.

5. Money received by the Commissioner pursuant to this section must be deposited in the Fund for Mortgage Lending created by NRS 645F.270.

6. The Commissioner may provide by regulation that any hours of a certified course of continuing education attended during a 12-month period, but not needed to satisfy a requirement set forth in this section for the 12-month period in which the hours were taken, may be used to satisfy a requirement set forth in this section for a later 12-month period.

7. As used in this section, “certified course of continuing education” has the meaning ascribed to it in NRS 645B.051.

(Added to NRS by 2003, 3544)

NRS 645B.450 Conditions and limitations regarding employment of or association with mortgage agent; duties of mortgage broker upon termination of mortgage agent.

1. A person licensed as a mortgage agent pursuant to the provisions of NRS 645B.410 may not be associated with or employed by more than one mortgage broker at the same time.

2. A mortgage broker shall not associate with or employ a person as a mortgage agent or authorize a person to be associated with the mortgage broker as a mortgage agent if the mortgage agent is not licensed with the Division pursuant to NRS 645B.410.

3. If a mortgage agent terminates his association or employment with a mortgage broker for any reason, the mortgage broker shall, not later than the third business day following the date of termination:

(a) Deliver to the mortgage agent or send by certified mail to the last known residence address of the mortgage agent a written statement which advises him that his termination is being reported to the Division; and

(b) Deliver or send by certified mail to the Division:

(1) The license or license number of the mortgage agent;

(2) A written statement of the circumstances surrounding the termination; and

(3) A copy of the written statement that the mortgage broker delivers or mails to the mortgage agent pursuant to paragraph (a).

(Added to NRS by 1999, 3769; A 2001, 2472; 2003, 2723, 2863, 3552)

NRS 645B.455 License issued on behalf of professional corporation or limited-liability company; limitations on license; automatic expiration of license.

1. Any natural person who meets the qualifications of a mortgage agent and:

(a) Except as otherwise provided in subsection 2, is the sole shareholder of a corporation organized pursuant to the provisions of chapter 89 of NRS; or

(b) Is the manager of a limited-liability company organized pursuant to the provisions of chapter 86 of NRS,

Ê may be licensed on behalf of the corporation or limited-liability company for the purpose of associating with a licensed mortgage broker in the capacity of a mortgage agent.

2. The spouse of the owner of the corporation who has a community interest in any shares of the corporation shall not be deemed a second shareholder of the corporation for the purposes of paragraph (a) of subsection 1, if the spouse does not vote any of those shares.

3. A license issued pursuant to this section entitles only the sole shareholder of the corporation or the manager of the limited-liability company to act as a mortgage agent, and only as an officer or agent of the corporation or limited-liability company and not on his own behalf. The licensee shall not do or deal in any act, acts or transactions included within the definition of a mortgage broker in NRS 645B.0127, except as that activity is permitted pursuant to this chapter to licensed mortgage agents.

4. The corporation or limited-liability company shall, within 30 days after a license is issued on its behalf pursuant to this section and within 30 days after any change in its ownership, file an affidavit with the Division stating:

(a) For a corporation, the number of issued and outstanding shares of the corporation and the names of all persons to whom the shares have been issued.

(b) For a limited-liability company, the names of members who have an interest in the company.

5. A license issued pursuant to this section automatically expires upon:

(a) The death of the licensed shareholder in the corporation or the manager of the limited-liability company; or

(b) The issuance of shares in the corporation to more than one person other than the spouse.

6. This section does not alter any of the rights, duties or liabilities which otherwise arise in the legal relationship between a mortgage broker or mortgage agent and a person who deals with him.

(Added to NRS by 2007, 21)

NRS 645B.460 Supervision by mortgage broker; requirements; regulations.

1. A mortgage broker shall exercise reasonable supervision over the activities of his mortgage agents. Such reasonable supervision must include, as appropriate:

(a) The establishment of written or oral policies and procedures for his mortgage agents; and

(b) The establishment of a system to review, oversee and inspect the activities of his mortgage agents, including, without limitation:

(1) Transactions handled by his mortgage agents pursuant to this chapter;

(2) Communications between his mortgage agents and a party to such a transaction;

(3) Documents prepared by his mortgage agents that may have a material effect upon the rights or obligations of a party to such a transaction; and

(4) The handling by his mortgage agents of any fee, deposit or money paid to the mortgage broker or his mortgage agents or held in trust by the mortgage broker or his mortgage agents pursuant to this chapter.

2. The Commissioner shall allow a mortgage broker to take into consideration the total number of mortgage agents associated with or employed by the mortgage broker when the mortgage broker determines the form and extent of the policies and procedures for those mortgage agents and the system to review, oversee and inspect the activities of those mortgage agents.

3. The Commissioner may adopt regulations prescribing standards for determining whether a mortgage broker has exercised reasonable supervision over the activities of a mortgage agent pursuant to this section.

(Added to NRS by 1999, 3769; A 2001, 2473)

RIGHTS OF BROKERS AND AGENTS DURING MILITARY SERVICE

NRS 645B.490 Right to be placed on inactive status; procedure for reinstatement.

1. Any mortgage broker or mortgage agent licensed under the provisions of this chapter who is called into the military service of the United States shall, at his request, be relieved from compliance with the provisions of this chapter and placed on inactive status for the period of such military service and for a period of 6 months after discharge therefrom.

2. At any time within 6 months after termination of such service, if the mortgage broker or mortgage agent complies with the provisions of subsection 1, the mortgage broker or mortgage agent may be reinstated, without having to meet any qualification or requirement other than the payment of the reinstatement fee, as provided in NRS 645B.050 or 645B.430, and the mortgage broker or mortgage agent is not required to make payment of the renewal fee for the current year.

3. Any mortgage broker or mortgage agent seeking to qualify for reinstatement, as provided in subsections 1 and 2, must present a certified copy of his honorable discharge or certificate of satisfactory service to the Commissioner.

(Added to NRS by 2003, 3545)

INVESTIGATION OF VIOLATIONS AND UNSAFE PRACTICES; REMEDIAL ACTION

NRS 645B.600 Person may file complaint alleging violation; requirements.

1. A person may file with the Commissioner a complaint alleging that another person has violated a provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner.

2. A complaint filed pursuant to this section must:

(a) Be in writing;

(b) Be signed by the person filing the complaint or the authorized representative of the person filing the complaint;

(c) Contain an address and a telephone number for the person filing the complaint or the authorized representative of the person filing the complaint;

(d) Describe the nature of the alleged violation in as much detail as possible;

(e) Include as exhibits copies of all documentation supporting the complaint; and

(f) Include any other information or supporting materials required by the regulations adopted by the Commissioner or by an order of the Commissioner.

(Added to NRS by 1999, 3775; A 2001, 2474)

NRS 645B.610 Duties of Commissioner when complaint is filed.

1. If a person properly files a complaint with the Commissioner pursuant to NRS 645B.600, the Commissioner shall investigate each violation alleged in the complaint, unless the Commissioner has previously investigated the alleged violation.

2. Except as otherwise provided in subsection 2 of NRS 645B.090, if the Commissioner does not conduct an investigation of an alleged violation pursuant to subsection 1 because he previously has investigated the alleged violation, the Commissioner shall provide to the person who filed the complaint a written summary of the previous investigation and the nature of any disciplinary action that was taken as a result of the previous investigation.

3. If the Commissioner conducts an investigation of an alleged violation pursuant to subsection 1, the Commissioner shall determine from the investigation whether there is reasonable cause to believe that the person committed the alleged violation.

4. If, upon investigation, the Commissioner determines that there is not reasonable cause to believe that the person committed the alleged violation, the Commissioner shall provide the reason for his determination, in writing, to the person who filed the complaint and to the person alleged to have committed the violation.

5. Except as otherwise provided in subsection 6, if, upon investigation, the Commissioner determines that there is reasonable cause to believe that the person committed the alleged violation, the Commissioner shall:

(a) Schedule a hearing concerning the alleged violation;

(b) Mail to the last known address of the person who filed the complaint written notice that must include, without limitation:

(1) The date, time and place of the hearing; and

(2) A statement of each alleged violation that will be considered at the hearing; and

(c) By personal service in accordance with the Nevada Rules of Civil Procedure and any applicable provision of NRS, serve written notice of the hearing to the person alleged to have committed the violation. The written notice that is served pursuant to this paragraph must include, without limitation:

(1) The date, time and place of the hearing;

(2) A copy of the complaint and a statement of each alleged violation that will be considered at the hearing; and

(3) A statement informing the person that, pursuant to NRS 645B.760, if he fails to appear, without reasonable cause, at the hearing:

(I) He is guilty of a misdemeanor; and

(II) The Commissioner is authorized to conduct the hearing in his absence, draw any conclusions that the Commissioner deems appropriate from his failure to appear and render a decision concerning each alleged violation.

6. If the Commissioner enters into a written consent agreement settling or resolving the alleged violation, the Commissioner shall provide a copy of the written consent agreement to the person who filed the complaint.

7. The Commissioner may:

(a) Investigate and conduct a hearing concerning any alleged violation, whether or not a complaint has been filed.

(b) Hear and consider more than one alleged violation against a person at the same hearing.

(Added to NRS by 1999, 3775; A 2003, 3469)

NRS 645B.620 Duties of Commissioner when violation is suspected; referral of violations to Attorney General for criminal prosecution; civil action for injunctive relief.

1. Whether or not a complaint has been filed, the Commissioner shall investigate a mortgage broker, mortgage agent or other person if, for any reason, it appears that:

(a) The mortgage broker or mortgage agent is conducting business in an unsafe and injurious manner or in violation of any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner;

(b) The person is offering or providing any of the services of a mortgage broker or mortgage agent or otherwise engaging in, carrying on or holding himself out as engaging in or carrying on the business of a mortgage broker or mortgage agent without being appropriately licensed or exempt from licensing pursuant to the provisions of this chapter; or

(c) The person is violating any other provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner.

2. If, upon investigation, the Commissioner has reasonable cause to believe that the mortgage broker, mortgage agent or other person has engaged in any conduct or committed any violation described in subsection 1:

(a) The Commissioner shall notify the Attorney General of the conduct or violation and, if applicable, the Commissioner shall immediately take possession of the property of the mortgage broker pursuant to NRS 645B.630; and

(b) The Attorney General shall, if appropriate:

(1) Investigate and prosecute the mortgage broker, mortgage agent or other person pursuant to NRS 645B.800; and

(2) Bring a civil action to:

(I) Enjoin the mortgage broker, mortgage agent or other person from engaging in the conduct, operating the business or committing the violation; and

(II) Enjoin any other person who has encouraged, facilitated, aided or participated in the conduct, the operation of the business or the commission of the violation, or who is likely to engage in such acts, from engaging in or continuing to engage in such acts.

3. If the Attorney General brings a civil action pursuant to subsection 2, the district court of any county of this State is hereby vested with the jurisdiction in equity to enjoin the conduct, the operation of the business or the commission of the violation and may grant any injunctions that are necessary to prevent and restrain the conduct, the operation of the business or the commission of the violation. During the pendency of the proceedings before the district court:

(a) The court may issue any temporary restraining orders as may appear to be just and proper;

(b) The findings of the Commissioner shall be deemed to be prima facie evidence and sufficient grounds, in the discretion of the court, for the ex parte issuance of a temporary restraining order; and

(c) The Attorney General may apply for and on due showing is entitled to have issued the court’s subpoena requiring forthwith the appearance of any person to:

(1) Produce any documents, books and records as may appear necessary for the hearing of the petition; and

(2) Testify and give evidence concerning the conduct complained of in the petition.

(Added to NRS by 1973, 1540; A 1983, 1705; 1987, 1882; 1999, 3790; 2003, 3554)

NRS 645B.630 Duties of Commissioner when unsafe condition or practice is suspected; seizure of property and assets of mortgage broker; duties of Attorney General.

1. In addition to any other action that is required or permitted pursuant to this chapter, if the Commissioner has reasonable cause to believe that:

(a) The assets or capital of a mortgage broker are impaired; or

(b) A mortgage broker is conducting business in an unsafe and injurious manner that may result in danger to the public,

Ê the Commissioner shall immediately take possession of all the property, business and assets of the mortgage broker that are located in this State and shall retain possession of them pending further proceedings provided for in this chapter.

2. If the licensee, the board of directors or any officer or person in charge of the offices of the mortgage broker refuses to permit the Commissioner to take possession of the property of the mortgage broker pursuant to subsection 1:

(a) The Commissioner shall notify the Attorney General; and

(b) The Attorney General shall immediately bring such proceedings as may be necessary to place the Commissioner in immediate possession of the property of the mortgage broker.

3. If the Commissioner takes possession of the property of the mortgage broker, the Commissioner shall:

(a) Make or have made an inventory of the assets and known liabilities of the mortgage broker;

(b) File one copy of the inventory in his office and one copy in the office of the clerk of the district court of the county in which the principal office of the mortgage broker is located and shall mail one copy to each stockholder, partner, officer, director or associate of the mortgage broker at his last known address; and

(c) If the mortgage broker maintains any accounts described in NRS 645B.175, not later than 5 business days after the date on which the Commissioner takes possession of the property of the mortgage broker, mail notice of his possession to the last known address of each person whose money is deposited in such an account or whose money was or should have been deposited in such an account during the preceding 12 months.

4. The clerk of the court with which the copy of the inventory is filed shall file it as any other case or proceeding pending in the court and shall give it a docket number.

(Added to NRS by 1973, 1541; A 1981, 1790; 1983, 1707; 1987, 1883; 1999, 3791)—(Substituted in revision for NRS 645B.150)

NRS 645B.640 Persons entitled to correct unsafe conditions and practices; effect of failure to correct; receivership and liquidation of assets.

1. If the Commissioner takes possession of the property of a mortgage broker pursuant to NRS 645B.630, the licensee, officers, directors, partners, associates or stockholders of the mortgage broker may, within 60 days after the date on which the Commissioner takes possession of the property, make good any deficit in the assets or capital of the mortgage broker or remedy any unsafe and injurious conditions or practices of the mortgage broker.

2. At the expiration of the 60-day period, if the deficiency in assets or capital has not been made good or the unsafe and injurious conditions or practices remedied, the Commissioner may apply to the court to be appointed receiver and proceed to liquidate the assets of the mortgage broker which are located in this State in the same manner as now provided by law for liquidation of a private corporation in receivership.

3. No other person may be appointed receiver by any court without first giving the Commissioner ample notice of his application.

4. The inventory made by the Commissioner and all claims filed by creditors are open at all reasonable times for inspection, and any action taken by the receiver upon any of the claims is subject to the approval of the court before which the cause is pending.

5. The expenses of the receiver and compensation of counsel, as well as all expenditures required in the liquidation proceedings, must be fixed by the Commissioner subject to the approval of the court and, upon certification of the Commissioner, must be paid out of the money in his hands as the receiver.

(Added to NRS by 1973, 1542; A 1983, 1707; 1987, 1884; 1999, 3792)—(Substituted in revision for NRS 645B.160)

DISCIPLINARY ACTION

NRS 645B.670 Authorized disciplinary action; grounds for disciplinary action. Except as otherwise provided in NRS 645B.690:

1. For each violation committed by an applicant for a license issued pursuant to this chapter, whether or not he is issued a license, the Commissioner may impose upon the applicant an administrative fine of not more than $10,000, if the applicant:

(a) Has knowingly made or caused to be made to the Commissioner any false representation of material fact;

(b) Has suppressed or withheld from the Commissioner any information which the applicant possesses and which, if submitted by him, would have rendered the applicant ineligible to be licensed pursuant to the provisions of this chapter; or

(c) Has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner in completing and filing his application for a license or during the course of the investigation of his application for a license.

2. For each violation committed by a mortgage broker, the Commissioner may impose upon the mortgage broker an administrative fine of not more than $10,000, may suspend, revoke or place conditions upon his license, or may do both, if the mortgage broker, whether or not acting as such:

(a) Is insolvent;

(b) Is grossly negligent or incompetent in performing any act for which he is required to be licensed pursuant to the provisions of this chapter;

(c) Does not conduct his business in accordance with law or has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner;

(d) Is in such financial condition that he cannot continue in business with safety to his customers;

(e) Has made a material misrepresentation in connection with any transaction governed by this chapter;

(f) Has suppressed or withheld from a client any material facts, data or other information relating to any transaction governed by the provisions of this chapter which the mortgage broker knew or, by the exercise of reasonable diligence, should have known;

(g) Has knowingly made or caused to be made to the Commissioner any false representation of material fact or has suppressed or withheld from the Commissioner any information which the mortgage broker possesses and which, if submitted by him, would have rendered the mortgage broker ineligible to be licensed pursuant to the provisions of this chapter;

(h) Has failed to account to persons interested for all money received for a trust account;

(i) Has refused to permit an examination by the Commissioner of his books and affairs or has refused or failed, within a reasonable time, to furnish any information or make any report that may be required by the Commissioner pursuant to the provisions of this chapter or a regulation adopted pursuant to this chapter;

(j) Has been convicted of, or entered a plea of nolo contendere to, a felony relating to the practice of mortgage brokers or any crime involving fraud, misrepresentation or moral turpitude;

(k) Has refused or failed to pay, within a reasonable time, any fees, assessments, costs or expenses that the mortgage broker is required to pay pursuant to this chapter or a regulation adopted pursuant to this chapter;

(l) Has failed to satisfy a claim made by a client which has been reduced to judgment;

(m) Has failed to account for or to remit any money of a client within a reasonable time after a request for an accounting or remittal;

(n) Has commingled the money or other property of a client with his own or has converted the money or property of others to his own use;

(o) Has engaged in any other conduct constituting a deceitful, fraudulent or dishonest business practice;

(p) Has repeatedly violated the policies and procedures of the mortgage broker;

(q) Has failed to exercise reasonable supervision over the activities of a mortgage agent as required by NRS 645B.460;

(r) Has instructed a mortgage agent to commit an act that would be cause for the revocation of the license of the mortgage broker, whether or not the mortgage agent commits the act;

(s) Has employed a person as a mortgage agent or authorized a person to be associated with the mortgage broker as a mortgage agent at a time when the mortgage broker knew or, in light of all the surrounding facts and circumstances, reasonably should have known that the person:

(1) Had been convicted of, or entered a plea of nolo contendere to, a felony relating to the practice of mortgage agents or any crime involving fraud, misrepresentation or moral turpitude; or

(2) Had a financial services license or registration suspended or revoked within the immediately preceding 10 years;

(t) Has failed to pay a tax as required pursuant to the provisions of chapter 363A of NRS; or

(u) Has not conducted verifiable business as a mortgage broker for 12 consecutive months, except in the case of a new applicant. The Commissioner shall determine whether a mortgage broker is conducting business by examining the monthly reports of activity submitted by the mortgage broker or by conducting an examination of the mortgage broker.

3. For each violation committed by a mortgage agent, the Commissioner may impose upon the mortgage agent an administrative fine of not more than $10,000, may suspend, revoke or place conditions upon his license, or may do both, if the mortgage agent, whether or not acting as such:

(a) Is grossly negligent or incompetent in performing any act for which he is required to be licensed pursuant to the provisions of this chapter;

(b) Has made a material misrepresentation in connection with any transaction governed by this chapter;

(c) Has suppressed or withheld from a client any material facts, data or other information relating to any transaction governed by the provisions of this chapter which the mortgage agent knew or, by the exercise of reasonable diligence, should have known;

(d) Has knowingly made or caused to be made to the Commissioner any false representation of material fact or has suppressed or withheld from the Commissioner any information which the mortgage agent possesses and which, if submitted by him, would have rendered the mortgage agent ineligible to be licensed pursuant to the provisions of this chapter;

(e) Has been convicted of, or entered a plea of nolo contendere to, a felony relating to the practice of mortgage agents or any crime involving fraud, misrepresentation or moral turpitude;

(f) Has failed to account for or to remit any money of a client within a reasonable time after a request for an accounting or remittal;

(g) Has commingled the money or other property of a client with his own or has converted the money or property of others to his own use;

(h) Has engaged in any other conduct constituting a deceitful, fraudulent or dishonest business practice;

(i) Has repeatedly violated the policies and procedures of the mortgage broker with whom he is associated or by whom he is employed; or

(j) Has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner or has assisted or offered to assist another person to commit such a violation.

(Added to NRS by 1973, 1539; A 1977, 93; 1981, 1790; 1983, 1380, 1704; 1985, 2188; 1987, 1880; 1993, 498; 1999, 3787; 2001, 2474; 2003, 2724, 3555; 2003, 20th Special Session, 221, 258)

NRS 645B.680 Suspension of license for failure to pay child support or comply with certain subpoenas or warrants; reinstatement of license. [Effective until 2 years after the date of the repeal of the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

1. If the Commissioner receives a copy of a court order issued pursuant to NRS 425.540 that provides for the suspension of all professional, occupational and recreational licenses, certificates and permits issued to a person who is the holder of a license as a mortgage broker or mortgage agent, the Commissioner shall deem the license issued to that person to be suspended at the end of the 30th day after the date on which the court order was issued unless the Commissioner receives a letter issued to the holder of the license by the district attorney or other public agency pursuant to NRS 425.550 stating that the holder of the license has complied with the subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

2. The Commissioner shall reinstate a license as a mortgage broker or mortgage agent that has been suspended by a district court pursuant to NRS 425.540 if the Commissioner receives a letter issued by the district attorney or other public agency pursuant to NRS 425.550 to the person whose license was suspended stating that the person whose license was suspended has complied with the subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

(Added to NRS by 1997, 2171; A 1999, 3789; 2003, 3556; 2005, 2807, 2810, 2817)

NRS 645B.690 Duty of Commissioner to take disciplinary action for certain violations.

1. If a person offers or provides any of the services of a mortgage broker or mortgage agent or otherwise engages in, carries on or holds himself out as engaging in or carrying on the business of a mortgage broker or mortgage agent and, at the time:

(a) The person was required to have a license pursuant to this chapter and the person did not have such a license; or

(b) The person’s license was suspended or revoked pursuant to this chapter,

Ê the Commissioner shall impose upon the person an administrative fine of not more than $10,000 for each violation and, if the person has a license, the Commissioner shall revoke it.

2. If a mortgage broker violates any provision of subsection 1 of NRS 645B.080 and the mortgage broker fails, without reasonable cause, to remedy the violation within 20 business days after being ordered by the Commissioner to do so or within such later time as prescribed by the Commissioner, or if the Commissioner orders a mortgage broker to provide information, make a report or permit an examination of his books or affairs pursuant to this chapter and the mortgage broker fails, without reasonable cause, to comply with the order within 20 business days or within such later time as prescribed by the Commissioner, the Commissioner shall:

(a) Impose upon the mortgage broker an administrative fine of not more than $10,000 for each violation;

(b) Suspend or revoke the license of the mortgage broker; and

(c) Conduct a hearing to determine whether the mortgage broker is conducting business in an unsafe and injurious manner that may result in danger to the public and whether it is necessary for the Commissioner to take possession of the property of the mortgage broker pursuant to NRS 645B.630.

(Added to NRS by 1999, 3776; A 2003, 3557)

NRS 645B.700 Categorization of major and minor violations; regulations.

1. Except as otherwise provided in subsection 2, for each violation that may be committed by a person pursuant to this chapter or the regulations adopted pursuant to this chapter, the Commissioner may adopt regulations:

(a) Categorizing the violation as a major violation or a minor violation; and

(b) Specifying the disciplinary action that will be taken by the Commissioner pursuant to this chapter against a person who commits:

(1) A major violation. The disciplinary action taken by the Commissioner for a major violation may include, without limitation, suspension or revocation of the person’s license.

(2) More than two minor violations. The Commissioner may establish graduated sanctions for a person who commits more than two minor violations based upon the number, the frequency and the severity of the minor violations and whether the person previously has committed any major violations.

2. The provisions of this section do not apply to a violation for which the Commissioner is required to take disciplinary action in accordance with NRS 645B.690.

(Added to NRS by 1999, 3777; A 2001, 2476)

NRS 645B.710 Act or omission of partner, officer or director deemed act or omission of partnership, corporation or unincorporated association. If a person is a partnership, corporation or unincorporated association, the Commissioner shall take any disciplinary action required pursuant to NRS 645B.690 and may take any other disciplinary action set forth in this chapter against the person if any member of the partnership or any officer or director of the corporation or unincorporated association has committed any act or omission that would be cause for taking such disciplinary action against a natural person.

(Added to NRS by 1999, 3777)

NRS 645B.720 Authority of Commissioner to order summary suspension of license and take other action to protect public before conducting hearing. Before conducting a hearing, the Commissioner may, to the fullest extent permitted by the Constitution of the United States and the Constitution of this State:

1. Order a summary suspension of a license pursuant to subsection 3 of NRS 233B.127; and

2. Take any other action against a licensee or other person that is necessary to protect the health, safety or welfare of the public.

(Added to NRS by 1999, 3777)

HEARINGS; APPEALS

NRS 645B.750 Duty of Commissioner to provide written notice of disciplinary action or denial of license; right to administrative hearing; entry of final order; appeals.

1. If the Commissioner enters an order taking any disciplinary action against a person or denying a person’s application for a license, the Commissioner shall cause a written notice of the order to be served personally or sent by certified mail or telegram to the person.

2. Unless a hearing has already been conducted concerning the matter, the person, upon application, is entitled to a hearing. If the person does not make such an application within 20 days after the date of the initial order, the Commissioner shall enter a final order concerning the matter.

3. A person may appeal a final order of the Commissioner in accordance with the provisions of chapter 233B of NRS that apply to a contested case.

(Added to NRS by 1973, 1539; A 1983, 1705; 1987, 1881; 1999, 3789; 2003, 984)

NRS 645B.760 Effect of failure to appear at hearing; penalty. If a person is alleged to have engaged in any conduct or committed any violation that is described in NRS 645B.620, 645B.630 or 645B.670 or is alleged to have committed a violation of any other provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner, and the person fails to appear, without reasonable cause, at a hearing before the Commissioner concerning the alleged conduct or violation:

1. The Commissioner shall notify the Attorney General that the person failed to appear;

2. The person is guilty of a misdemeanor and shall be punished as provided in NRS 645B.950; and

3. The Commissioner may conduct the hearing in the person’s absence, draw any conclusions that the Commissioner deems appropriate from his failure to appear and render a decision concerning the alleged conduct or violation.

(Added to NRS by 1999, 3777)

ENFORCEMENT BY ATTORNEY GENERAL

NRS 645B.800 Attorney General has primary criminal jurisdiction; duty to provide Attorney General with information to assist prosecution; penalty.

1. The Attorney General has primary jurisdiction for the enforcement of this chapter. The Attorney General shall, if appropriate, investigate and prosecute a person who violates:

(a) Any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner, including, without limitation, a violation of any provision of NRS 645B.620 or 645B.670; or

(b) Any other law or regulation if the violation is committed by the person in the course of committing a violation described in paragraph (a).

2. The Attorney General shall, if appropriate, investigate and prosecute a person who is alleged to have committed a violation described in subsection 1 whether or not:

(a) The Commissioner notifies the Attorney General of the alleged violation;

(b) The Commissioner takes any disciplinary action against the person alleged to have committed the violation;

(c) Any other person files a complaint against the person alleged to have committed the violation; or

(d) A civil action is commenced against the person alleged to have committed the violation.

3. When acting pursuant to this section, the Attorney General may commence his investigation and file a criminal action without leave of court, and the Attorney General has exclusive charge of the conduct of the prosecution.

4. Except as otherwise provided by the Constitution of the United States, the Constitution of this State or a specific statute, a person shall, if requested, provide the Attorney General with information that would assist in the prosecution of any other person who is alleged to have committed a violation described in subsection 1. If a person fails, without reasonable cause, to provide the Attorney General with such information upon request, the person is guilty of a misdemeanor and shall be punished as provided in NRS 645B.950.

(Added to NRS by 1999, 3778)

NRS 645B.810 Attorney General may bring civil action; recovery of costs in civil action.

1. The Attorney General may bring any appropriate civil action against a person to enforce any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner, including, without limitation, an order of the Commissioner:

(a) Imposing an administrative fine; or

(b) Suspending, revoking or placing conditions upon a license.

2. If the Attorney General prevails in any civil action brought pursuant to this chapter, the court shall order the person against whom the civil action was brought to pay:

(a) Court costs; and

(b) Reasonable costs of the investigation and prosecution of the civil action.

3. Whether or not the Attorney General brings a civil action against a person pursuant to this chapter, the Attorney General may prosecute the person for a criminal violation pursuant to this chapter.

(Added to NRS by 1999, 3778)

ADVISORY COUNCIL ON MORTGAGE INVESTMENTS AND MORTGAGE LENDING

NRS 645B.860 Creation; members; appointment; terms and vacancies; no compensation or per diem allowance; protections afforded members who are public officers or employees.

1. The Advisory Council on Mortgage Investments and Mortgage Lending is hereby created.

2. The Advisory Council consists of five members appointed by the Legislative Commission from a list of persons provided by the Commissioner.

3. The members of the Advisory Council:

(a) Must be persons who have experience with, an interest in or a knowledge of issues relating to mortgage investments or mortgage lending. Such persons may include, without limitation, investors, public officers and employees, licensees and persons who have engaged in or been involved with any business, profession or occupation relating to mortgage investments or mortgage lending.

(b) Serve terms of 2 years and at the pleasure of the Legislative Commission.

(c) May be reappointed.

(d) Serve without compensation and may not receive a per diem allowance or travel expenses.

4. Any vacancy in the membership of the Advisory Council must be filled for the remainder of the unexpired term in the same manner as the original appointment.

5. A member of the Advisory Council who is an officer or employee of this State or a political subdivision of this State must be relieved from his duties without loss of his regular compensation so that he may prepare for and attend meetings of the Advisory Council and perform any work necessary to carry out the duties of the Advisory Council in the most timely manner practicable. A state agency or political subdivision of this State shall not require an officer or employee who is a member of the Advisory Council to make up the time he is absent from work to carry out his duties as a member of the Advisory Council or use annual vacation or compensatory time for the absence.

6. Notwithstanding any other provision of law, a member of the Advisory Council:

(a) Is not disqualified from public employment or holding a public office because of his membership on the Advisory Council; and

(b) Does not forfeit his public office or public employment because of his membership on the Advisory Council.

(Added to NRS by 1999, 3766)

NRS 645B.865 Chairman and Vice Chairman; meetings; quorum; subcommittees.

1. The members of the Advisory Council on Mortgage Investments and Mortgage Lending shall elect a Chairman and a Vice Chairman from among their membership. The Vice Chairman shall perform the duties of the Chairman during any absence of the Chairman.

2. The Advisory Council may meet at least once each calendar quarter and at other times on the call of the Chairman or a majority of its members.

3. The meetings of the Advisory Council may be held at any location designated by the Chairman or a majority of its members.

4. A majority of the members of the Advisory Council constitutes a quorum for the transaction of all business.

5. The Chairman may appoint subcommittees of the members of the Advisory Council to consider specific problems relating to mortgage investments or mortgage lending.

(Added to NRS by 1999, 3767)

NRS 645B.870 Purpose. The purpose of the Advisory Council on Mortgage Investments and Mortgage Lending is to:

1. Consult with, advise and make recommendations to the Commissioner in all matters relating to mortgage investments and mortgage lending.

2. Make recommendations to the Legislature concerning the enactment of any legislation relating to mortgage investments and mortgage lending.

3. Make recommendations to the Legislature and the Commissioner concerning educational requirements and other qualifications for persons who are engaged in any business, profession or occupation relating to mortgage investments and mortgage lending.

4. Conduct hearings, conferences and special studies on all matters relating to mortgage investments and mortgage lending.

5. Provide a forum for the consideration and discussion of all matters relating to mortgage investments and mortgage lending.

6. Gather and disseminate information relating to mortgage investments and mortgage lending.

7. Engage in other activities that are designed to promote, improve and protect the reliability and stability of mortgage investments and mortgage lending in this State.

(Added to NRS by 1999, 3767)

UNLAWFUL ACTS; PENALTIES

NRS 645B.900 Unlawful to conduct business of mortgage broker or mortgage agent without being licensed or exempt from licensing. It is unlawful for any person to offer or provide any of the services of a mortgage broker or mortgage agent or otherwise to engage in, carry on or hold himself out as engaging in or carrying on the business of a mortgage broker or mortgage agent without first obtaining the applicable license issued pursuant to this chapter, unless the person:

1. Is exempt from the provisions of this chapter; and

2. Complies with the requirements for that exemption.

(Added to NRS by 1973, 1536; A 1981, 1792; 1999, 3801; 2003, 3558)

NRS 645B.910 Unlawful for foreign corporation, association or business trust to conduct business of mortgage broker without meeting certain requirements. It is unlawful for any foreign corporation, association or business trust to conduct any business as a mortgage broker within this State, unless it:

1. Qualifies under chapter 80 of NRS; and

2. Complies with the provisions of this chapter or, if it claims an exemption from the provisions of this chapter, complies with the requirements for that exemption.

(Added to NRS by 1973, 1542; A 1999, 3801)—(Substituted in revision for NRS 645B.220)

NRS 645B.950 Penalties for general violations.

1. Except as otherwise provided in NRS 645B.960, a person, or any general partner, director, officer, agent or employee of a person, who violates any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner is guilty of a misdemeanor.

2. In addition to any other penalty, if a person is convicted of or enters a plea of nolo contendere to a violation described in subsection 1, the court shall order the person to pay:

(a) Court costs; and

(b) Reasonable costs of the investigation and prosecution of the violation.

(Added to NRS by 1973, 1543; A 1981, 1792; 1999, 3802)—(Substituted in revision for NRS 645B.230)
NRS 645B.960 Penalties for violations relating to escrow or trust accounts.
1. A person, or any general partner, director, officer, agent or employee of a person, who violates any provision of NRS 645B.165 to 645B.180, inclusive, is guilty of:
(a) A misdemeanor if the amount involved is less than $250;
(b) A gross misdemeanor if the amount involved is $250 or more but less than $1,000; or
(c) A category D felony if the amount involved is $1,000 or more, and shall be punished as provided in NRS 193.130.
2. In addition to any other penalty, if a person is convicted of or enters a plea of nolo contendere to a violation described in subsection 1, the court shall order the person to pay:
(a) Court costs; and
(b) Reasonable costs of the investigation and prosecution of the violation.
(Added to NRS by 1981, 1785; A 1985, 2191; 1989, 1442; 1995, 1313; 1999, 3801)—(Substituted in revision for NRS 645B.225)

How banks are worsening the foreclosure crisis?

Tough Time on TV about Foreclosure

http://www.nytimes.com/2009/03/12/arts/television/12plot.html”

Foreclosure and TV Cartoons?

Foreclosure: All Across USA

Here is a good article cautioning Nevada residents from scam artists, fraud loan modification as well as unlicensed, including “attorney-backed”, “attorney-supported” or “attorney-affiliated” modifications. Most of these companies are operated by former loan officers, real estate agents and people of similar professions. Remember, they are the one who spread this fiasco in the first place.

FOR IMMEDIATE RELEASE — October 22, 2008
CONTACT: Elisabeth Shurtleff, Public Information Officer
PHONE: (702) 486-2756 E-MAIL: eshurtleff@business.nv.gov

Homeowners: Be Informed about Foreclosure Consulting ServicesLas Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as
“foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.

“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for.

“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer
Affairs Division under the Credit Service Organization law.”

According to NRS 598.741, companies providing “counseling or assistance to a person in establishing -more-

State of Nevada
Department of Business & Industry
Director’s Office
555 East Washington Avenue, Suite 4900
Las Vegas, Nevada 89101
Phone (702) 486-2750 | Fax (702) 486-2758
dbi.state.nv.usor effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs.

“Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other
consumers have had.”

Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies.

There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”
Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit
http://foreclosurehelp.nv.gov/HousingCounselors.html for a list of qualified Nevada housing
counselors.

If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at

In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at
“The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”
-END

Homeowners Cautioned by Lending Division

Here is a good article cautioning Nevada residents from scam artists, fraud loan modification as well as unlicensed, including “attorney-backed”, “attorney-supported” or “attorney-affiliated” modifications. Most of these companies are operated by former loan officers, real estate agents and people of similar professions. Remember, they are the one who spread this fiasco in the first place.

FOR IMMEDIATE RELEASE — October 22, 2008
CONTACT: Elisabeth Shurtleff, Public Information Officer
PHONE: (702) 486-2756 E-MAIL: eshurtleff@business.nv.gov

Homeowners: Be Informed about Foreclosure Consulting ServicesLas Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as
“foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.

“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for.

“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer
Affairs Division under the Credit Service Organization law.”

According to NRS 598.741, companies providing “counseling or assistance to a person in establishing -more-

State of Nevada
Department of Business & Industry
Director’s Office
555 East Washington Avenue, Suite 4900
Las Vegas, Nevada 89101
Phone (702) 486-2750 | Fax (702) 486-2758
dbi.state.nv.usor effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs.

“Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other
consumers have had.”

Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies.

There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”
Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit
http://foreclosurehelp.nv.gov/HousingCounselors.html for a list of qualified Nevada housing
counselors.

If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at

In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at
“The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”
-END

Obama’s New Plan to Save Home

HOMEOWNER AFFORDABILITY AND STABILITY PLAN
Law Office of Malik Ahmad is posting this message as a service to the community. In case, you have any follow up questions, please address via email to the Law Office of Malik Ahmad at Malik11397@aol.com. No attorney client relationship is meant by this.

The White House recently announced its broad plan to help homeowners who are experiencing financial challenges. Critical details about this program and its eligibility requirements are currently being developed by the White House and other federal agencies, and we expect these guidelines to be released by the federal government in the coming weeks.

If you are a homeowner experiencing financial challenges that are affecting your ability to pay your mortgage, please gather the following information and documentation that will be used to determine if you qualify for a workout solution:

• Household gross income (amount of income before taxes and other deductions are taken into account)
• Most recent pay stub
• Most recent tax return
• Information about a second mortgage on your home
• Monthly payment amounts for any credit cards with a balance
• Monthly payments on other loans such as car loans or student loans

The following is an excerpt from a Treasury document titled “Questions and Answers for Borrowers about the Homeowner Affordability and Stability Plan” that explains some frequently asked questions about the program.
(Source: http://www.treas.gov/initiatives/eesa/)

What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

I’m already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan? Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes
• information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.

My loan is scheduled for foreclosure soon. What should I do?
Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility. We support this effort.

http://www.treas.gov/press/releases/reports/guidelines_summary.pdf
http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf
http://www.treas.gov/press/releases/reports/housing_fact_sheet.pdf

Florida Attorney General Warns About Mod Loan Scam

Attorney General Bill McCollum News Release
March 3, 2009
Media Contact: Sandi Copes
Phone: (850) 245-0150
Floridians Should Avoid Being Scammed By Foreclosure “Rescue,” Loan Modification Offers
~ Homeowners encouraged to look for warning signs, avoid common scams ~
TALLAHASSEE, FL – Attorney General Bill McCollum today issued a consumer advisory as
part of National Consumer Protection Week on foreclosure “rescue” services and loan
modification offers, the most frequent subject of complaints to the Attorney General’s
Office during 2008. Within the last year, the Attorney General’s has reviewed information on
over 200 foreclosure rescue businesses and has over 40 active investigations into potential
violations of Florida’s Foreclosure Rescue Fraud Prevention Act, a new law supported last
year by the Attorney General. Several lawsuits have been filed throughout the state,
including one against a South Florida company which allegedly defrauded several hundred
homeowners out of more than $1 million collectively.

“Today, homeowners are being bombarded with advertising from companies claiming they
can save homes, reduce mortgage payments, and many other offers,” said Attorney General
McCollum. “Florida homeowners need to be very cautious and should know that Florida
law prohibits any company or individual from charging up-front fees for foreclosure rescue
or loan modification services.”

The Attorney General urged homeowners facing foreclosure or mortgage payments in
default to contact their lenders directly before reaching out to a third party. Consumers also
should avoid any business that seeks to charge for services related to the new Homeowner Affordability and Stability Plan initiated by the President. Lenders and mortgage servicers can provide information about negotiating a new payment schedule or about homeowners’ eligibility for loan modification under the new federal plan. Services under this initiative will be provided at no cost to consumers; more information about the Homeowner Affordability and Stability Plan is available at http://www.financialstability.gov/.

The Attorney General also offered the following tips to identify and avoid a potential foreclosure rescue scam:
- Avoid businesses that guarantee to save homes from foreclosure or stop the foreclosure
process “no matter what the circumstances.”

- Do not work with businesses or individuals who instruct homeowners not to contact their
lenders, lawyers or financial counselors and to make mortgage payments directly to the
business or individual.

- Avoid businesses that use names or symbols which mimic federal and state programs or
http://www.myfloridalegal.com/newsrel.nsf/pv/9336ADA7BC17D20F8…
1 of 2 3/3/2009 10:50 AM
falsely suggest they offer legal services or are affiliated with an attorney or law firm.

- Before doing business with any loan modification business, check it out fully. Get its
physical address, ask for the names of its corporate officers, and call the Attorney General’s Office to determine whether it has any complaints reported against it.

Consumers who wish to file a complaint may do so by calling the Attorney General’s fraud
hotline at 1-866-9-NO-SCAM (1-866-966-7226) or by filing a complaint online at
http://myfloridalegal.com. Additional information about National Consumer Protection Week is available at http://www.consumer.gov/ncpw

Summary of the Housing Act 2008

Summary of the “Housing and Economic Recovery Act of 2008″A. Summary of the “Federal Housing Finance Regulatory Reform Act of 2008″

[The Law office of Malik W. Ahmad always tries to bring the best articles and news material to educate its readers. Please if you any questions, always send via email to Malik11397@aol.com for a non binding legal advice on general issues.]

This legislation strengthens and modernizes the regulation of the housing government-sponsored enterprises – Fannie Mae and Freddie Mac (the enterprises) and the Federal Home Loan Banks (FHLBs or Banks) – and expands the housing mission of these GSEs. In addition, it creates a new program at FHA that will help at least 400,000 families save their homes from foreclosure by providing for new FHA loans after lenders take deep discounts.

I. Safety and Soundness Regulation of the Housing GSEs The “Federal Housing Finance Regulatory Reform Act of 2008″ establishes a new, independent, “world class” regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the housing government-sponsored enterprises (GSEs). The legislation endows this regulator with broad new authority, equivalent to the authority of other federal financial regulators, to ensure the safe and sound operations of the GSEs, including the power to:
• establish capital standards;
• establish prudential management standards, including internal controls, audits, risk management, and management of the portfolio;
• enforce its orders through cease and desist authority, civil money penalties, and the authority to remove officers and directors;
• restrict asset growth and capital distributions for undercapitalized institutions;
• put a regulated entity into receivership; and
• review and approve (subject to notice and comment) new product offerings.

II. Mission Improvement
The new legislation also significantly enhances the affordable housing component of the GSEs’ mission, and expands the number of families Fannie Mae and Freddie Mac (the enterprises) can serve by raising the loan limits in high cost areas (areas with median house prices that are higher than the regular conforming limit) to 150% of the conforming loan limit. Currently, this would be $625,000.

For the enterprises, the legislation tightens targeting requirements of the affordable housing goals, and rewrites those goals to ensure that the enterprises provide liquidity to both ownership and rental housing markets for low and very-low income families. The legislation requires the enterprises to serve a variety of underserved markets, such as rural areas, manufactured housing, and the preservation market. The legislation improves reporting requirements for affordable housing activities, including the expansion of the public use data base, and strengthens the new regulator’s ability to enforce compliance with the housing goals.

Finally, the legislation creates a new Housing Trust Fund and a Capital Magnet Fund, financed by annual contributions from the enterprises, which will used for the construction of affordable rental housing.
For the Federal Home Loan Banks (FHLBs), the legislation requires new affordable housing goals similar to those that apply to the enterprises for FHLB mortgage purchase programs. The legislation also requires the FHLBs to create a public use data base for such programs. Treasury-certified Community Development Financial Institutions (CDFIs) would become eligible to join FHLBs. Finally, community financial institution members of the FHLBs may use FHLB advances for community development purposes.

B. Summary of the “HOPE for Homeowners Act of 2008″

The “HOPE for Homeowners Act of 2008″ creates a new, temporary, voluntary program within FHA to back FHA-insured mortgages to distressed borrowers. The new mortgages offered by FHA-approved lenders will refinance distressed loans at a significant discount for owner-occupants at risk of losing their homes to foreclosure. In exchange, homeowners will share future appreciation with FHA.

The program is built on five principles:
1. Long-term affordability. The program is built on the idea, expressed by Federal Reserve Chairman Bernanke, that creating new equity for troubled homeowners is likely to be a more effective way to avoid foreclosures. New loans will be based on a family’s ability to repay the loan, ensuring affordability and sustainable homeownership.

2. No investor or lender bailout. Investors and/or lenders will have to take significant losses in order to benefit from the proceeds of the loans refinanced with government insurance. However, these losses would be less than the losses associated with foreclosure.

3. No windfall for borrowers. Borrowers will share their new equity and future appreciation equally with FHA. Borrowers will pay for the FHA insurance.

4. Voluntary participation. This will be a voluntary program. No lenders, servicers, or investors will be compelled to participate.

5. Restore confidence, liquidity, and transparency. Credit markets are fearful and frozen in part because banks and other financial institutions do not know what their subprime mortgages and related securities are worth. The uncertainty is forcing lenders to hoard capital and stop the lending necessary for economic growth. This program will help restore confidence and get markets flowing again.

Program Oversight. The new program will be overseen by a Board made up of the Secretary of HUD, the Secretary of the Treasury, the Chairman of the Federal Reserve Board, and the Chairman of the Federal Deposit Insurance Corporation (FDIC). The Board will have the authority to develop standards within the framework of the legislation.

Eligible Borrowers. Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008. Lenders must document and verify borrowers’ income with the IRS.
New Loan Amount. The size of the new FHA-insured loan will be lesser of the amount the borrower can afford to repay, as determined by the current affordability requirements of FHA; or, 90% of the current value of the home. Loans must be 30-year, fixed rate loans.
Equity & Appreciation Sharing. In order to avoid a windfall to the borrower created by the new 90% loan-to-value FHA-insured mortgage, the borrower must share the newly-created equity and future appreciation equally with FHA. This obligation will continue until the borrower sells the home or refinances the FHA-insured mortgage. Moreover, the homeowner’s access to the newly created equity will be phased-in over 5 years.

Eligible Mortgages. In order to protect against adverse selection, the program prohibits the Secretary from paying an insurance claim whenever the representations and warranties required to be made by lenders are violated, or in cases in which a borrower has an early payment default and misses the first payment. The Act provides the Board the authority to establish other protections against adverse selection, such as requiring “seasoning” for certain higher risk loans before they can be insured under the program. Appraisers of property insured by FHA must be certified by the state where the property is located, or by a nationally recognized professional appraisal organization, and have “demonstrated verifiable education” in FHA appraisal requirements.

Existing Subordinate Liens. Before participating in this program, all subordinate liens must be extinguished. This will have to be done through negotiation with the first lien holder.

Qualified Safe Harbor. The legislation provides servicers with an incentive to participate in the program by offering a safe harbor against legal liability.

Program Size. The program is authorized to insure up to $300 billion in mortgages and is expected to serve approximately 400,000 homeowners.

Program Sunset. The program will begin October 1, 2008 and sunset on September 30, 2011. CBO say the program will net nearly $250 million for taxpayers. The program is paid for by using part of the Affordable Housing Trust Fund; the GSE bill provides a further $2 billion cushion for the government by establishing a reserve fund at Treasury over ten years. If the program costs less than projected, the unused funds are returned to the Affordable Housing Trust Fund. If the program more than pays for itself (as was the case during the Roosevelt Administration), any excess savings are dedicated to reducing the national debt.

C. Summary of the “Foreclosure Prevention Act of 2008″The Foreclosure bill passed by the Senate on April 10 contains the following provisions designed to address the problems faced by families and their communities in light of the foreclosure crisis:

• FHA Modernization. To ensure that additional families can access the FHA program, which provides safe, fixed-rate mortgages, significant FHA reform is included to modernize, streamline and expand the reach of the FHA program. Under this bill, the FHA loan limit is increased from 95% to 110% of area median home price with a cap at 150% of GSE limit (currently, $625,000), allowing families in all areas of the country to access homeownership through FHA. Downpayments of 3.5% will be required for any FHA loan and counseling requirements are enhanced to help provide for stable homeownership.

• Assisting Communities Devastated by Foreclosures. Homes that have been foreclosed upon and are sitting unoccupied lead to declines in neighboring house values, increased crime and significant disinvestment. To ensure that communities can mitigate these harmful effects of foreclosures, $3.92 billion is provided to communities hardest hit by foreclosures and delinquencies. These supplemental Community Development Block Grant Funds will be used to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in house values of neighboring homes.
• Providing Pre-Foreclosure Counseling for Families in Need. To help families avoid foreclosure, this bill provides $150 million in additional funding for housing counseling. These funds will be distributed by the Neighborhood Reinvestment Corporation by the end of 2008 to ensure families can quickly get the help they need. As many as 250,000 additional families connect with their mortgage servicer or lender to explore options that will keep them in their homes as a result of these counseling funds. In addition, $30 million is provided to help provide legal services to distressed borrowers.
• Enhancing Mortgage Disclosure. To ensure that consumers are provided with timely and meaningful disclosures in connection with mortgages, the bill expands the types of home loans subject to early disclosures (within three days of application) under the Truth In Lending Act (TILA) including refinancings. The bill requires that disclosures be provided no later than 7 days prior to closing so borrowers can shop for another loan if not satisfied with the terms. The bill requires a new disclosure that informs borrowers of the maximum monthly payments possible under their loan, and also increases the range of statutory damages for TILA violations from the current $200 to $2000 to $400 to $4000.
• Preserving the American Dream for Our Nation’s Veterans. To assist returning soldiers avoid foreclosure, this bill lengthens the time a lender must wait before starting foreclosure from three months to nine months after a soldier returns from service and also provides returning soldiers with one year relief from increases in mortgage interest rates. In addition, the Department of Defense is required to establish a counseling program to ensure veterans and active service members can access assistance if facing financial difficulties. Also included is a provision that increases the VA loan guarantee amount, so that veterans have additional homeownership opportunities. The bill contains provisions to do the following: increase benefits paid to veterans with disabilities such as blindness for the purpose of adapting their housing; provide a moving benefit to servicemen and woman who are forced to move out of rental housing because the owner of the housing was foreclosed on; provide that veterans benefits received in a lump sum are treated the same for the purposes of eligibility for housing assistance as monthly benefits; and to allow the Veterans Administration to provide for improvements and structural alterations to homes of veterans with service-connected disabilities.

HUD Issues New Changes in RESPA Rules:

HUD ISSUES NEW MORTGAGE RULES TO HELP CONSUMERS SHOP FOR LOWER COST HOME LOANS
New ‘Good Faith Estimate’ will help borrowers save nearly $700

WASHINGTON – For the first time in more than 30 years, the U.S. Department of Housing and Urban Development today issued long-anticipated mortgage reforms that will help consumers to shop for the lowest cost mortgage and avoid costly and potentially harmful loan offers. HUD will require, for the first time ever, that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. HUD estimates its new regulation will save consumers nearly $700 at the closing table.

In announcing HUD’s final changes to the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA), HUD Secretary Steve Preston said that changes in the housing market and increases in home foreclosures demands action. (Read Preston’s remarks)

“It has been a long road but today we can finally announce a better way to buy homes in America,” said Preston. “Consumers need and deserve to know what they’re getting themselves into before they sign on the dotted line. After carefully considering the concerns of consumers and the different businesses in the housing sector, we have developed an approach that empowers the average family to shop for the most appropriate loan to meet their needs.”

Last March, HUD proposed reforms to the longstanding regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) by improving disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. Last May, HUD extended the rule’s comment period to June 12th to allow for more opportunity for comment on the Department’s proposed GFE form.

Brian Montgomery, HUD’s Assistant Secretary of Housing, Federal Housing Commissioner, said, “We have carefully considered the concerns expressed from every corner of the mortgage market in developing this rule. I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don’t understand all the fine print of their mortgages and this, in many respects, is at the heart of today’s mortgage crisis.”

Since 1974, little has changed about the process Americans endure when they buy and refinance their homes. Now, HUD’s final reform will improve disclosure of the key loan terms and closing costs consumers pay when they buy or refinance their home.

HUD received approximately 12,000 comment letters following the proposal of its new RESPA rule. In considering those comments, the Department made considerable modifications to its proposal. For example, HUD originally proposed that settlement agents read a closing script at the closing table and that a copy be provided to borrowers. HUD ultimately discarded the script in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final loan terms and closing costs with those listed on their Good Faith Estimate.

Most industry commenters said HUD’s proposed four-page GFE was too long. HUD shortened the GFE form to three pages including an instructional page to help borrowers understand their loan offer. HUD continues to believe that consumers need to be aware of the key aspects of their loan as well as associated settlement costs.

HUD agreed with many commenters who suggested the new GFE allow consumers to compare their estimated closing costs with the actual costs included on their HUD-1 Settlement Statement. To facilitate comparison between the HUD-1 and the GFE, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in very much the same manner as many of the commenters suggested.

HUD will require the new standardized GFE and HUD-1 beginning January 1, 2010. To view these documents, click on the following links:

HUD’s standard Good Faith Estimate
HUD-1 Settlement Statement

###

Fact Sheet on HUD’s final RESPA Rule

For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:
What’s the term of the loan?
Is the interest rate fixed or can it change?
Is there a pre-payment penalty should the borrower choose to refinance at a later date?
Is there a balloon payment?
What are total closing costs?
HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.
Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a ‘closing script.’ Instead, to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.
HUD’s new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.
To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenters suggested.
HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD’s new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good Faith Estimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.
Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator’s receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.
HUD will allow lenders and settlement service providers to correct potential violations of RESPA’s new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.
The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

Extent of Bankrutpcy Reforms Hinges on Detials

This is an interesting story and we are publishing with the courtsey of Washington Post.

Extent of Bankruptcy Reform Hinges on Details

By Renae Merle
Washington Post Staff Writer
Saturday, February 21, 2009; D01

When President Obama touted reform of the bankruptcy code while unveiling his foreclosure prevention program earlier this week, it wasn’t much of a surprise. He had advocated allowing judges to modify troubled loans several times before, including during the presidential campaign.

But in the fine print of Obama’s proposal were restrictions that some of his fellow supporters of bankruptcy reform said could blunt its impact. Opponents, meanwhile, have said they viewed the president’s version of the proposal as a move in the right direction.

For one, the Obama initiative would cap the value of mortgages that could be revised in bankruptcy court. It would also pertain only to loans originated in the “past few years,” according to a summary of his proposal.

How the administration chooses to define several parts of its plan will impact whether tens of thousands of homeowners are excluded, said Henry Sommer, a past president of the National Association of Consumer Bankruptcy Attorneys. “It could affect a lot of people or very few people, we don’t know,” he said.

The details will ultimately be hammered out on Capitol Hill, where lawmakers have been wrangling with the financial services industry for years about allowing bankruptcy judges to lower the principal owed on home loans. Now, bankruptcy judges are precluded from modifying mortgages on primary residences, a practice known as cramdown. The House, where bankruptcy reform has already been approved in committee, could take up the measure as soon as next week, a Democratic aide said.

Republicans and the financial services industry fiercely oppose the measure, complaining it could drive up mortgage rates and increase losses to lenders. But some financial industry sources have said they expect some version of the legislation to pass and are working to limit its scope.

“What the administration put out was encouraging, because it looked at bankruptcy as a last option rather than a first option,” said Francis Creighton, chief lobbyist for the Mortgage Bankers Association.

Scott DeFife, senior managing director of government affairs at the Securities Industry and Financial Markets Association, said that his industry “saw the president’s proposal as improvements to the bankruptcy cramdown debate.”

The provision will also be a key part of a housing package being put together by Congress to codify changes to housing policy called for by Obama, a congressional aide said. The administration has designed a program to lavish incentives on lenders that modify mortgages. The incentives are the carrots to encourage more modifications, and bankruptcy reform is seen by the administration as the stick lenders would face for failing to comply.

Democratic congressional leaders aim to have the legislation passed within the next month, the aide said.

Nearly three-quarters of homeowners in Chapter 13 bankruptcy — which allows borrowers to restructure their debt — have unaffordable home payments, said Katie Porter, a University of Iowa law professor who has studied the bankruptcy process. About 20 percent of homeowners spend at least half of their income on their mortgage. Having an unaffordable mortgage can be a major stumbling block to completing the bankruptcy process successfully, she said.

Obama’s plan would limit bankruptcy cramdown to mortgages written in “the past few years” — a restriction advocated by industry officials.

“It will curb the number of people who can use [the bankruptcy court] — and probably not in a sensible way,” said Porter. “The people who are still in homes they bought in ‘04 really fought hard to stay,” she said. “We should be giving them help.” Many subprime and other loans now burdening homeowners were taken out at least four years ago, she noted.

The proposal would also cap the value of the loans eligible for bankruptcy modification to limits set by mortgage finance firms Fannie Mae and Freddie Mac, which could be difficult in parts of the country that saw the biggest run-up in prices.

(The conforming loan limit is currently $417,000 in most parts of the country and $625,000 in high-price areas, including the Washington region, though the limit in these areas will soon rise to $729,750.)

“At certain points during the bubble, 60 percent of the homes purchased in California were above the conforming loan limit,” Sommer said.

Obama’s plan mimics a provision included in the House version of the legislation requiring homeowners to contact their lender before filing for bankruptcy. But the White House version also requires the homeowner to certify that they have complied with requests for information from their lender. Industry officials said that would help weed out homeowners that received their mortgage fraudulently.

But the provision could also allow lenders to disrupt the bankruptcy process by contending they did not receive all requested information, Sommer said. That would be frustrating to homeowners who complain that lenders ignore their pleas for help even after submitting and resubmitting information, he said.

“What we don’t want is where someone would think they had provided reasonable information, and the lender comes into bankruptcy court and says, ‘You can’t do this, we wanted to ask you for more information,’ ” Sommer said. “We don’t want to create a potential gotcha situation where they can try to trip people up.”

Swindlers Taking Benefit of Foreclosure Crisis

An interesting article is published in NY Times 02/21/09. The swindlers are taking benefit of the increasing miseries of the people. Here is the link to the article:

Link to the article:

Trapped in their Homes:

Hear is a sad story of people who could not sell their homes and waiting to move on to their next phase in life, either to sell the home, or get rid of the mortgage.

http://www.nytimes.com/2009/02/22/nyregion/long-island/22Rstuck.html?hp

It is One Trillion Dollar Now:

Here is a link to very interisting article from 02/20/09 article.
http://www.nytimes.com/2009/02/20/business/20lend.html?_r=1&hp

Who benefit from Obama’s Plan? Interesting Article

Here is a link to very interesting and informative article published in Daily Finance today.

Details of Obama’s Plan:Some Answers

Here is an interesting article from NY Times.
http://www.nytimes.com/2009/02/19/your-money/mortgages/19modify.html?pagewanted=print
More Housing Details Are Pending, but First Some Answers
By TARA SIEGEL BERNARD
The Obama administration’s housing plan aims to help millions of homeowners who fall into two categories: either they have been struggling to pay their mortgages or they have been shut out of the refinancing market.

The initiative gives lenders incentives to modify the mortgages of the three million to four million homeowners on the brink of foreclosure or who cannot make their monthly payments. The goal is to reduce the payments to levels they can afford.

The plan also aims to help the four million to five million homeowners who have been unable to refinance their mortgages because their home values dropped, erasing much or all of their home equity. Some of them would have a fresh shot at refinancing.

While the administration offered some details about the programs, more information will be available on March 4, when the programs begin.

Below are answers to some of the questions that troubled borrowers may have.

Q. Am I eligible?

A. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, the government-controlled companies that together account for about half of the mortgage market. The problem is that many of the most problematic loans do not fall under the Fannie-Freddie umbrella. You can call your mortgage lender after March 4 to find out if your loan qualifies.

You will need to have “sufficient income to make the new payment and an acceptable mortgage payment history,” according to documents about the initiative. Precise details will be released next month.

In the meantime, you should get your financial house in order. That means collecting the paperwork you will need to refinance, including information detailing your gross monthly income; most recent income tax returns; information about any second mortgages; payments made on credit cards if you carry a balance; and payments on other loans, like auto or student loans.

Q. What if my home is under water?

A. If you owe more on your mortgage than your property is worth, you may still be eligible. But there is a giant caveat: your new mortgage cannot exceed 105 percent of the property’s current market value. That means many homeowners in areas like Florida, Arizona and Nevada, where home prices have plunged the most, will not be eligible.

If your property is worth $200,000, you can qualify if you owe $210,000 or less. Your property will be valued after you apply to refinance.

Q. What if I have a second mortgage?

A. You are still eligible as long as the amount due on the first mortgage is less than 105 percent of the property’s value and you have the wherewithal to meet the new terms on your first mortgage. But the lender on your second mortgage needs to agree to remain in a “second position,” which means that if you declared bankruptcy, the second loan would be less likely to be repaid. To date, these lenders have not been wholly cooperative.

Q. What kind of interest rate am I likely to get?

A. All loans that are refinanced under the plan will have a 15- or 30-year term with a fixed rate, which will be based on market rates at the time of refinancing, as well as any associated points and fees charged by the lender.

Q. Am I eligible for that?

A. To qualify, your monthly mortgage payment needs to exceed 31 percent of your monthly gross income and the house you are refinancing must be your primary home. Mortgages on two-, three- and four-unit properties are also eligible, as long as you also consider one as your primary home. You do not need to be behind on your payments to qualify. If your income is no longer enough to make the payments (because your paycheck has shrunk, your expenses rose or your mortgage rate is about to reset higher), you would still qualify.

Moreover, the loan amount must not exceed current Fannie Mae or Freddie Mac loan limits, which are $417,000, but up to about $729,000 in certain high-cost areas.

Unlike the refinancing program, the loans do not have to be owned or insured by Fannie or Freddie. Only primary loans may be modified.

Q. Will the plan reduce my mortgage balance?

A. Lenders are most likely to lower your payments to a level you can afford by reducing your interest rate. But that does not preclude lenders from reducing your loan amount. All borrowers who make timely payments will be able to cut their balance by up to $1,000 a year for five years.

Q. What if I am about to lose my house to foreclosure?

A. Call the company that services your mortgage or your credit counselor. Many lenders have stopped foreclosures on houses that may qualify for the modification program. If you are already working with a counselor, ask him or her to consider your case for the new program.

Q. Is my lender required to comply?

A. No, but the government is offering lenders incentives if they do. The government expects that most major lenders will participate.

Obama Announces New Home Retention Plan

Here is a link to NY times lates editorial on this Plan.

How Lenders Violations Can Help Modify Your Loan?

By Malik Ahmad attorney at law, Las Vegas, Nevada.

Here is what Nevada Attorney Malik W. Ahmad of the Law Office of Malik W. Ahmad would look for violations in your home loan papers when seeking to modify your loan. This is just a short list, you may or may not have all these violations. Even though we do not claim any expertise on any “Forensic Loan Audit”, we nevertheless sees to ourselves if we can find any prima facie violations of federal laws like RESPA,TILA and HOEPA.

– ARM Rate Calculations must be correct
– ARM Adjustment Disclosures must be correct
– APR (Annual Percentage Rate) must be adequately disclosed

Here is some basic information about RESPA from the Housing and Urban Development Website (HUD)

Scope of RESPA
1. What kinds of transactions are covered under RESPA?

Transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.

2. What types of transactions are generally not covered?

The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.

3. Is a “time share” a covered transaction under RESPA?
Yes, if the lender’s interest is secured by a lien on residential property.

4. Is a loan secured by a condominium unit or a cooperative share a covered transaction under RESPA?

Yes, as long the units are not used for business purposes.

5. Is a loan secured by a manufactured home (mobile home) covered transaction under RESPA?
Yes, but only if the manufactured home is located on real property on which the lender’s interest is secured by a lien.

6. Does a federally related mortgage loan only involve FHA, VA or other government sponsored loans?
No, RESPA covers most conventional loans too. See the statute or regulations for the definition of a federally related mortgage loan.

7. Are home equity loans covered under RESPA?
Yes, home equity loans secured by residential property are covered.

8. How does the coverage of home equity loans and subordinate lien loans differ from other RESPA covered loans?

If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate and the HUD-1 or HUD-1A requirements.

Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
9. Are construction loans covered under RESPA?No. Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.

10. If a construction loan is covered under RESPA, how do you account for construction loan closing on the HUD-1 if funds will be held back by the lender until performance?

List the sales price of the land on Line 204, the construction cost on Line 105 (Line 101 is left blank) and the amount of the loan on line
102. The remainder of the form should be completed taking into account adjustments and charges related to the temporary and permanent financing which are known at the date of the settlement.

11. When the loan transaction includes an option for the borrower to obtain additional funds in the future merely by signing a note for the new amount, must RESPA’s disclosure requirements be followed for the future advance of additional funds?
Yes, because there is a new note. This is consistent with Truth in Lending Act provisions.

12. If a loan is sold within 1-7 days of closing to another lender, does the sale of that loan fall within RESPA’s coverage?

The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction. However, any transfer of ownership and/or servicing rights is subject to RESPA’s requirements in Section 6.

13. Does the exemption from RESPA for the sale of a land parcel of at least 25 acres apply even if there are 2 homes on the property?Yes, as long as the property is a single parcel.

14. Can a credit agency provide a lender with a dedicated printer to expedite communication between the credit agency and the lender?Yes, provided the printer can only be used for communication with the lender and not for general use. If it’s for general use it may be considered payment for the referral of business.

15. Can a flood zone certification company examine a lender’s existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that “[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”

16. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?

No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.

17. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?
RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.
18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
19. Can a lender give a real estate agent note pads with the lender’s name on it?
Yes. Such note pads with the lender’s name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent’s name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.20. Can a mortgage broker be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans?

Yes, provided that the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan.

Affiliated businesses
21. If a lender refers a consumer to more than one of its affiliated settlement service providers, does the lender have to provide a separate affiliated business arrangement disclosure statement for each referral?No, the lender can use one disclosure statement.

22. If a lender refers a consumer to a settlement service provider with which it does not have an affiliate relationship, as defined by RESPA, does the lender still have to provide the affiliated business arrangement disclosure statement?No, the affiliated business arrangement disclosure statement is only for affiliates.

23. When a principal in a law firm is a member of the board of a lender and the lender refers RESPA covered settlement service business to the firm, but not personally to the principal, must the relationship be disclosed?

Yes. When the lender refers the borrower to the law firm, the borrower must be given an Affiliated Business Arrangement Disclosure Statement.

Fee splitting

24. Can a lender charge a borrower a fee for sending documents via courier and disclose it on the HUD-1 where in fact the borrower stops by the lender’s office and picks up the documents instead?
No, because the charge for the courier service does not represent a charge for work actually performed which can be imposed on the borrower.

25. Can a lender collect from the borrower an appraisal fee of $200, listing the fee as such on the HUD-1, yet pay an independent appraiser $175 and collect the $25 difference?No, the lender may only collect $175 as the actual charge. It is a violation of Section 8 (b) for any person to accept a split of a fee where services are not performed.

26. Can a lender charge a borrower at closing a one time charge for setting up an account with a tax service to arrange for tax payments?
Yes, the lender may collect a reasonable charge for the service provided.

27. Can a title company, which has the only convenient closing room in the area, provide it to any interested party at $100 per closing?Yes, provided the charge is reasonably related to the value of the space.

Specific forms and consumer information
28. Where a mortgage broker is used, is it the mortgage broker’s responsibility to provide the Good Faith Estimate (GFE) to consumers, or is that the lender’s responsibility?

If the mortgage broker is not an exclusive agent of the lender, the broker should provide a GFE within 3 days of receiving an application. The lender is not required to send an additional GFE; however, it is the lender’s responsibility to ascertain that one was sent and includes an estimate of all costs that are likely to occur. Where the broker is the exclusive agent of the lender, either the broker or the lender shall provide the GFE.
29. When must the special information booklet be provided and by whom?
In general, the lender or mortgage broker should provide the special information booklet at application. Alternatively, they may place it in the mail to the applicant not later than three business days after the application is received or prepared.

30. Must a mortgage servicing transfer notice be given for a prospective table funded transaction?

Yes, by the mortgage broker.
31. When the potential borrower furnishes a substantial amount of financial information for prequalification, but no particular property has been identified, must the good faith estimate be furnished to the borrower?No. A submission by a borrower to a lender that does not identify a property is not an application and thus does not trigger the Good Faith Estimate requirement. However, HUD encourages providing information to the borrower on settlement costs as soon as it can be estimated, so that the borrower may be better able to shop.

32. If the servicer neglects to pay the homeowner’s insurance bill out of escrow and, as a result, the consumer loses coverage, what are the servicer’s responsibilities and what is the servicer’s liability for harm to the consumer that results? The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer’s failure to pay for the insurance on time, the borrower can sue under section 6.

Additional FAQs
33. If the borrower is getting a “no cost” loan, must the lender list charges the lender is going to pay?

Yes. The charges to be shown on the GFE and the HUD-1 must include any payments by the lender to affiliated or independent settlement providers. These payments should be shown as P.O.C. (paid outside of closing).

34. The regulations at 3500.15 (b)(1)(i) state that where a lender makes a referral to a borrower the condition for providing an Affiliated Business Disclosure (AfBA) may be satisfied as part of and at the time of the GFE. Does this mean the lender does not have to give a separate AfBA disclosure if the information is part of the GFE?

No. A separate AfBA must be given. The regulation means the AfBA may be given at the time the GFE is given if this is when the affiliate is referred or is required to be used (a lender may require the use of an appraisal, credit reporting company, or attorney).

35. Must a mortgage broker disclose payments he receives that the borrower does not pay for directly?

Yes. The mortgage broker must disclose all payments and fees he receives whether they are received directly from the borrower or indirectly from the lender.

36. If I have a question concerning the calculation of the “Annual Percentage Rate” or “APR”, can HUD answer it?The calculation of the APR is part of the Truth-in-Lending Act (TILA) which is administered by the Federal Reserve Board. Questions concerning TILA as well as Section

32 (high cost loan disclosure) may be directed to the Federal Reserve Board at (202) 452-3693 .

37. May a settlement service provider charge a fee that reflects its own fee plus any recording fees as the servicer provider’s fee? Example: An attorney charges $500 for its services and the county charges $30 for recording fees. May the attorney simply charge the consumer $530 and pay the county as a cost of doing business?

No. The “Line Item” instructions to the HUD-1 state that “[f]or all items except for those paid to and retained by the lender, the name of the person or firm ultimately receiving the payment should be shown.” The attorney must disclose all entities ultimately receiving the fee.

38. May real estate agents that are independent contractors be considered employees under the “employer-employee” exemption, for purposes of being allowed to be paid referral fees from employers?No. The exemption applies only to bona-fide employees.

39. If the borrower’s escrow account includes a surplus greater than $50 which HUD’s rules require be refunded, may the servicer credit the surplus directly to the principal, rather than refund the surplus to the borrower?No. However, the servicer may inform the borrower in the information accompanying the return of the surplus that the borrower may elect to use the refund to reduce principal or have it credited against the next year’s escrow payments.

40. If there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?
HUD’s escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.

41. May a consumer delay or avoid a mortgage transaction if it discovers that there exists a RESPA violation?

No. RESPA specifically provides that it does not affect the validity or enforceability of any sale or contract for the sale of real property, or any agreement arising in connection with a federally-related mortgage loan.
42. How should I report a violation of RESPA? You should send a written complaint describing the practice that you believe violates RESPA.

The complaint should include the names, addresses and phone numbers of the alleged violators. It is preferred that you include your name and phone number in case an investigator wishes to ask further questions. You may request confidentiality. Send the complaint to:

U.S. Department of HUD
Office of RESPA and Interstate Land Sales
451 7th Street, SW, Room 9154
Washington, DC 20410

43. You may also wish to send a complaint to State and other Federal agencies that have the responsibility for regulating the settlement providers engaged in the referenced practice.

The Law Office of Malik W. Ahmad can also audit your loan of course, on a limited basis to to see if HOEPA was violated:

Here is some basic information about HOEPA from the Federal Trade Commission Website:
High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages)

If you’re refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called “Section 32 Mortgages.” Here’s what loans are covered, the law’s disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.

What Loans Are Covered?
A loan is covered by the law if it meets the following tests:

• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;

• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or

• the total fees and points payable by the consumer at or before closing exceed the larger of $561 or eight percent of the total loan amount. (The $561 figure is for 2008. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.
The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).
What Disclosures Are Required?
If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:

• The lender must give you a written notice stating that the loan need not be completed, even though you’ve signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.

• The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.

• The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.
These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.
What Practices Are Prohibited?
The following features are banned from high-rate, high-fee loans:

• All balloon payments – where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required – for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.
• Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.

• Default interest rates higher than pre-default rates.

• Rebates of interest upon default calculated by any method less favorable than the actuarial method.

• A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan.

• Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:

o the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
o you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
o the lender exercises the penalty clause during the first five years following execution of the mortgage.

• A due-on-demand clause. The exceptions are if:

o there is fraud or material misrepresentation by the consumer in connection with the loan;
o the consumer fails to meet the repayment terms of the agreement; or

o there is any action by the consumer that adversely affects the creditor’s security.
Creditors also may not:

• make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.

• refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower’s best interest. The prohibition also applies to assignees holding or servicing the loan.

• wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.

How Are Compliance Violations Handled?

You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney’s fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.
(4) Our Law Office audit your loan file to see if the ARM was adequately disclosed
(5) Our Law Office look at whether costs and fees were excessive/predatory
If we can find a legal violation of any of these statutes we can seek an appropriate remedy in a Court of law. Of course, these remedies may include monetary damages, punitive damages, attorney fees, court costs, rescission of your loan, restitution and/or a loan modification.
Note: We do not file lawsuit in every case and or not obligated just by auditing a loan to file a lawsuit. Our Attorney retains the discretion whether or not to file any case. Each suit is depends again on many other factors including the size of the loan, the nature of the lender and the complexity of litigation. Our audit is written in simple, precise and concise manner readable by anyone and understanable in simple ways. A lender faced with the prospects of an attorney filing a lawsuit overnight changes to a decent human being again eager to help his customers. This is a welcome change, and of course our borrowers like to deal with this new lenders. Now we can request the following from this newly chaged lenders:
(a) modify the Client’s loan as an act that seeks to take accountability for their non-compliance with serious loan and mortgage laws, or
(b) face the prospects of losing in court to a jury that may be largely unsympathetic to these lenders who have largely caused the economic crises we are facing? Let’s not forget this bailout is touted as a bailout for lenders. People are not at all happy about this. If we find a serious loan compliance error or omission in your loan files following a loan audit, we will be in a very strong position to compel the lender to give you the loan modification you so badly need.
GOOD REASONS TO HAVE YOUR LOAN AUDITED BY by Our Law Office:

(1) You have negotiated your own loan modification and the lender wants you to relinquish your rights in a new loan modification agreement. Send us the loan modification agreement your lender sent you and have us review it.

(2) Even if you are not late on your mortgage (which in today’s loan modification market means noone wants to deal with you as far as banks go) have your file audited and see if the tune changes. After all, if you find a legal error, doesn’t that give you a potential right to sue your bank or lender or do you have to wait until you are late on your mortgage to sue your bank? Keep in mind, in the legal world, statutes of limitations are always running.

Why a Loan Modification Attorney is Required?

Why an Attorney Must For Loan Modification?

We all know it is very time consuming to talk or even to find the right person for a request for loan modification. We are constantly transferred from one line to another and of course to various countries during few minutes. Well, my experience in contacting the lenders has resulted many times in many frustrating experiences as well. However, when I told them that I am an attorney some of the non sense is washed away very quickly. Phones messages starts returning, letters being replied and they cut short the delaying tactics which are meant for almost all of the borrowers. I meet clients all day in reference to their loan modification needs.

Here, is the summary of all the experiences what my clients had told me and my office staff in handling their own loan modification requests:

-We were transferred from one phone to another.
-We were transferred to a dead line.
-The average time of greetings last about 5 minutes, and each transferred calls is started again with greeting on the phone.
-You are advised to identify yourself each time.
-You are requested to send the same papers which you had faxed many times before.
-At each layer, the representative would ask you money.
-Each representative would give you same stale information, and invariably the first answer is “there is nothing we can do”.
Okay here is an experience of congresswoman <a href=”http://ABC Nightline“>Maxine Waters.

Countrywide:
Here is an interesting video clip about Countrywide. Countrywide is still hoodwinking its borrowers. Countrywide has not learnt its lessons and still using all the delaying tactics it can find to its borrowers.
Here is another article on House of Cards:
Part One:
Where are the Chris Dodd’s Mortgage Papers:

Watch California Loan Mod Fraud Again.

lllegal California Loan Modification Companies Attacking Nevada Again.

Not a day go by when I do not receive calls from some California company wanted to do business with me or having partnership with me to do loan modification. I have told them many times that such partnership is illegal and against the professional rules of conduct of State Bar of Nevada. Apparently, they don’t listen to that. Now, some of these companies are putting ad to hire attorneys and they would “train” themselves. This is funny, how someone can be trained by totally untrained and unscrupulous people. Remember, these are the companies who have approved loan for a dead person also. They are the master of this flawed invention called “No doc”, “Low Doc” collectively called Liars Loan.

These California companies are back on this fraud game again. They apparently think that people in Las Vegas, and in Nevada are gullible and would believe this fraud again. If Nevadans are losing their homes to foreclosures in drones, these scam artists from this “sister” state are responsible.

They never cared to verify the job, the income, the debt to income or loan ratio, or even length of job. The qualified everyone. They never even asked if some had declared bankruptcy. They did not ask any single question in good faith. Now, all these loans where they had deceived these people, they are back on this game to modify their loan.

These companies are committing a misdemeanor in Nevada by practicing law here without a license; they are illegally taking advance fee payments that “rescue” companies are not allowed to accept; they make false and exaggerated promises; and they are unlicensed and unregulated. These loan agencies are run by the same type of people, same old mortgage brokers, tired looking loan officers, and their henchmen, and some collusive brokers.

I have a strong belief that a loan mod should only be handled by a local licensed attorney who can review all of the relevant options and who can also assist with foreclosure defense and counterclaims.

Furthermore, they are doing business under the guise of providing loan audit, the so called fancy name of forensic loan audit. What exactly is a forensic loan audit? It is the finding of violations based on TILA and RESPA. Let us if they find some violations, who is going to file this law suit? Not these scam artists. They are not licensed to practice law in the great state of Nevada, and the attorneys working in California are not qualified either to file suit, unless they hire a local attorney. Folks please be prepared to face this onslaught and for your safety and the safety of your home, please ask them questions, and never let them continue your peace of mind.
Ask them few questions, and never be reluctant to ask them:

1. Be wary if they call around dinner time.
2. If you hear lots of noise in the background, it must be a boiler room with lots of caller calling all over USA.
3. If there a slight pause when you pick up the phone, and mostly the person mispronounces your name.
4. Ask them the first thing what is their phone number and the name of the caller. You would notice a reluctance in their demeanor. They would hesitate, and if they give out their name, they would only give a short version like Bill, Joe, Dina, etc.
5. They would interview you for few minutes, and would get straight to the most sensitive issues, like how much is your interest rate, how many months are you behind etc.
6. They would also show some compassion to you and use high tech words which you probably may not understand.

More tips later

How to Do Loan Modifications With Your Lenders?

How to do loan modification with some top lenders?In this article, I am suggesting ways and means to talk, handle and finally negotiate a loan modification with your lenders. These are time tested tricks, and procedure which people who does not want to hire an attorney, can use and be successful. I am not saying that you should not hire a licensed attorney, and by all means should hire a Nevada attorney but I am saying that if you are so hard pressed but otherwise feel capable of doing your own loan modification and like to sail through this troubled tsunami, then have my blessings and read the following pearls of wisdom.
First with Countrywide, there are some important steps you need to take.

Countrywide has made a settlement with State Attorney General of Nevada to do loan modifications. Countrywide, a rule of caution for everyone, is one of the most crooked bank of USA. Yes, close to the savings bank debacle of the 80’s. If one institution had single handedly destroyed the American fabric and American Home Dream, this is the one. What does Countrywide Bank need to see from you in order to approve your loan modification application? Here are some of the items you will need to prepare and submit with your application:
• Hardship Letter-a brief explanation detailing the circumstances that caused you to become delinquent, explain how you have tried to remedy the situation and tell the lender about your plan to get back on track and stay there
• Recent Income documents: pay stubs, W2, benefit statements, unemployment
• Bank statements and Tax returns for last 2 years
• Complete & accurate financial statements
How all of these documents are prepared and presented to Countrywide loss mitigation department can make the difference between getting your loan modified to an affordable payment or being denied.

A little up-front knowledge and preparation will give you the fighting chance you need to save your home with a loan workout. Once you know what Countrywide Bank is looking for in an acceptable loan modification application, you will be able to present your case in the best possible light to get an approval.

First, send them an authorization, if some third party is handling your case like an attorney. Then, wait a few days, and send them a hardship letter. Please see my blog for writing a hardship letter. Then just give them basic financial information about your mortgage, expenses, and income. A rule of caution, don’t give them all the details, so in case you need to change down the road, you can do that. Try some intelligence with them. Don’t beg them. Tell them that they had done something wrong. Not a single day passes, when Countrywide does not settle with someone the ongoing litigation.

Here are 8 Tips that will help you get your loan modification application approved:

Tip #1: You should know the lenders guidelines for approval before you even send your documentation. Wells Fargo is strict about all these guidelines, and your case would be unnecessarily delayed, if some of your documents are missing.

Tip #2: Make a financial statements which can show all your income and expenses, and that you are trying to cut down your expenses, and in fact, balancing your budget and expenses. Eliminate all the unnecessary expenses like cable tv, cell phone bill, extra car sitting in garage for long time, including of course sending in-laws back to their original home.

Tip #3: Write a convincing letter explaining your circumstances about your hardship situation. I have given some templates. Use them extensively with some revision. Sooner, I am going to write more about different economic hardship situation.

Tip #4 Substantiate your economic hardship with supporting documents. Each fact should be corroborated with documentary evidence.

Tip #5: Calculate your monthly mortgage payment yourself, and prepare yourself, if you can live with it because this is the payment you are going to pay for the next 30 years or so.

Tip #6: Take your time and complete the required loan modification application forms. Call the lenders to find out if they had received all the papers.

Tip #7: Submit a complete, accurate and acceptable application that meets the Wells Fargo loan modification program guidelines. Remember, if you are missing on any of these documentation, you are losing valuable time.
When you call the lenders on phone, make sure you plan to stay longer period of time, and also to be very polite with the representatives. Make sure you get their name, and write on your journal with time and date, and the result of the conversation.

More later.

What are the Defenses to a Wrongful Foreclosure?

There can be a whole set of defenses for a wrongful foreclosure as long as you file your case in time. And, let us assume we are following the time tested constraint that “Time is the essence” in all kinds of foreclosure litigation.

1. Truth in Lending Act (TILA) violations enabling rescission. This recisision period which is 3 days in Nevada, can be extended to 3 years in Nevada.

The bank or your lender supposed to provide the disclosure–of course all the disclosures, and if a single one is missing, then you are entitled to a rescission without a doubt.

2. Truth in Lending Act (TILA) violations enabling damages.

If you purchased the property with the loan or used the proceeds to refinance and proper disclosures were not given, then you may be entitled to money damages to offset the foreclosure.

3. Home Ownership and Equity Protection Act (HOEPA).
This is a very powerful federal law governing high cost refinance loans. If your loan is under $150,000 or the initial rate was above 8%, you should evaluate your loan for violations of this act. Violations here enable rescission and substantial money damages that can be in excess of the loan’s dollar amount.

4. Failure to Provide a Correct Notice of the Right to Rescind.

There is a specific notice that must be provided to refinance customers at closing. If this form is inaccurate or incorrect, the loan is rescindable up to three years after the closing date.

5. Breach of Contract. These are the same contractual remedies which are available in every business litigation.

6. Real Estate Settlement Procedures Act.

This federal law governs many types of disclosures that lenders must provide at the time of closing, in addition to prohibiting things like kickbacks and unearned fees.

7. Fair Debt Collection Practices Act.

This federal law requires servicers or lenders who obtain the mortgage after default follow specific protocol in attempting to collect on the debt. A failure to follow this law enables statutory damages and attorney’s fees.

8. Fair Credit Reporting Act.

This federal law governs lenders ability to report information about the mortgage and requires the accurate reporting of negative information. Violations of this act also enables damages and attorney’s fees. Punitive damages might be available under this act.

9. Real party in interest.

This is a procedural defense to foreclosure that can be extremely effective at stopping the lender’s ability to foreclose. It essentially questions the ownership of the mortgage and questions whether the foreclosing party is, in fact, the holder of the mortgage and note.

10. Unconscionability.
This defense is focused on the events surrounding the creation and closing of the mortgage loan. A violation here gives the court great leeway in deciding whether the mortgage should be voided or changed.

11. Failure to state a claim upon which relief can be granted.
This general defense attacks the lender’s ability to foreclose and is can be used in conjunction with one of the other foreclosure defenses.

12. Failure to establish conditions precedent.

13. Failure to comply with FHA pre-foreclosure requirements.
FHA requires every lender to mail a booklet called “How to Avoid Foreclosure” and set up a face-to-face meeting with the borrower before foreclosing (in most cases). If the lender does not take these steps, then it cannot foreclose.

And finally, if there is a surrender of deed in lieu of foreclosure, you can use it as a collusive surrender in a bankruptcy court petition of Chapter 13. A surrender should only be negotiated if you don’t like the publicity of foreclosure and also if your lenders agrees with you not to report to the credit agencies of bad rating on your credit.

Modification News

Fannie Working on Pilot Mod ProgramFederal cramdown legislation that would allow bankruptcy judges to modify mortgages has its supporters and detractors. In other modification news, bankruptcy specialists will debate modifications this spring, while Fannie Mae has reached an agreement with a consumer advocacy group to restructure unaffordable mortgages.

The program involves restructuring mortgages to achieve an affordable payment.
read full story

REOs Ease as Foreclosure Prevention Grows
Mortgage servicers are preventing an increasing number of foreclosures by modifying loans, according to a new industry report. Loan delinquency continued to increase — though repossessions eased late last year.

Isn’t Loan Modification Just Begging?
Don’t beg your predatory lender for a loan modification, you may
be entitled to a total refund. If we find fraud you could be entitled
to millions. Contact Mortgage Fraud Examiners and find out how.

Wells Launches Rescue Plan for Wachovia BorrowersWells Fargo Home Mortgage hopes to prevent nearly a half million Wachovia Corp. foreclosures. The company boasts a 70 percent success rate on its modifications.
Modification Statistics and Programs
As mortgage companies commit to an increasing number of loan modifications, more modification firms are popping up. Two groups testified before Congress last week that funds from the Troubled Asset Relief Program should be used to modify loans — with one of the groups calling for cramdowns on as many as 5 million mortgages that are not even in bankruptcy.

BoA Earnings & Originations Worse, Apps Higher
Bank of America Corp. saw quarterly originations decline but said new activity picked up at the end of the year. While earnings deteriorated last year, results might have been worse without the acquisition of Countrywide Financial Corp. The institution said it plans to modify more than a half million loans.

Countrywide Sued Over Denied Modification
Attorneys for a couple who became delinquent on their mortgage and were subsequently foreclosed on are accusing Countrywide Home Loans of claiming in public to be pursuing a diligent loan modification strategy while denying legitimate modification requests.

The Modification Report
Two firms said they are among only 80 approved by the State of California to collect advance fees for helping delinquent borrowers obtain modifications from loan servicers. Other recent modification activity includes banker opposition to cramdown legislation endorsed by one of its own, modification agents being recruited from the ranks of mortgage brokers and a report that calls for federal compensation of servicers.

Citi Supports Cramdowns
Senate Democrats have found an ally in Citigroup Inc. for their proposed legislation to allow bankruptcy judges to modify mortgages. Citi’s endorsement follows an endorsement by U.S. homebuilders — though it is in opposition to the position taken by the country’s mortgage bankers.

FDIC Sells $500 Million Portfolio
A mortgage company run by former Countrywide Financial Corp. executives has acquired more than a half billion dollars in mortgages originated by a failed bank.

The Modification President
A stimulus plan proposed to Congress by President-elect Barack Obama calls for his cabinet to use its existing authority to step up loan modifications. It also proposes that servicers not be held liable for modifications and that bankruptcy judges be empowered to modify loan balances.

Letus find out if you have predatory loan?

Do some Homework if you got a Predatory Lending

Foreclosures in Nevada are on the rise and unfortunately everyday more and more homes are being foreclosed. Not all of that is your fault, and it is not all based on your non payments of the monthly mortgage payments. There is something else to it, and that is the predatory practices of your lenders. They are the one who has given loans to unqualified people, with unverified and unsubstantiated incomes and financial reports, and started loans with the so called “teaser rate”. So they are also culpable in this fiasco. In fact, they are the one who caused this fiasco.
1. Find out if you have a balloon loan. A balloon loan is the one in which after a series of low payments the entire loan balance is due in a large lump sum) and your need to obtain another loan to finance that final lump-sum amount.
2. PMSI and other mandatory insurances? Were you required to buy credit insurance, insurance that will repay the debt if you die or become disabled? (Note: Credit insurance is optional and will not affect your loan decision if you decline to buy it. It can, however, add considerable cost to the loan transaction. You should decide whether you are going to purchase credit insurance carefully.)

3. Have you refinanced your loan several times, and in each instance increased either your monthly payment and/or the total amount you owe on your home?

4. After settlement, were you surprised to find that the monthly payments on your mortgage loan were higher than you anticipated based on the initial disclosures?
5. Did you incur any unexpected costs at settlement that were not explained to you prior to the settlement?

6. Were you asked to leave signature lines or any other important line-item of any form blank? Did the lender or broker alter any information you entered on your loan application?

7. Check your loan file. Are any of the following disclosures missing?
- Good Faith Estimate:
- Special Information Booklet
- Truth in Lending
- HUD-1 Settlement Statement
- Any missing signature of one of the spouse
- Any spouse missed any of the initial in those documents
Each one of the spouse suppose to get separate documents for loan closing

8. Do your documents reveal that your interest rate calculation will change to require you to pay “daily interest” in instances when your payments are late?

9. Is your loan amount on the loan you obtained higher than the value of the home?

10. Were you encouraged to include false information on your loan application?

11. What is falsification of loan documents? This is most common in Nevada because most of the people, who worked in the service industry, never made more money to deserve a conventional loan. Most of them got 80/20 loans. That means they have a principal mortgage accompanied with a secondary mortgage. Unfortunately, they are the prime victim of this predatory mortgage practices. Their assets, jobs, secondary job, and of course the so called “other income” was never verified by a single verifier. I still see lots of the missing documents in the loan/escrow package. Most of the times, the TILA documents are missing, at other times the most missing are the RESPA documents. The borrowers were given a different Good Faith Estimate and the escrow papers reveal a different outlook.

Be Careful of Foreclosure Scams in Nevada

The New York Times has an interesting article on rescue scammers. These rescue scammers are popping out everywhere mostly run by former loan officers, or mortgage brokers. In Nevada, most of these scammers originally belonged to California. If someone gives you an 800–just distrust them. You would be pressured with a high pitched sales person vying to get your business and your credit card number. They are blatantly and openly violating these laws. These are the companies that are practicing law without a license (a misdemeanor or felony in the state of Nevada). They are violating RESPA Section 8 by creating affiliate programs for kickbacks. Many of them do nothing to help the homeowenrs other than taking their money. Here is the article: “Swindlers Find Growing Market in Foreclosures.” Only a local licensed attorney and that too a Nevada licensed attorney can legally handle a loan modification along with legal violations both under RESPA, TILA, HOEPA and Nevada deceptive trade practice.

Foreclousre in Nevada: Myths, Mysteries & Defense

Foreclosure in Nevada?
How, Whys, and Defense?
By
Malik W. Ahmad Attorney at Law
[Malik Ahmad is a licensed attorney and admitted to practice to the Supreme Court of Nevada]
All loans in real estate property are considered secured loans. Whenever there is collateral attached to a loan, it is called secured loan. Unsecured loans are mostly credit cards loans and which have no collateral attached with them. Here, in Nevada, and in the real estate context, all loans are secured because they are attached with property. When a loan secured by your lender goes into default, the secured creditor has a right to initiate foreclosure proceedings to take over this collateral. The lender has two choices, one is judicial foreclosure, and the other is non judicial or statutory foreclosure. Also, these days lenders are using other tactics like workout package, surrender deed in lieu of foreclosure, short sale, and of course the much touted loan modifications. A foreclosure happens much after all these remedies or solutions are exhausted. Lenders does not like to lose money and like the homeowners likes to pursue all of the options at all the times. A workout package may or may not work because the lender is exploring all the choices where the homeowners can be made current. In a workout package, the lender sees your financial situation, the nature and value of your collateral and whether there are advantages which can be accomplished through the workout package. In almost all cases, sooner you talk to your lenders; they would suggest a workout package. The lender may send a workout package. Also, it may follow a forbearance period. There is no uniform method of conducting such negotiation, each lender has their different guidelines and of course very skilled negotiator for this purpose.
A deed in lieu of foreclosure:

The borrower executes a deed where he conveys the property to the secured creditor in lieu of conducting the foreclosure sale. This way the lender becomes the owner of the property without going through the hassle of foreclosing and avoiding extra expenditure of publication. It is a voluntary matter from the borrower where no money in return can be expected. Sometime the borrower offers some money in exchange of clean returning the keys and up keeping the property during the transition times. This paper, however, only discusses situation after the workout package is exhausted or not discussed. There are some advantages of deed in lieu of foreclosure:

1. Quick negotiation process.

2. Borrower avoids negative publicity.

3. Less expensive for the lenders, does not pay for publication of notices.

4. No recordation of documents with the county or recorders office.

5. There is no public record of any kind created.

6. Borrower may obtain some legal as well financial concession from the lender.

7. May stay in the property for sometime without paying any mortgage payments.

8. The foreclosure process is lengthy and parties can avoid for some mutual benefits.

9. Lenders can do to avoid potential bankruptcy problems.

10. The borrower can negotiate the reporting of foreclosure to the credit reporting agencies. A foreclosure on a credit agency is extremely damaging, and the creditors may be approached to report such foreclosure in a more human and decent way.

11. The lenders can have an immediate possession of the property.

12. A deed in lieu of foreclosure does not eliminate junior encumbrances. The lender that takes a deed in lieu of foreclosure takes the title subject to those junior encumbrances. The lender takes over these encumbrances and therefore the rights of secondary lien holders.

13. The lenders who accepts this deed in lieu of foreclosure also loses the right to pursue a deficiency judgment against the borrowers or guarantors either as a matter of law or as a matter of contract. See Maloney v. Boston five Cents Savings Bank FSB, 422 Mass. 431, 436, 663 N.E. 2d 811, 815 (1996). Both parties should pay particular notice to the doctrine of merger.

14. Doctrine of Merger: When one party holds both a fee interest in property and lien on the same property, the lesser interest will merge into the greater interest. See Alladin Heating Corp. v. Trustee of the Central States Pension Plan, 93, Nev. 257 (1977) (holding that whether merger occurs is dependent upon the intent of the parties). If a merger occurs, junior liens increase in priority as a result of removal the senior lien held by the lender. If there are junior liens of the property, therefore, the lender may prefer that its higher priority lien remain of record after the conveyance by the deed in lieu.

15. Another pitfall is that if the borrower files a bankruptcy, this can be considered a collusive transaction. The bankruptcy code and state law allow a bankruptcy trustee to avoid certain transfers of property that are made prior to a bankruptcy filing known as “fraudulent transfers” 11 U.S.C. Section 548(a)(1)(B); NRS 112.180,., 190. A transfer of property through a deed in lieu of foreclosure is a voluntary transfer that is not subject to the “protections” of the foreclosure process. See Main v. Brim, 75 B.R. 322, 327 (Bankr. D.Az. 1987)Foreclosure Process in General in Nevada:

Most of the loans are premised upon continuous payments to the lenders. If these payments are not timely paid, or not continuously paid, the borrowers can start the foreclosure process. The lender reviews the loan documents and determines about the occurrence of a default. Failure to make loan payments triggers this default process. Also, it is contingent upon events which have not been corrected by payments or failure of a workout package.

A trustee under a deed of trust may exercise its statutory power of sale without the judicial intervention. In Nevada, the foreclosure is mostly a statutory foreclosure. (NRS 107.080(1)). Judicial foreclosures are also permitted under Nevada law (NRS 40.430-40.450) but judicial foreclosures are not the preferred choice in Nevada for most of the lenders because of the looming danger of the right of redemption. Upon default, the initial step is for either the beneficiary or the trustee to execute a notice of breach and election to sell, which is usually accompanied by an unrecorded Declaration of Default. (NRS 107.080(2)(b)). The beneficiary executes the notice, but the trustee records it. The notice of breach and election to see must be recorded in the county in which the property encumbered by the trust deed is situated. This notice must also be mailed (notice of breach and election to sell) by registered or certified mail, return receipt requested with postage prepaid, to the address of the trustor and to the person who holds the title of record, if known, otherwise to the address of the property. (NRS 1076.080(3)

Notice of Default and Election to Sell?
1. Must describe the property
2. Must describe the deficiency in performance of payment.

3. May contain a notice of intent to accelerate the entire unpaid balance if the terms of the obligations so permit (NRS 107.080(3).

4. Within 10 days of recording and mailing the notice of default to the trustor, copies of the notice must also be sent by registered or certified mail, return receipt requested, to each person who has either (1) filed a request for a copy of the notice; or (2) holds a record interest in the property subordinate to the deed of trust being foreclosed. Additionally, 20 or more days before the sale, the trustee must mail a copy of the notice of the time and place of the sale to the same parties by register3ed or certified mail, return receipt requested. (NRS 107.090.)

5. Nevada laws make it immaterial whether the notice is actually received by the trustor. The notice is effective nonetheless. (Turner v. Dewco Services, Inc., 87 Nev. 14, 479 P. Wd 462 (1971)

6. NRS 107.080(2)(a) provides that no power of sale may be exercised unless the trustor or his successor in interest, a beneficiary under a subordinate deed of trust or any other person with a subordinate lien or encumbrance of record (referred to below as “trustor or interested person”) has, for a period of 35 days, “failed to make good the deficiency in performance or payment….” The 35-day period commences on the first day following the day upon which the notice and election is recorded and mailed to the grantor and to the record owner of the property in the manner specified above. (NRS 108.080(3). If the trustor other interested persons “make good” the deficiency in payment or performance within the 35-day period, the trustee’s power of sale may not be exercised, and the obligation may not be accelerated. NRS 107.080(2)(a), (3). The 35-day period in the statute exists independently of any notice or cure periods contained the applicable notes or deeds of trust. If the notice of breach contains a permitted election to accelerate and the breach is not cured within the 35-day period, the trustor or other interested persons can thereafter only prevent the sale by tendering the entire unpaid balance of the obligation, as well as any costs, fees and expenses incidents to the preparation or recordation of the notice and incident to the making good of the deficiency in performance or payment (NRS 107.080(3).

What is the Procedure for Trustee’s Sale?

When three months have elapsed from the date of the recordation of the notice of breach and election to sell, the trustee may give notice of the time and place of the trustee’s sale, which notice must be given in accordance with the statutory provisions for execution sales of real property – posted notice in three public places for 20 successive days and published once a week for three consecutive weeks. (NRS 107.080(4);231.130(1)©. The trustee’s sale may be held at the office of the trustee anywhere in Nevada, even if it is not in the county where the property being sold is located. (NRS 107.080(4).
If the power of sale is exercised in compliance with the Nevada statute, the purchaser is vested with the title of the trustor, without equity or right of redemption NRS 107.080(5).

What are the Guarantor’s Rights to Notice and Subrogation?The notice of breach and election to sell must be mailed by certified mail, postage prepaid, to each guarantor or surety of the debt at the address of each if known, or at the address of the trust property. The notice must also be mailed to any other obligor who has filed a request for a copy of the notice under NRS107.090.

Failure to provide such notice would release that guarantor, surety or obligor from liability on the obligation. (NRS 107.095(1).
Under NRs 107.095(3) a guaranty, surety or other obligor is not released if the required notice is give at least fifteen (15) days before the later of the expiration of the 35-day period described in NRs 107.080 or any extension of that period by the beneficiary, or if the notice of default is rescinded before the sale id advertised.

Upon full satisfaction by the guarantor, surety or other obligor, other than the trustor, of the indebtedness secured by a mortgage or lien, the paying guarantor or obligor is entitled to enforce every remedy which the beneficiary has against the trustor, and is entitled to an assignment from the beneficiary of all of the rights the beneficiary then has by way of security for the payment or performance of the trustor. NRS 40-475 (1989). Such an obligor is also entitled to subrogation, junior only to the secured lender’s rights, in the case of partial satisfaction of the indebtedness. (NRS 40.485 (1989). These rights may only be waived by the guarantor, surety or other obligor after default. NRs 40.495(1)(1989).

What are the rights under One Action Rule?
In Nevada, a deficiency judgment can be filed under non statutory foreclosure provisions without having filed a judicial foreclosure.

What is a deed of Trust in Nevada?

The most common type of security interest in real property in Nevada is a Deed of Trust. A DOT has three parties.
Lender: It is the first party who is referred to as “Beneficiary.”
Borrower: It is the second party who is referred to as the “Maker”, or “Grantor”, or “Trustor” who conveys legal title to the property to the Trustee.
Trustee: This is the third party who holds legal title to the property.
Process: A DOT can be foreclosed in a simple process and cheaper as well. A Trustee sells the property encumbered by the DOT. All the lender needs to do in order to foreclose on a DOT is to determine that an even of default has occurred under the DOT and have the trustee conduct non-judicial foreclosure proceedings. Here, in Nevada, the trustee sale does not entail redemption. The borrower, in Nevada, does not have the statutory rights of redemption unlike the judicial foreclosure where the right of redemption lasts one year. Compare NRs 107.080(5) (no right of redemption in a foreclosure on a DOT ) with NRs 21.210 (one year period of redemption).

Determination of Default.

Your default notice also consists of a determination of default. It can be monetary or non monetary. Monetary is when it is linked to borrowers failure to pay, failure to pay property taxes, failure to pay homeowners association assessments and failure to pay special improvements and other assessments against the property. The non monetary events of default are spelled out in the notice of default and Deed of Trust as well as related loan documents. They can be failure to insure property, the failure to maintain debt service coverage ratios and waste.
Acceleration of Obligation:

A trustee under a deed of trust may exercise its statutory power of sale (commencement of foreclosure process) without judicial intervention in Nevada. NRs 107.080(1). Judicial foreclosure is also permitted under Nevada laws though seldom exercised. (NRs 40.430-40-450). They carry with them a one year right of redemption which lenders does not like it as they like to close this chapter once for all.

Steps in Foreclosure:

1. The beneficiary or the trustee to execute a notice of breach and election to sell which is usually accompanied by an unrecorded Declaration of Default. (NRS 107.080(2)(b). The beneficiary executes the notice, but the trustee records it. The notice of breach and election to sell must be recorded in the county in which the property encumbered by the trust deed is situated. The notice of breach and election to sell must also be mailed by registered or certified mail, return receipt requested with postage prepaid, to the address of the trustor and to the person who holds the title of record, if known, otherwise to the address of the property. (NRS 1076.080(3).

2. The notice and election must describe the deficiency in performance or payment, and may contain a notice of intent to accelerate the entire unpaid balance if the terms of the obligation so permit. (NRS 107.080(3).

3. Within ten days of recording and mailing to the trustor the notice of default, copies of the notice must also be sent by registered or certified mail, return receipt requested, to each person who had either (1) filed a request for a copy of the notice; or (2) holds a record interest in the property subordinate to the deed of trust being foreclosed. Additionally, 20 or more days before the sale, the trustee must mail a copy of the notice of the time and place of the sale to the same parties by registered or certified mail, return receipt requested. (NRS 107.90)

4. Under Nevada law, it is immaterial whether the notice is actually received by the trustor. Turner v. Dewco Services, Inc., 87 Nev 14. 479 P.2d 462 (1971).

5. NRS 107.080(2)(a) provides that no power of sale may be exercised unless the trustor or his successor in interest, a beneficiary under a subordinate deed of trust or any other person with a subordinate lien or encumbrance of record (trustor or interested persons) has, for a period of 35 days, “failed to make good the deficiency in performance or payment….” The 35-day period commences on the first day following the day upon which the notice and election is recorded and mailed to the grantor and to the record owner of the property in the manner specified above. NRS 107.080(3). If the trustor or other interested person “make good” the deficiency in payment or performance within 35-day period, the trustee’s power of sale may not be exercised, and the obligation may not be accelerated. NRs 107.80(2)(a), (3). The 35-day period in the statue exists independently of any notice or cure periods contained in the applicable notes or deeds of trust. If the notice of breach contains a permitted election to accelerate and the breach is not cured within the 35-day period, the trustor or other interested persons can thereafter only prevent the sale by tendering the entire unpaid balance of the obligation, as well as any costs, fees and expenses incident to the preparation or recordation of the notice and incident to the making good of the deficiency in performance or payment. NRS 107.080(3).

6. Nevada Revised Statutes Chapter 107 governs Deeds of Trusts. The transfer of real property may be made in trust to secure loans and other obligations. See NRs 107.020. In the event a transfer is made in trust to secure payment, the Trustee is granted a power of sale which may be exercised if an event of default has occurred. See generally NRS 107.080.

How a Foreclosure Process in Nevada is Commenced?

1. The lender must first determine that an event of default has taken place.

2. The lender employs the Trustee or a successor.

3. The Trustee will prepare and record in the Office of the County of Records of the County in which the property is located a Notice of Default and Election To Sell. (NRS 107.080).

4. The Notice of Default and Election to Sell must be mailed by registered or certified mail, return receipt requested Election to Sell must be mailed by registered or certified mail, return receipt requested and postage prepaid, to the grantor of the Deed of Trust, the person who holds title of record on the date of the Notice of Default and Election to Sell, each guarantor or surety of the debt, NRS 107.095(1), and any person who recorded a request for a Notice of Default and Election to Sell. (NRS 107.090.

5. On the first day after the Notice of Default and Election to Sell is recorded and sent by mail to all interested parties, the borrower and the other obligors are then given 35 days to make good the deficiency in payment or performance. NRs 107.080(2)(a)(2). This essentially allows the borrower or other obligors to de-accelerate the default under the Deed of Trust and terminate the foreclosure proceedings.

6. In the event the borrower or other party in interest fails to cure the deficiency in payment or performance, the Trustee must wait until the expiration of three months following the recording of the Notice of Default and Election to Sell (55 days after the 35 day reinstatement period expires) before giving notice of the time and the place for the sale of the real property (NRS 107.080). The notice of the time and place for the sale of the real property must be published in accordance with
Nevada’s execution statutes.

Requirements of Publication for the Notice Under Nevada Laws

Nevada statute requires the following publication of the notice of the date, time and place of the sale:
(1) Personal service or service by registered mail to the last known address of each person entitled to Notice of Default and Election to Sell;
(2) The posting of a similar notice particularly describing the property , for twenty days successively, in three public places of the township or city where the property is situated in or where the property is to be sold; and
(3) Publishing a copy of the Notice three times, once each week for three successive weeks, in a newspaper, if there is one the county. (NRS 21.130(c).
(4) In addition to the notice required by Nevada’s execution statutes, the Trustee is required to, at least twenty days before the date of the sale, deposit in the United States mail and envelope, registered or certified, return receipt requested and with postage prepaid, containing a copy of the Notice of time and place of sale, addressed to each person who has recorded a Request for Notice of Default and Sale. See NRS 107.090(4).
(5) If the Trustee fails to give any person liable to the beneficiary or any other person who has requested a Notice of Default and Sale the required notices, that person may be released of its obligation to the lender. NRs 107.095.
(6) NRs 107.080(4) allows the Trustee to conduct the sale at the Trustee’s office.
(7) At the foreclosure sale, the Trustee may sell the real property by public auction. Generally, the lender will provide the trustee with a minimum credit bid before the foreclosure sale. The amount of the credit bid may be for the full amount of the debt owed to the beneficiary or only a portion of what is owed to the beneficiary. Any person or entity may attend the foreclosure sale and bid for the real property.

What is Nevada’s “One Action Rule”?

Nevada has adopted a one-action rule. It provides that there may be only one action to collect a debt secured by a mortgage or other lien. The Nevada One Action rules provides: (NRs 40.430(1)-(3).
1. There may be but one action for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate. That action must be in accordance with the provision of this section and NRS 40.433 to 40.459, inclusive. In that action, the judgment must be rendered for the amount found due the plaintiff, and the court, by its decree or judgment, may direct a sale or the encumbered property, or such part thereof as is necessary, and apply the proceeds of the sale as provided in NRs 40.462.
2. This section must be construed to permit a secured creditor to realize upon the collateral for a debt or other obligation agreed upon by the debtor and creditor when the debt or other obligation was incurred.
3. A sale directed by the court pursuant to subsection 1 must be conducted in the same manner as the sale of real property upon execution, by the sheriff of the county in which the encumbered land is situated, and if the encumbered land is situated in two or more counties, the court shall direct the sheriff of one of the counties to conduct the sale with like proceedings and effect as if the whole of the encumbered land were situated in that county.

Conclusion: The Foreclosure–The End of the Dream:The foreclosure is the final and definitive step and the end of the whole nightmare process. There is no right of redemption for a non judicial foreclosure in Nevada. The acceptance of the winning bid concludes the bidding process. The execution sale is final and deprives the debtor of any entitlement to the rights of ownership in the property. It is final elimination of any liens on the property along with the junior encumbrances.

What is right of Redemption?

Few words on redemption: The foreclosure process may not be final unless a final remedy can be exercise in Nevada, and that is called right of redemption. There is no redemption in non judicial foreclosures. However, there is one year period of redemption in a judicial foreclosure sale in Nevada. Right of redemption is paying off all the existing monetary obligations up to and before the final fall of the hammer. The full amount may consist of all delinquent amounts, plus interest and attorney fees and other publication costs. Under Nevada law, there are no rights of redemption in connection with a properly conducted non-judicial foreclosure sale. NRS 107.080(5). There is one year right of redemption in a judicial foreclosure sale (NRS 21.210)

And Finally: What is Deficiency Judgment, and Where This Money Will Come From?
As it is happening quite often these days, the Trustee will sell property at a foreclosure sale for less than the amount which is owed to the creditor or beneficiary under the Deed of Trust. Deficiency judgments are governed by NRs 40.451 to 40.459. The beneficiary must file the deficiency action within six (6) months after the date of the foreclosure sale or the deficiency action will be time barred. Specifically, NRs 40.455(1) provides:
Upon application of the judgment creditor or the beneficiary of the deed of trust within six months after the date of the foreclosure sale or the Trustee’s sale held pursuant to NRs 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or beneficiary of the deed of trust if it appears from the sheriff’s return or the recital of consideration and the trustee’s deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively. NRS 40.455(1)
Nevada law places stringent limitations on the amount of a money judgment, which may be recovered against the debtor, guarantor or surety who is personally liable for the deficiency. The court shall not render a deficiency judgment for more than:

1. The amount by which the amount of the indebtedness which was secured exceeds the fair market value of the property sold at the time of the sale, with interest from the date of the sale; or

2. The amount which is the difference between the amounts for which the property was actually sold and the amount of the indebtedness which was secured, with interest from the date of sale, whichever is the lessor amount.

3. The court may also consider expert appraisal testimony to evaluate the fair value of the property.

4. The junior lien holder if their rights are not properly extinguished, can also sue for deficiency judgment.

5. Nevada law provides that the anti deficiency legislation protects a guarantor and any other entity that is personally liable for the debt. See generally NRS 40.459.

How to write an Economic Hardship Letter?

How to Write An Economic Hardship Letter?
By: Malik Ahmad Attorney at Law. (No copy rights reserved: Use it extensively with your own revision at your own risk, just send me an email of acknowledgement. No legal advice is meant and provided here.
[Malik Ahmad is a Las Vegas Attorney having his own law office. He can be reached at Malik11397@aol.com. He is admitted to all the courts in the state of Nevada. His areas of practice include real estate, bankruptcy and loan modification].

By far writing and inclusion of a hardship letter is a must (a sine quo nun to use the legal lingo) and most sought after requirement by your lenders. This hardship letter does not require and asking for the best English language writing skills but at least it mandates a strong composition which details all the hardship you are presently suffering. Give them a laundry list of all the economic problems you have. Don’t make it too long. A synopsis is enough. Here, in this brief article I am going to touch all those spots on which your lender may base its loan modification decision. Remember, the other supporting documents your lender requires are: (1) the bank statements; (2) the tax record for two years and (3) the paystubs. Almost every lender requires this hardship letter. Here, I am giving first all the hardship points which may or may not be required and suitable in each and every case, but which you can edit to suit your particular needs.

1. Hardship about yourself:
You are telling your own story. Write like a story.
“I had a continuous job at the IBM for the last 7 years, and the company shut down the local plant. Consequently, I was laid off from work. I have been looking for work for quite some time. Initially, I was drawing unemployment compensation, but since last few weeks (or months) I have ran out of this compensation. I almost send my resume to various employers. Due to the current hardship, I am not getting many responses.

“We barely are making our normal household expenses. If you look at our history of mortgage payments, you would see that we had a pattern of timely payments on our mortgage since originally we bought this home in 1999. It is only three months ago when we were first delinquent. We though we would catch up. Initially, we borrowed from our lines of equity, but that has been cut down and now frozen by our bank. We do not like to borrow from family and friends at this time.”

2. About Your Family:“Luckily, my wife is still employed. She is employed as a registered nurse at the local hospital. She used to work overtime, but because of the depressing conditions, the hospital had cut down her overtime. Additionally, she worked part time but recently the County had laid down its benefit program for the indigent”.

“We had lately an extended family in our home as parents of my wife had joined us. My 82 mother in law is in frail health accompanied by my 92 years old father in law. Presently, both are living with because they rural place where they lived had no modern medical facilities. My mother in law is suffering from Alzheimer. My wife had to take her quite often to the local professional medical offices. They had to go at least three times a week. Even though our in laws sometime contribute in household things but largely we bear the expenses.”

“Unfortunately, our 10 year old son was diagnosed with the disease of the liver. We had to buy the latest medicine which is not covered by our health plan, and there is no generic substitute of these medicines. We had to spend an upward of $300 every month on these medicines.”

“We had recently borrowed $20,000 from our pension and which was spent on paying all the old bills. We ran out this money quickly, and now the Pension Fund has placed severe restrictions on any more withdrawal.”

“My wife who worked as a registered nurse in the local hospital always wanted to pursue a master degree in public health administration (MBA, Public Administration, Nurse Practitioner etc). She has enrolled in the University of Nevada in their master program where one more year has left in her completion. She likes to become a university nursing teacher. Our expenses are quadrupled because of her enrollment and doing lesser numbers of hours at her regular employment”.

“I am enrolled in an MBA Program in the University of Phoenix (CPA, Law school, chef school, auto technician course, vocation schools etc). It is night program which is extended to 4 years degree program. I have almost finished the first two years. It was a wise expenditure of my savings as I was expecting a promotion in the place of my work. Hopefully, someday I would be rewarded for this hard work.”
3. General Situation:

“We had a lower interest rate initially for the first two years. We had a good FICO score and always though that we can get better interest rate. Our loan officer promised us that once we are entrenched in our home for some time, we would be eligible for better interest rate. We had not seen any better interest rate other than the fact that these interests are constantly rising. We used to pay a payment of $1650 per month, which was increased for an upward adjustment to $1850 and now since the last three months had gone up to $2450.

This is an exorbitant amount which unfortunately we cannot pay. There is a choice to either pay for the basic necessities of life or pay just the mortgage only. We had also seen a sharp increase in our utilities bill including the cost of transportation. Furthermore, my commute time has been increased due to our work place relocated in far off place from my home.”

“Our loan officer always told us that our interest rate is locked at 5% percent. We were shocked when our attorney friend came to our home for a social function and we showed him our escrow papers. According to him, there are quite a few violations of RESPA and TILA. We were never provided a copy of the good faith estimate. We were not provided this entire disclosure certificate under TILA. Our attorney friend had told us that in his opinion we are a victim of some predatory lending practices, and that we should seek an immediate legal help. He also told us to seek some forensic loan audit.”

“We are not litigious people. At this time we are requesting a loan modification with a significant decrease in our interest rate as well as a reduction in our principal balance. We are not delinquent kind of people. We like this home, and like to continue staying here. This has been a part of our American Dream. Our economic hardship is temporary and hopefully would resolve in next few years. At this time we are requesting a loan modification with a significant decrease in our interest rate as well principal. Interest rates are historically low and your bank had also accepted federal bailout money. We do not anticipate another loan modification, and if this done right we would abide by all the terms and conditions set by it.

Persistence for Loan Modification Pays Off:

This is a very interesting article and which I have taken from another website with of course due credit to the original writer.
————
Persistence Pays Off When Loan Modification Saves House and Credit
By Jack Guttentag
Saturday, October 20, 2007; Page G04
A loan modification is a change in the loan contract agreed to by the lender and the borrower. The modifications getting attention now are those designed to reduce the payment burden on borrowers faced with impending interest rate increases that will make monthly payments unaffordable to them. Many are subprime borrowers.
Homeowners faced with this prospect, whether they are delinquent or not, should request a modification.

You are unlikely to get such a change if you don’t ask, and you should make the investment required to make the case. The stakes are very high: your house and your credit.
In most cases, the decision on a modification is not made by the firm that owns the loan. It is made by a firm servicing the loan under contract to the owner. The owner could be a single lender, or it could be a group of investors who own pieces of a mortgage-backed security collateralized by a pool of loans.
Whoever owns the loan, the servicing firm is contractually obligated to find the solution to payment problems that will minimize loss to the owner. If the lowest-cost solution is a contract modification, that’s great — everyone involved prefers a modification instead of a foreclosure. But if a foreclosure would generate lower costs for the owner, the decision will be to foreclose. The cost of foreclosure to the borrower does not enter the decision.
Yet the decision is far from cut and dried, and it can be materially affected by whether and how the borrower presents his case. I discussed this issue with Warren Brasch, a lawyer who represents borrowers seeking loan modifications. Our combined observations:
Equity: Perhaps the most important factor affecting the modification decision is the amount of equity the borrower has in the property. If the borrower has enough equity in the property to pay any deferred interest plus foreclosure expenses, foreclosure is almost bound to be the lower-cost solution.
Equity depends on property value, which the borrower is much better positioned to know than the servicer. The borrower knows or can easily find out how many houses in the neighborhood are for sale and what the trend has been in recent sale prices. In a weakening market, it is easy for the lender to overestimate value, and the borrower must prevent that.
Moral hazard: Servicers fear that if they are liberal in granting modifications, borrowers who don’t need a modification will seek one anyway. They protect themselves against this by entertaining modification proposals on a case-by-case basis, while placing the burden of proof on the borrower.
Borrowers must accept the burden of proof. In addition to the data on property value, they need to document that they cannot afford the payment increase that is pending, and they must document what they can afford.
To do so, borrowers should calculate their total debt ratio: the sum of mortgage payment, other debt payments, property taxes and homeowner’s insurance as a percent of their gross (before tax) income.
This number should be calculated as it stands now and as it would be after the rate adjustment. It should also be calculated to demonstrate what the borrower can afford. On the last, Brasch suggests that a servicer may be willing to accept 45 percent as a reasonable maximum.
Servicing cost: Servicers have an interest in minimizing modifications because they add to costs. They try to keep costs down by computerizing the servicing process to the greatest degree possible and standardizing customer support procedures so that low-paid and easily trained employees can perform them.
Modifications must be handled by a special group who are more highly trained and better-paid, and the increased cost of expanding their number cuts into the bottom line. Hence, there is a tendency to be nonresponsive in the hope that the borrower will go away.

Borrowers have to be persistent. Brasch said: “If a servicer says they will call you back . . . forget about it. You need to call them and call them constantly. They will lose your paperwork, fail to return calls, put you on hold and then hang up. It’s what they do. Keep fighting, calling, faxing. This does work!”
In deciding whether a modification would be less costly than a foreclosure, servicers usually ignore an asset possessed by the borrower that could tilt the balance toward modification. This is the right to future appreciation in the value of the borrower’s house.
In exchange for a modification that might otherwise be more costly to the owner than a foreclosure, the borrower could pledge a percent of the future appreciation, which could shift the balance to modification. I will discuss that next Saturday.
Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania. He can be contacted through his Web site,http://www.mtgprofessor.com.
Copyright 2007 Jack Guttentag

How to find your lender?

http://foreclosurehelp.nv.gov/Lenders.html

Nevada Laws About Servicers:

NEVADA
Nev. Rev. Stat. §§ 645A.010 to 645A.230 (Escrow Agents); Nev.
Rev. Stat. § 645B.170 (Mortgage Brokers and Agents); Nev.
Rev. Stat. § 645E.430 (Mortgage Bankers)

Scope: Mortgage brokers, mortgage agents, and mortgage bankers.
Exclusions: Numerous including banks, finance companies, insurance
companies regulated under other state or federal laws, lenders
whose loans are approved under certain federal programs, certain
lawyers and realtors, sellers of real property who offer credit
secured by property sold.
Transfer Notice Requirements: None specified.
Borrower Inquiries: Not specified.
Escrow Requirements:
Restrictions: Payments required to be made into escrow account
shall be in amount reasonably necessary to pay obligations as
they become due.
Recordkeeping and notice: Account to the debtor upon reasonable
notice for any funds paid into escrow account. Conduct
annual account review and, within thirty days after completion
of review, notify borrower of the amount by which the contributions
exceed the amount reasonably necessary to pay annual obligations. Within twenty days borrower may specify the disposition of the excess funds. If borrower does not specify, excess
shall remain in escrow account.
Handling of funds: Escrow funds must be kept in FDIC-insured
account, separate from lender’s own funds. Taxes and insurance
must be paid in timely fashion to avoid insurance being canceled
or taxes becoming delinquent. If deficiency exists, may request
additional funds from borrower.
Interest: Not specified.
Additional Requirements: License (§ 645A.210), surety bond
(§ 645A.041).
Private Remedies: None specified. See § 645B.0145.
State Remedies: Violation is a misdemeanor (if more than $1000
involved, it is a Class D felony).
Special Servicing Requirements for High-Cost Loans: None.

Lenders had eaten up bailout money

I seen an interesting article in today’s NY Times about lenders having good time with the bailout money which they were supposed to pass out to depressed homeowners. Here, is the link to the article.

http://www.nytimes.com/2009/01/18/business/18bank.html?_r=1&hp

Your Financial Disaster Plan:

I seen a very interesting article in New York Times. Here, is the link to this very interesting and relevant article.
http://www.nytimes.com/2009/01/17/your-money/17money.html

Nevada Foreclosure Procedure (Part three)

Nevada Foreclosure Procedure

How to Avoid Foreclosure? (Part One)

By Malik W. Ahmad,

Attorney & Counselor at Law

NOTE: This article is three part series on foreclosure and related issues, and only meant for education purposes. There is no legal advice given, or any kind of attorney client relations are created. Readers, if they still have question, should contact a licensed attorneys. However, smaller question of general education nature can be answered by Attorney Malik Ahmad via his Loan Modification blog. Thanks.

I think it is good time that I discuss here about deficiency judgment. I have been getting lots of calls lately about deficiency judgment.

 

Deficiency Judgment—–Where will the Money come From?

Let us say the foreclosure brings lesser money than the appraised value of the home which the borrower had borrowed from the lender, would a foreclosure absolve that deficiency? Of course, not. The borrower still owes that surplus money to the lender, and it is looming on his head like a sword of Damocles. The beneficiary is entitled to bring an action for a deficiency within six (6) months after the foreclosure in the case of a single parcel lien or six months after the last, but not more than two (2) years after the first, sale in the case of multiple parcel collateral. NRS 40.455.

                The court would not permit an award of a deficiency judgment, exclusive of interest after the date of such sale, in an amount exceeding the difference between the amount for which the property was actually sold at the trustee’s sale. The amount of indebtedness is called the deficiency and a judgment from a court can be sought for this amount. The court is also not permitted to render a deficiency judgment for more than the amount by which the amount of indebtedness which was secured by the deed of trust at the time of the trustee’s sale exceeded the fair market value of the property at the time of such sale as determined by an appraisal hearing, with interests  from the date of the sale.  (NRs 4-.459.

                What is an automatic stay under the Bankruptcy?

                Though this topic requires a full discussion at its own merits, I would briefly touch it here. The automatic stay under 11 USC Section 363 applies to property of the bankruptcy estate. Property of the estate is defined broadly as all legal or equitable interests of the debtor in property as of the commencement of the case. (11 U.S.C. Section 541)

                The automatic stay under 11 USC Section 362 is designed to give the bankruptcy court an opportunity to harmonize the interests of both debtor and creditor while preserving the debtor’s assets for repayment and reorganization of his or her obligations. The automatic stay is one of the fundamental debtor protection provided under the bankruptcy law. It definitely gives the debtor a space for sustenance from creditors for sometime. It gives him time to reorganization or for a repayment plan. This automatic stay is not permanent. Filing of a bankruptcy petition operates as stay of any act by a creditor to create, perfect, or enforce any lien against property of the debtor. Action taken in violation of the stay are null and void. The automatic stay is an injunction issuing from the authority of the bankruptcy and there are sanctions for violating the stay like contempt of court

What is predatory Lending?

Predatory Lending

Predatory lending occurs when a mortgage loan with unwarranted high interest rates and fees is set up to primarily benefit the lender or broker. The loan is not made in the best interest of the borrower, often locks the borrower into unfair terms, and tends to cause severe financial hardship or default. To determine if a loan is predatory in nature, ask yourself these questions:

• Does your past credit history justify the high rate and fees charged?
• Is the loan being made on the basis of your ability to repay the loan and not solely on the value of the property?
• Have the loan’s terms been fairly represented and explained to you?
• Does the type of loan and the loan services provided meet your need and interests?

If you answered “NO” to any of these questions, there is a possibility the loan is predatory in nature. In order to avoid falling prey to these abusive practices, you must be a smart and informed shopper.

What is Predatory Lending?

In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

• Use false appraisals to sell properties for much more than they are worth.
• Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
• Knowingly lend more money than a borrower can afford to repay.
• Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
• Charge fees for unnecessary or nonexistent products and services.
• Pressure borrowers to accept higher-risk loans such as balloon loans, interest-only payments, and steep pre-payment penalties.
• Target vulnerable borrowers to cash-out refinance offers when they know borrowers are in need of cash due to medical, unemployment, or debt problems.
• “Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
• Use high-pressure sales tactics to sell home improvements and then finance them at high interest rates.

What Tactics Do Predators Use?

• A lender or investor tells you that he or she is your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
• The house you are buying costs a lot more than other homes in the neighborhood but isn’t any bigger or better.
• You are asked to sign a sales contract or loan documents that are blank or that contain information that is not true.
• You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud. It does not.
• The cost or loan terms at closing are not what you agreed to.
• You are told that refinancing can solve your credit or money problems.
• You are told that the only way you can obtain a good deal on a home improvement loan is if you finance or refinance with a particular lender.

Tips to Avoid Predatory Lending

• Only deal with licensed mortgage lenders, mortgage brokers and loan officers operating under and subject to federal and/or state regulators. Read and get copies of everything you sign in connection with your mortgage.
• Beware of “bait & switch” tactics where the lender or broker makes an offer with one set of terms and then pressures you to sign a loan with more expensive rates and hidden costs.
• DO NOT sign blank forms. Forms should be completely filled out with no blank boxes or spaces.
• Make sure your monthly payments are affordable, and that you are NOT comparing apples with oranges when looking at the old vs. the new payment. Be sure that if the escrow of taxes and insurance has been part of your old payment, it is included in your new payment when comparing price savings.
• Make sure the rate and terms quoted by your lender and/or broker are given to you in writing and do not vary significantly from those presented at closing.
• DO NOT shop based solely on lower monthly payments. Payments may be lower if the loan has a balloon payment or a variable rate. Unless you expect falling mortgage rates, a higher income, or a better credit rating in the future, these loans eventually cost you more.
• Beware of door-to-door home improvement offers where the contractor offers to find you the necessary financing to make the improvements.
• DO NOT fall for scams from out-of-state businesses claiming to arrange mortgage loans for an advanced fee or with the advanced purchase of special loan insurance. Sending them a money order to a post office box or mail drop will likely be the last time you see your money.
• Never falsely state or allow others to falsely state your income. You won’t have your dream home very long if you can’t afford to make the payments.
• Borrow only what you need and can afford to pay back. If you need $5,000 to pay for a home improvement, there is usually little sense refinancing your existing mortgage and paying $6,000 in closing fees to arrange the loan.
• Remain current on your present mortgage obligations until closing and disbursement of new loan proceeds. If you are paying other debts off as part of the loan, remain current on them as well. Falling behind on your current debt while waiting to get your new loan will hurt you in the long run.
• Understand that if you consolidate your credit card debt and other consumer debt into your mortgage or home equity line of credit to have one lower overall monthly payment, nonpayment of the loan could cause you to lose your home. Also, any monthly savings will disappear if you accumulate credit card debt again.
• Know your credit rating and qualify for the loan you deserve. There is no reason to pay high rates and fees if you can qualify for better

 

Nevada Foreclosure Procedure (Part One)

Nevada Foreclosure Procedure

How to Avoid Foreclosure? (Part One)

By Malik W. Ahmad,

Attorney & Counselor at Law

NOTE: This article is three part series on foreclosure and related issues, and only meant for education purposes. There is no legal advice given, or any kind of attorney client relations are created. Readers, if they still have question, should contact a licensed attorneys. However, smaller question of general education nature can be answered by Attorney Malik Ahmad via his Loan Modification blog. Thanks.

 

First how to Avoid Foreclosure?

Can Workout be Helpful to You?

A debtor defaults on a loan, the creditor has two options. First, the creditor may elect to consider the loan due and exercise the legal remedies it is vested with. That includes, of course, a right to foreclose.  Secondly, there is much talked about loan modification. While workout is an informal plan, a loan modification depends on various factors like the hardship of the borrower, the changed circumstances of the factors contributing towards the loan. How this debt can be restructured, this is the most essential question in any loan modification. A workout can benefit both the creditors and the debtors. The underlying idea is that the debtor would avoid foreclosure and would catch up on his payments on a regular basis.

The pitfall of loan foreclosure is that the debtor would have trouble in qualifying another loan. There would be derogatory remarks inscribed on his credit report for quite some time. Furthermore, there is looming danger of a deficiency judgment which is the entitlement of the creditor for the unpaid portion of the loan. Again, the IRS is another sword of Damocles hanging on the debtor’s head. IRS considers loan forgiveness as income derived by debtor.

The lenders are more likely to work with debtors to facilitate loan modifications. There are innumerable number of guideline depending who you talk to. Lenders are becoming more agreeable because the onslaught of foreclosure homes is large and unbearable. The lenders do not like to become property managers. That is one benefit the depressed homeowners should think in making any plea for loan modification. Secondly, even if loans are modified, would the borrowers still be paying it regularly? A workout program also teaches the wild borrower who never learnt any rules of financial management, a sense of some discipline which he can apply on many facets of his life. A creditor must obtain written consent from all guarantors before a final agreement can be reached, otherwise, any affected guarantor will be relieved from obligation under the new agreement. See Southwest Sec. v. Amfac, Inc., 110 Nev. 1036, 1039, 879 P.2d 755, 757, citing Marion Properties, Ltd. V. Goff, 108 Nev. 946, 948, 840 P.2d 1230, 1231 (1992). 8. Workout Options: There are several options available to allow the debtor to remain in possession of its property and minimize the impact on their credit report. Those options include; reinstatement, forbearance, loan modification or future advance.  Below, we would like to discuss few of them:

Reinstatement: It allows the borrower to bring a delinquent loan current within a time agreed upon by making set payments toward the delinquent amount in addition the scheduled monthly payments on the loan.

Forbearance Agreement: The debtor makes a promise to pay and get caught up on his delinquency by an agreed date. This includes a repayment plan. It all depends on borrower financial viability and future earning potential.

Loan Modification: This is the alteration of the terms of the loan. Here, more than few elements of the original loans are changed ranging from interest rate, to terms of the loan, including a reduction in principal depending on the new appraised value.

Refinancing: It allows the debtor to borrow additional funds from either the same lender or a new one. The new loan may be obtained to pay off the either the whole balances of the previous loan, or simply the balance of the loan.

Short Sale: It is sale which does not bring the full value of the property but still acceptable to your lender.

Deed in Lieu of Foreclosure: You can surrender the deed, if your lenders accept it. The problem is that the lender may not accept it if there are junior liens attached to it. Furthermore, it may cause complications, if you are contemplating any future bankruptcy. By accepting the deed, the lender releases the debtor from all personal liability on the loan.

Loan Assumption: Your loan can be assumed by an equally qualified borrower.

When the Foreclosure is the Only Choice?

1. You must determine who the debtor is? If a foreclosing agency does not recognize clearly the debtor, they are in great problem. 

2. See if your creditor had determined the status of the loan, which includes all the surrounding factors around your loan.

3. Analyze realistically the reasons surrounding the foreclosure. Under what conditions, you would be paying the continuous payment.

4. Does the problem lies with the debtor?

5. Does the problem lies with the state of the economy?

6. The value of the property should be reasonably appraised. If the debt is greater than the market value, would it be worthwhile for the debtor to stay. He/she is not simply taking advantage of the whole situation. What was the last time he paid on his mortgage payment? Was there an irregular pattern before? Answers to debtors’ good credit history, sufficient equity in collateral, future income potential and other sound financial yardsticks can be important factors here.

7. Whether a bankruptcy is an Option? A bankruptcy petition is vested with an automatic stay of all judicial non-judicial foreclosures. A bankruptcy discharge will void any pre-petition stay of 11 U.S.C. Section 362 and will operate as an injunction against the commencement or continuation of any action concerning the debtor’s personal pre-petition liability on the loan. A bankruptcy can be filed anytime before a foreclosure sale.

Note: My next article which is Part Two, concentrates on Real Property Foreclosure Procedures in the State of Nevada. (Malik Ahmad)

What is Foreclosure Rescue Scam?

What’s a Foreclosure “Rescue” Scam?

These scams revolve around heavily-promoted deals supposedly designed to save the homes of people facing foreclosure, those who’ve fallen behind on their mortgage payments. But with frightening regularity this “help” from a “rescuer” either drains off the property’s built-up

equity or leaves the “rescuer” owning the house outright – and the family evicted from their home.

 

Phantom Help:

The predominant foreclosure “rescue” scams appear to come in three varieties. The first might be called “phantom help,” where the “rescuer” charges outrageous fees either for light-duty phone calls and paperwork the homeowner could have easily performed, or on a promise of more robust representation that never materializes. In either event the homeowner is usually left without enough assistance to actually save the home but with little or no time left to prevent this grievous loss by the time s/he realizes it. The “rescuer” essentially abandons the homeowner to a fate that might well have been prevented with better intervention.

 

Bailout Scam:

This scenario includes various schemes under which the homeowner surrenders title to the house in the belief that s/he is entering a deal where s/he’ll be able to remain as a renter, and buy it back over the next few years.

 

Homeowners are sometimes told that surrendering title is necessary so that someone with a better credit rating can secure new financing to prevent the loss of the home. But the terms of these deals are almost invariably so onerous that the buyback becomes impossible, the homeowner permanently loses possession, and the “rescuers” walk off with all or most of the home’s equity.

 

Bait-and-Switch:

The third variety is a bait-and-switch where the homeowner does not realize s/he is surrendering ownership of the house in exchange for a “rescue.” Many homeowners later insist that they believed they were only signing documents for a new loan to make the mortgage current.

It’s important to note here that a substantial number of these cases involve fraud and forgeries of deeds. Worse, in many cases the original homeowner is left holding the original mortgage on the home s/he no longer owns!

 

-         The “rescuer” identifies distressed homeowners through public foreclosure notices in newspapers or at government offices. These records are more readily accessible than in the past because they’re computerized and because more private firms now compile and sell the lists. The homeowner has not been foreclosed on yet, but is merely threatened with foreclosure after falling behind on mortgage payments.

 

-         The “rescuer” then contacts the homeowner by phone, personal visit, card or flyer

left at the door (see examples of these solicitations in  Appendix A), or advertising.

Initial contact typically revolves around a simple message such as “Stop foreclosure with just one phone call,” “I’d like to $ buy $ your house,” “You have options,” or

“Do you need instant debt relief and CASH?” This contact also frequently contains a “time is of the essence” theme, adding a note of urgency to what is already a stressful and possibly desperate situation.

-         Initial meetings stress the promise of a “fresh start” – likely what a frightened homeowner most wants to hear – and often feature written or recorded

“testimonials” from other homeowners the “rescue” scammer has supposedly saved.

While it is true that these programs “work” for some, what’s glossed over is that even that help often comes at a very steep price.

-         Homeowners are also frequently instructed to cease all contact with lawyers or the mortgage lender and let the “rescuer” handle all negotiations.3 This doubly-devious tactic simultaneously cuts off access to possible re-financing options while running out the clock on ways to prevent the foreclosure.

-         Once it’s too late to save the home the property is either taken by the “rescuer” or, having been drained of substantial equity through the “rescuer’s” imposition of heavy fees and other charges, simply lost to foreclosure.

-         After things fall apart many homeowners suffer the added stress and indignity of being evicted by their “rescuer” from the home they once owned.

-          Separately but also quite worrisome, this scam appears to have spawned a side industry

of scam artists who teach others how to drain equity from homes facing foreclosure.

 

These scam teachers often advertise their seminars under the rubric of buying real estate with no money down, cashing in on the so-called pre-foreclosure market, helping those in distress or some such. (parts of this article were taken from a Foreclosure article written in Consumer Law.Org)

How Our Law Office Can Help Stop Foreclosure?

How Attorney at Law

Malik Ahmad

Can Help You?

Keep Your Home

www.Fastbankrutpcynevada.com

 

We Prepare litigation that raises several arguments which include:      1. Statutory defenses where appropriate, pertaining to the Notice of Default and Intent to foreclose, were they proper.      2. We can attack the foreclosing parties as incorrect parties.           3. Raising an argument where appropriate of Predatory Lending.      4. Requesting to have your Note and Trust Deed reformed to the actual  current value of your home.      5. We also make an argument that if your property has been sold at auction the sale should be set aside and you should be reinstated on title.      6. We also prepare for your filing a Notice of Pendency of Action which when recorded with the County Recorder’s office will cloud the title thereby preventing your property from successfully being transferred during the litigation.

Mortgage Help Not Working

AP
Mortgage aid falls short, Bush admin official says
Wednesday November 19, 5:17 pm ET
By Alan Zibel, AP Real Estate Writer

Federal government changing mortgage assistance programs after efforts fall short

 WASHINGTON (AP) — Two government programs designed to help hundreds of thousands of delinquent borrowers avoid foreclosure are having negligible effects, a top Bush administration official acknowledged Wednesday. One program will be revamped immediately, and the other possibly in the near future.Steve Preston, secretary of Housing and Urban Development, said both private industry and government efforts have fallen short as the foreclosure crisis has exceeded all but the most dire forecasts.

“The response has not kept up with the need,” Preston said in a speech the National Press Club. “Many Americans who should be getting help are not getting help.”

The “FHASecure” program announced in August 2007 has only assisted about 4,000 delinquent borrowers and “has really not met the need,” Preston said.

The other, called “Hope for Homeowners,” has received just 111 applications from distressed homeowners since it was launched Oct. 1. “Few lenders have actually signed up, and few borrowers are submitting applications,” Preston said. “So clearly we needed to make meaningful changes.”

The HUD chief outlined changes intended to encourage more participation in the Hope for Homeowners program, which refinances cash-strapped borrowers into new government-backed mortgages.

He also said that housing officials are reviewing whether additional changes to FHASecure might help that program gain traction.

Last week, hundreds of lenders gave HUD officials an earful of criticism about the Hope for Homeowners program. They blamed drawbacks in the program’s original design for their lack of participation. Among their complaints: lenders were required to absorb large losses on the delinquent loans.

Under the new rules, lenders would be allowed to take a smaller loss. New loans can be made for 96.5 percent of the home’s current value, rather than the previous level of 90 percent.

Even with the changes, borrowers would still have to pay back half of any appreciation back to the government if they sell their house or refinance.

The new guidelines only apply to borrowers who are spending up to 31 percent of their pretax income on their home loans. Borrowers who are spending a larger share of their incomes are required to have at least 10 percent in home equity.

Preston also said that lenders who hold home equity loans or other second mortgages must not block the transaction, but will receive an small payment and a share of any eventual appreciation in return for doing so.

In addition, lenders will be allowed to create new 40-year mortgages, rather than the traditional 30-year term, which will lower the borrowers’ monthly payments but cost them more in interest over the life of the loan.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, called the changes “very helpful steps and reflect a commitment to meeting the need for more aggressive action to diminish foreclosures.”

However, consumer advocate John Taylor of the National Community Reinvestment Coalition said the changes “offer sweeteners for the lender and nothing for the homeowner.”

Preston did not release updated projections of how many homeowners are expected to participate, but officials hope the new guidelines will help the program reach its original estimate of helping 400,000 distressed borrowers over the next three years.

Why a Licensed Attorney is Better for Loan Modification?

Why Licensed attorneys are better for Loan Modification?

Malik Ahamd, Attorney at Law

 

Loan modification should only be handled by a local attorney. It should not be considered handling by some former loan officers, real estate agents and especially from folk from California. Truthfully, most of the foreclosure, ARMS interest mess has been created from and originated from California. I still get innumerable phone call, and solicitations in mail from California.  Every day some new scammer is born who is trying to eat up the distressed home owners once more.

 

Non Attorneys Cannot Practice Laws. State Bar of Nevada is very strict in enforcing non attorneys practicing laws. Most of the foreclosures are the result of some predatory lending practices, including a violation of RESP and TILA laws and only a licensed attorney qualified in this regard can help and render legal services.

 

A  loan modification is not guaranteed in every case and that is true with licensed attorneys as well. But once attorneys are involved, the things get accelerated, phone calls are answered, and letters are acknowledged.  Again, an attorney who is well versed can better advice if a filing of Chapter 7 or Chapter 13 is better suited to help the distressed homeowners.

 

Sometime a short sale, or a loan workout program or a forebearance is appropriate in different circumstances. An attorney in this field has a wealth of knowledge and can appropriately guide his clients.

Others may be better off discussing short sales.

 

There are legal defenses to a foreclosure sale.

Yes, there are legal defenses to a foreclosure sale and they include a proper history of all of your loan payments, PMI which stopped your proper rendition of loan payments and created an extra burden on borrowers. There are severe violations mentioned in RESPA and TILA, and your out of state or even in state former loan officers or real estate people cannot answer those questions. I am contacted everyday by these folks and they request me to take over. It is sometime difficult to rectify their fatal mistakes.

 

I am getting more and more calls from homeowners who hired companies in California and then found themselves stranded after they paid a fee and cannot get anyone on the phone. It seems that there is rampant unlicensed practice of law going on now in the loan modification area in Nevada and California. Practicing law in Nevada is a violation of the rules of State Bar of Nevada, and the Bar association pursues these cases very diligently, but they can’t do much to stop the harm already done to the borrowers and homeowners.