Good News For Nevada HomeOwners: New Legislation

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)

What Additional 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 a mediation for loan modification.

Who can provide a 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.

What 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 8. 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. 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 owneroccupied 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.