The Nevada Homeowner Bill of Rights (NHBR) is a law enacted to protect Nevada homeowners from illegal foreclosure practices. The NHBR ensures that the default process is fair, honest, and transparent to the homeowner, and it was established in response to the foreclosure scandal of 2010. The law took effect in October 2013.
Key aspects of the NHBR include:
- A rigorous process that mortgage holders must follow before they can foreclose on a homeowner.
- A requirement for the mortgage holder to provide certain documents to the homeowner, such as:
- A statement for service members;
- A summary of the homeowner’s account;
- Contact information to inquire about a statement of facts establishing the right to foreclose;
- A statement of foreclosure prevention alternatives offered by the mortgage holder;
- A statement indicating that the homeowner may request a copy of the mortgage;
- The homeowner’s payment history; and
- Instructions about loan modification.
- A prohibition on the practice known as “dual tracking,” where the lender simultaneously offers a loan modification to a homeowner in debt while also moving forward with foreclosure. Under the NHBR, once a borrower submits a loan modification application, the lender must choose to either modify the loan or foreclose the property but cannot do both.
- A requirement for the lender is to provide a “contact person” (or team) that the homeowner can communicate with. This contact person should be familiar with the facts of the case and keep the homeowner updated about the status of their application for a loan modification.
The NHBR only applies to residential and homeowner-occupied properties. If the homeowner has surrendered the property to the lender or has filed for bankruptcy, the homeowner is not protected by the NHBR.
As for how the NHBR compares with the general Bill of Rights, they serve different purposes and protect different rights. The Bill of Rights, as part of the United States Constitution, outlines fundamental civil liberties, such as freedom of speech, religion, and the right to a fair trial. On the other hand, the NHBR is specific to Nevada and focuses on protecting homeowners’ rights in the context of foreclosure.
In other words, the NHBR is a state-specific law that adds specific protections for homeowners on top of the basic rights guaranteed by the U.S. Constitution.
What Due Process Does a Homeowner Have Under the NHBR?
Due process, a constitutional principle, is a guarantee of fair treatment through the normal judicial system, particularly as a citizen’s entitlement to notice and a hearing when legal rights are involved. This concept is encapsulated in the 5th and 14th Amendments to the United States Constitution, which state that no person shall be “deprived of life, liberty, or property, without due process of law.”
In the context of foreclosure, due process refers to the legal steps and rights that must be followed and respected by both the mortgage holder and the homeowner.
Under the Nevada Homeowner Bill of Rights, homeowners have several protections related to due process.
Notification of Default
The mortgage holder must notify the homeowner that they are in default and that foreclosure is a possibility. The mortgage holder is required to send the homeowner a first-class letter outlining the situation or call the homeowner directly. The homeowner cannot be charged any fees for foreclosure prevention.
The mortgage holder is required to provide a contact person or team who is familiar with the homeowner’s case and can keep them updated about the status of their loan modification application.
Loan Modification Process
The homeowner must be instructed about applying for a loan modification. If the homeowner sends the mortgage holder an application for a loan modification, the mortgage holder is forbidden from taking any foreclosure action.
The mortgage holder has 30 days to decide whether to accept or reject the homeowner’s request. If the request is denied, the decision must be reviewed, and the homeowner has the right to appeal the decision. The mortgage holder must wait 30 days after rejecting an application for a loan modification before beginning foreclosure.
If the mortgage holder decides to proceed with foreclosure, they must provide evidence of their legal standing to foreclose the property. A public notice of default must be recorded before foreclosure, and a notice of sale must be posted within nine months of posting the notice of default.
If these steps are not taken, the homeowner can seek injunctive relief, or the case can be dismissed if the foreclosure is a judicial foreclosure and the mortgage holder fails to post a notice of sale within the time limit or conduct the foreclosure sale within 90 days.
In the event of default or a loan modification request, the NHBR provides clear guidelines to ensure fair and transparent proceedings. It prohibits the practice of dual tracking (offering a loan modification while simultaneously foreclosing), requiring the mortgage holder to choose between modifying the loan or foreclosing the property once a borrower submits a loan modification application.
Therefore, the NHBR enhances the due process rights of homeowners, providing them with protections against predatory and unfair practices and ensuring they have the opportunity to rectify their financial situations before foreclosure proceedings commence.
What Documents Does the Mortgage Holder Have to Give to the Homeowner?
The mortgage holder must notify the homeowner if they are in default and that foreclosure is a possibility. This can be via a first-class letter or a phone call. The homeowner should not be charged any processing, application, or servicing fees for foreclosure prevention.
The mortgage holder is required to provide a “contact person” who is familiar with the homeowner’s case and who can keep the homeowner updated about the status of their application for a loan modification.
After the mortgage holder has received a loan modification application from the homeowner, they are not allowed to take any foreclosure action. The mortgage holder then has 30 days to decide whether to accept or reject the homeowner’s request.
If the mortgage holder denies the request for a loan modification, they must inform the homeowner of potential alternatives to foreclosure, like the Nevada Foreclosure Mediation Program. They must also wait 30 days before starting foreclosure proceedings.
Dual tracking, which is the practice of offering a loan modification while simultaneously foreclosing the property, is illegal under the NHBR.
The mortgage holder must provide several documents to the homeowner, including:
- A summary of the homeowner’s account;
- Contact information for inquiries about the loan;
- A statement of facts establishing the right to foreclose;
- A statement of foreclosure prevention alternatives; and
- A statement indicating that the homeowner can request a copy of their mortgage, among others.
Once foreclosure has started, the mortgage holder must prove through documentation that they have the legal standing to foreclose the property. They must also record a public notice of default before foreclosure and post a notice of sale within nine months of posting the notice of default.
The NHBR allows homeowners to seek injunctive relief if there has been a violation of the law. If the foreclosure is a judicial foreclosure, the case can be dismissed if the mortgage holder fails to post a notice of sale within the time limit or if the foreclosure sale is not conducted within 90 days.
What Is Dual Tracking?
Dual tracking is a term used in the context of mortgage lending and foreclosure proceedings. It refers to the practice where a mortgage servicer continues the foreclosure process while simultaneously working with the homeowner on a potential loan modification or other loss mitigation options.
In essence, the lender or servicer is pursuing two tracks at the same time: they are proceeding with foreclosure (which is the route to repossession and sale of the property to repay the debt) while also engaging with the borrower to potentially modify the loan or agree on another resolution that would allow the borrower to avoid foreclosure.
Here’s an example to illustrate the concept:
Imagine you are a homeowner, and unfortunately, you’ve fallen behind on your mortgage payments due to some financial hardships. You reach out to your lender to discuss options and apply for a loan modification in hopes of lowering your monthly payments and staying in your home.
The lender agrees to review your application. However, while they are reviewing your application, they are also moving forward with the foreclosure process. They have initiated legal proceedings to sell your home at an auction. This is an example of dual tracking. Even as they consider your application for assistance, they are also pursuing the foreclosure.
What Does the Law Mean by a “Contact Person”?
A “contact person” within the context of legislation like the NHRB typically refers to a designated individual that a borrower can communicate with at their mortgage servicer. This person (or sometimes a team of people) is responsible for keeping the borrower informed about the status of their mortgage, answering any questions the borrower may have, and guiding them through processes like loan modification or foreclosure.
This is done to ensure that homeowners can effectively communicate their concerns and receive the necessary information and assistance throughout their loan repayment period.
Should I Consult a Mortgage Lawyer?
Mortgage laws can be intricate. A lawyer experienced in this area can help you understand your rights, explore your options, and advocate for your interests.
If you’re located in Nevada, LegalMatch is a good resource to help you find a suitable attorney. It’s a secure online service that allows you to quickly find a pre-screened lawyer in your area. You can present your case, and interested Nevada mortgage lawyers will offer their service to you, giving you the opportunity to choose the one that best fits your needs.
Don’t let confusion or uncertainty about mortgage law create unnecessary stress or lead to undesirable outcomes. Get the professional guidance you need. Consult a Nevada mortgage lawyer through LegalMatch today.