Good News for Nevada Homeowners


Good News For Nevada Homeowners
Passing of AB 149
AN 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 http://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.

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