On October 1, 2013, Nevada’s Senate Bill 321, or what is commonly referred to as the Homeowner’s Bill of Rights (HBR), went into effect. The HBR applies only to owner-occupied homes, and adds the following steps to the foreclosure process:
- No less than 30 days after a homeowner defaults, but at least 30 days before a lender either (a) files a “notice of default and election to sell” or (b) begins a judicial foreclosure, notice of the homeowners rights must be given in writing by the lender.
- The notice of the homeowner’s rights must include information about the borrower’s account, including its status, foreclosure prevention alternatives offered by the lender, and a statement of facts describing the lender’s right to foreclose.
- Lenders must first try to contact borrowers before they begin the foreclosure process and provide the borrower with a single point of contact.
- Lenders are prohibited from the practice known as “dual-tracking”, which prohibits a mortgage servicer, trustee, mortgagee, or beneficiary of a deed of trust from continuing or pursuing the foreclosure process, once an application for a foreclosure alternative is pending, such as a short sale or loan modification.
- For lenders who elect to pursue a judicial foreclosure, the borrower may elect to participate in Nevada’s foreclosure mediation program.
It is too soon to know whether this new statute will help or hurt Nevada’s real estate market. What is certain is that pursuant to the recent national settlement among the five largest mortgage servicers in the United States, nearly 60% of all owner occupied homes in Nevada are currently receiving the treatment required by the HBR. Importantly, the Homeowner’s Bill of Rights does not apply to any lender, regulator, or mortgage servicer which foreclosed on 100 or fewer owner-occupied homes in Nevada. While this new statute does seek to give some certainty to homeowners seeking foreclosure alternatives, borrowers and lawyers should make certain the statute applies to their loan prior to seeking its enforcement.
Finally, the purpose and intent of the HBR is positive. While the short-term effects of the new statute may slow down Nevada’s housing recovery, to the extent it gives owner occupied borrowers a clear path to foreclosure alternatives, the statute should help level the playing field. If the playing field becomes level, housing stability should follow right behind.
About the Author
Sam Schwartz is an attorney at law and a real estate broker. Prior to starting his own firm, Mr. Schwartz practiced commercial bankruptcy law, representing debtors and creditors on a broad range of business reorganization and restructuring matters involving a variety of industries.
Specifically, Mr. Schwartz represented numerous clients in chapter 11-related matters and now represents both consumers and businesses in all forms of restructuring, bankruptcy and workouts. In addition to handling all aspects of bankruptcy and restructuring workouts, Mr. Schwartz worked on corporate matters, specifically acquisitions, mergers, and general corporate representation. Mr. Schwartz also handles all aspects of real estate short sales and has helped manage the sale of under-water properties in the states of Nevada, California, Arizona, Florida and Illinois.
Schwartz Law Firm, www.schwartzlawyers.com