Nevada enters the housing law business as state number 7 enacting a foreclosure mediation program. Nevada’s law goes into effect on July 1, 2009. The other states with this type of legislation are Pennsylvania, Massachusetts, Michigan, Florida, Connecticut and Colorado.
I don’t know about the other 6 states but here in Nevada the law will be administered by the Nevada Supreme Court. If that isn’t going to the top of the legal food chain I don’t know what is. The unfortunate aspect of the new law is lack of rules. Since the legislation just passed, the NSC has not had time to implement the rules.
This new law leaves out those borrowers who are already in the foreclosure process. They will not be able to request mediation because they went into foreclosure prior to July 1, 2009 unless the lender agrees to let them request mediation. No one however expects lenders to agree to mediation with people already in foreclosure.
As you can imagine, other problems are inherent. For example, the fees to be charged. The lenders will be assessed $200 and the home owners will pay $200. From the lender’s stand point this could be viewed as another tax in a taxing process. From the homeowner’s point of view, paying $200 and not walking away with a favorable decision is a real slap in the face. The only guaranteed winner is the mediator. (S)he is guaranteed to make $400 per mediation client.
Homeowners may not even enter the process because of this fee. Generally speaking, a person in foreclosure is already behind the financial power curve and in a hole. The advice that says when in a hole, stop digging may become the advice du jour for foreclosed homeowners.
The court is still hustling for mediators, clerical people and managers. As one can imagine, legislation passed in June and going into effect on July 1, does not give them a lot of time to hit the ground running. They believe they will meet the deadline but believing is a long way from delivering.
To be eligible for the program a person has to receive a notice of foreclosure after July 1, 2009. The notice has to include information about the mediation program. Not just anyone can mediate. It has to be a court appointed mediator or it doesn’t count.
Both parties are also required to negotiate in good faith towards a possible solution. A loan modification can be one of the outcomes.
The homeowner only has 30 days to request mediation and they still have to be living in their home. Investors are not afforded mediation at all. This means a good many Nevada investors will lose their properties.
Homeowners who have entered bankruptcy or completed a deed-in-lieu-of-foreclosure will also be excluded. Non-native speakers will be required to provide their own translators. Nevada has many non-native speakers so the legislation has covered everyone.
Out of work people, people with no money to pay their mortgage will not be permitted to request mediation. In addition, the lenders are not mandated to modify any loan. They are only mandated to go into mediation in good faith and pay their $200 fee. One might say this is a sneaky way for the state to benefit from someone’s misery. Nevada never misses a trick to enrich their coffers.
The Big Plus
For anyone who has experienced difficulty contacting their lender, servicer or note holder, this new law erased that difficulty. This means those hard nosed SOBs we all have dealt with will have to change their tune. If a lender is a no-show at the mediation hearing, the mediator has the authority to force him to modify the loan. In other words, the homeowner will see more favorable loan terms.
By no means is this law being touted as the magic pill. Truth is, a whole flock of bugs still sit inside the law. However, once this thing actually gets going, it is expected the outcomes will be positive with more people staying in their homes. It might even help the banking industry in Nevada.
No one’s mortgage will go away but the mortgagors will at least have their homes and can continue on with their lives. I don’t know how the other state programs are faring but I want to believe people are being helped. After all, not everybody went out and bought an overpriced home on inflated income/asset statements.
Photo Credit: mrak75