Although many states are starting to recover from the foreclosure crisis, some states such as Nevada are struggling to catch up and thousands of homeowners are at risk of losing their home. In fact, Nevada still has the second highest foreclosure rate in the nation, only behind Florida.
When it comes to avoiding foreclosure, homeowners don’t always have a fair opportunity to work with their servicer to lower monthly payments and avoid this devastating event. More often than not, servicers will continue with the foreclosure process even if the homeowner is actively working to avoid foreclosure – whether it be through a loan modification, short sale or deed in lieu.
Several laws have came into effect over the last year to help homeowners stave off foreclosure and have a fair chance to save their home. In January, the California Homeowner Bill of Rights became law to help provide fair lending and foreclosure prevention practices for Californians. We’ve noticed here in our forums that many California homeowners have greatly benefited from this new law and have a much better chance fighting foreclosure.
Due to this and several other similar state initiatives, Nevada Governor Brian Sandoval approved a similar bill, Senate Bill 321 – Nevada Homeowner Bill of Rights.
If you’re struggling to avoid foreclosure and don’t know where to start, check out Nevada’s Hardest Hit Fund and determine which program(s) may apply to you. And if you’re already being threatened with foreclosure notices, you might find relief through Nevada’s foreclosure mediation program. However, the key topic of this article will focus on Nevada’s Homeowner Bill of Rights – know your rights Nevadans!
Notice to Delinquent Homeowners
SB 321 (Section 10) At least 30 days before initiating the non-judicial foreclosure process and filing a Notice of Default – or beginning the judicial (in court) foreclosure process, the mortgage servicer is now required to send the homeowner a notice containing:
– specific information about the account – including the amount needed to satisfy the arrears, outstanding principal balance and contact information for the servicer
– information about loss mitigation (foreclosure prevention) options – including loan modifications, repayment plans, short sale, etc
– contact information for (at least one) non-profit housing counseling agency
– statement of the facts supporting the right of the lender to proceed with foreclosure.
If the servicer is unable to reach the borrower by phone or mail and has met the requirements above, they can legally move forward with foreclosure proceedings.
Stop Dual Tracking
Once a homeowner has submitted a loss mitigation application, the servicer must acknowledge the application no later than five business days after receipt. Upon receiving a “complete” application, the servicer has 30 days to either deny or approve the foreclosure prevention alternative. If the borrower has been denied for assistance in the past and the borrower’s situation is unchanged, the servicer is not required by law to re-review the application.
In addition to acknowledging the application in a timely matter, the servicer is prohibited from “dual tracking” a loan under review. Dual tracking has led to thousands (if not millions) of unnecessary foreclosures because servicers have continuously refused to stop foreclosure proceedings while a loss mitigation application is pending. Under SB 321, servicers are now required to either approve or deny an application prior to initiating the foreclosure process. If denied, homeowners also have an additional 30 days to appeal the denial before the servicer can move forward with foreclosure.
Establish a Single Point of Contact
Since 2008, homeowners have had to explain their situation repeatedly to various representatives, often in different departments/locations. This lack of organization and waste of precious time has also contributed to many unnecessary foreclosures in Nevada, and nationwide.
Under SB 321, the mortgage servicer is required to provide each homeowner a single point of contact whose job is to:
– communicate with the homeowner regularly while a loss mitigation application is pending review
– acknowledge the receipt of documentation related to the application
– ensure the homeowner is aware of all options available as well as contacting the appropriate party to stop foreclosure proceedings.
The Nevada Homeowner Bill of Rights applies to residential and owner-occupied properties that have not been “surrendered.” Small mortgage lenders and credit unions (which have foreclosed on less than 100 owner-occupied homes in the annual reporting period) are exempt from the law.