Assembly Bill 284 took effect Oct. 1, making it a felony if a mortgage servicer or trustee made false representations concerning a title. There also will be a $5,000 fine assessed if fraud, such as robo-signing, is detected. The new law requires servicers to provide a new affidavit that provides the amount due on the mortgage, who is in possession of the note and who has the authority to foreclose.
Cathe Cole, vice president of default for Trustee Corps., a designated foreclosure counsel in Nevada for Freddie Mac, and representatives from the law firm Malcolm & Cisneros sat down with the Nevada Attorney General office to voice industry concerns.
"There was a model affidavit provided by attorney general," Cole said. "There was a senior deputy AG there and they were very adamant that there was never an intention for Nevada to be a judicial foreclosure state."
Cole said as long as servicers and trustees show a clear chain of title through to the name of the entity servicers are foreclosing in the name of, there would be nothing to fear. The AG office stressed to her what they are attempting to do is shut down unfair business practices, such as robo-signing, that surfaced last year and they're afraid are still going on.
"They stressed they were not on a witch hunt," Cole said. "They just want to make sure we're doing things correctly. If a homeowner brings a mistake to the court, there's even a 20-day period where we can correct it."
Cases cropped up all over the country during the foreclosure crisis, challenging banks to provide a clear chain of title. Many cases challenged the authority of Mortgage Electronic Registration Systems in foreclosures, a system designed by major lenders and the government-sponsored enterprises to track the chain of title. Cole said the Nevada law was not designed to take on MERS.
"They're intent is not to battle MERS. That's never been their intent. That's for some other court to decide," Cole said. "As long as the assignment chain is in line, that's all they're looking at."
According to RealtyTrac, Nevada has maintained the highest foreclosure rate every month for nearly six years as of August. Home prices in the state have been halved since their peak in 2007, and currently one in every 118 properties is in foreclosure.
Cole said the model affidavit she was provided could be a draft for the one her office is designing for clients. In the end, she said, the industry simply needs to take care of the fundamentals in order to move forward and restore the nonjudicial foreclosure process.
"They talked about mistakes. Never attest to something you don't know. If you're signing an affidavit, make sure you're attesting to what the items are," Cole said. "I'm confident we can move forward with nonjudicial foreclosures. Some are just waiting for what the uniform affidavits are."
Write to Jon Prior.
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