I am very excited to feature a great guest writer on my blog, Robert Noggle of Black and Lobello law firm specializing in residential real estate law. For his full bio, click here. This is his first of many blog post. He is my choice of real estate attorneys in town.
A new Nevada law allowing any homeowner receiving a notice of default from their lender to request mandatory mediation with that lender becomes effective on July 1st. The purpose of the mediation program is to avoid a foreclosure by providing a forum for home owner and lender to negotiate a loan modification including a short sale.
The most important development is that the lender must be represented at the mediation hearing by a representative who has authority to modify the loan or who has telephone access to someone with such authority. The lender's failure to do so may result in the mediator modifying the loan. Proposed court rules for the program allow a lender to participate by telephone if approved by the mediator.
The mediation is nonbinding. The lender retains complete discretion as
to whether to modify the loan and, if so, on what terms. However, a
trustee's sale of the home may not occur until the mediation is
completed. The trustee's sale is the final step in the foreclosure
process. As a general practice the lender makes the winning bid at the
sale and becomes the owner of the home.
The cost of the mediation is $400 divided equally between the homeowner and the lender. According to the proposed rules the maximum period of time allotted to a mediation session is four hours. The homeowner must provide a financial statement together with a Housing Affordability Worksheet. The lender must provide a certified copy or original of the Deed of Trust and promissory note together with a copy of each assignment of the note and deed of trust.
The lender's failure to provide the required documents may result in
sanctions. The lender may also provide an estimate of the short sale
value of the property if the loan cannot be modified.
Under the proposed rules the mediation must take place within 90 days of the filing of the notice of default. By law the foreclosure process can
take no less than 111 days from the filing of the notice of default to
the sale. The mediation program is mandatory at the homeowner's request if the Notice of Default was filed July 1 or thereafter. The parties may stipulate to mediation if the notice of default was recorded prior to July 1.
Final mediation rules will be issued in the near future. However, as a
new program there are many unanswered questions as to how effective the program will be. Whether lenders will participate in good faith to avoid foreclosures is unknown.
Based upon cases from around the country a lender's ability to provide
the necessary documentation including copies of all assignments could be a serious challenge for them. For the homeowner the ability to present a case for a loan modification will depend upon their ability to make their numbers work so as to persuade the lender of their ability to make future modified payments.
Robert B. Noggle may be contacted at (702) 869-8801 or
rnoggle@blacklobellolaw.com. For more information visit
www.blacklobellolaw.com
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