The Nevada Foreclosure Mediation Program is designed to bring homeowners together with the bank to ensure that homeowners have an opportunity to sit face to face with the bank to try and work out an agreement. Initially, the program was only designed for loan modifications. However, the rules were revised beginning January 1, 2013; they now allow and encourage short sale agreements.
Eligibility and Election
Mediation is only available on owner-occupied homes. It is not available for second homes or rental properties. The program will allow for homes owned in a trust to enter the program so long as the beneficiary of the trust uses the home as their primary residence.
Currently, the program is only available after the bank files a Notice of Default. That notice will be taped to the door and sent multiple times via regular and certified mail. It is not uncommon to receive ten to fifteen copies of the notice.
Once you receive the Notice of Default, you have 30 days to elect mediation. You must submit $200 in certified funds to the program along with the election form. The bank also pays $200.
Once mediation is elected, a mediator will be assigned to schedule a document exchange conference call. The conference call will be between the bank, homeowner/homeowner’s representative, and mediator. The mediation will be scheduled and the bank will submit a list of required documents. Afterward, the homeowner has 15 days to submit documents to the bank for review. There are additional timelines that the bank is required to follow regarding requests for additional documents up to and until mediation.
An attorney for the bank will attend mediation and most often the bank representative will appear by phone. The bank is supposed to have reviewed the file and have a proposal for a modification, short sale or other options. The mediation is often used as a time to clarify questions about financials or other issues the bank may have. The bank is required to bring certain documents to prove they have the authority to foreclose on the home. Failure to bring these documents will stop them from being able to foreclose and they will be required to start over with a new Notice of Default. If an agreement can be reached, the mediator will put the details on the “Mediator Statement”. If no agreement can be reached and the bank brought all of the documents the mediator indicates “no agreement” and the bank can continue with the foreclosure process if they participated in good faith.
If either party disagrees with what happened at mediation they may file a petition for judicial review with the court within 30 days of the mediator’s decision. That appeal will be in front of a judge who will then make a determination as to whether everyone complied with the mediation rules. It is very difficult for a homeowner to win a petition for judicial review. Courts in Nevada generally rule for the bank unless there are severe violations of the rules.
A petition for judicial review may be appealed to the Supreme Court of Nevada.
If you have received a Notice of Default or have further questions about the mediation process, call Cogburn Law Offices today. We can help.
Previously in Part I, which you can access in our blog stream, I explained the eligibility and process for the Nevada Foreclosure Mediation Program. I will now elaborate and discuss the recent developments and trends that I have seen during the mediation process.
January 1, 2013, we saw the rules for foreclosure mediation change drastically in the hope to improve the success of the program. The main changes for the program involve a significant exchange of documents prior to getting to mediation. The hope was to have the lender review all financials so that a resolution can be achieved by the time mediation occurs. In reality, however, there are still far too few agreements reached during the mediation itself.
Overall, lenders are much more prepared than they were previously. It is still the exception, not the rule, that an agreement is reached during mediation.
What is the point of mediation if an agreement can’t be reached?
While an agreement may not be reached at the mediation itself, I have found that in the vast majority of mediations, the lender only requires a clarification of a few items in order to offer a modification or approve a short sale. This is a huge improvement from the program offered last year where, essentially, the lender had not reviewed the file prior to mediation. So, though an agreement may not be forthcoming at the time of mediation, frequently, the last remaining issues can be hashed out during mediation; revised documents can be submitted quickly; a decision can be made within 15-30 days.
Also, the benefit of mediation is that under the new rules, the lender is required to follow a set of deadlines. If they miss any of those deadlines, you have a solid argument that they did not participate in good faith; subsequently, they should not be able to foreclose.
Lenders still have to provide documents at mediation. On occasion, their documentation is not in order. That alone will prevent the lender from foreclosing on the property; it is reason enough to pay the mediation fee of $200 to the state and work out an agreement through the program.
It would be nice to say that the program is working exactly as planned, but that is not the case. It is still a huge benefit for homeowners to be able to elect mediation. Homeowners can sit down with their lender in order to come to an agreement, even if that agreement may occur several weeks after mediation.
If you receive a Notice of Default on your home and it is your primary residence, you should always elect mediation in order to protect yourself from foreclosure. Also, it makes the negotiation process with the lender much more smooth.
If you have received a Notice of Default or have further questions about the mediation process, call Cogburn Law today. We can help.