This month a new law went into effect affecting banks and the short sale or foreclosure process. The law is called the Nevada Homeowner Bill of Rights. The good news for homeowners is that it prevents the lender from continuing the foreclosure process while a homeowner is going through a short sale. In addition, the bank can no longer deny the short sale due to a relative purchasing the home.
Many other terms are included in the new law. The lender must now provide a single point of contact for the duration of the short sale process. They must also provide a Notice of Information. At least 30 calendar days before recording a notice of default and election to sell and at least 30 calendar days after the borrower’s default, the lender must provide to the borrower information concerning the borrower’s account, the foreclosure prevention alternatives offered by the lender and a statement of the facts supporting the right of the mortgagee or beneficiary to foreclose.
The Home Owner’s Bill of Rights also contains a Rescission of Notice of Default Clause. Any notice of default and election to sell recorded must be rescinded, and any pending foreclosure sale must be cancelled, if one of three things happens:
(a) The borrower accepts a permanent loan modification
(b) A notice of sale is not recorded within 9 months after the notice of default and election to sell is recorded
(c) A foreclosure sale is not conducted within 90 calendar days after a notice of sale is recorded.
That means a foreclosure has to start over, including new recording of notice of default, if the foreclosure does not take place.
Finally, if a Court finds a lender in violation of this law, the Court can order and award to the borrower the greater of treble actual damages or statutory damages of $50,000.
The bill went into effect October 1st. The restrictions only apply to notices of default and election to sell which were recorded on or after October 1st of this year. Lenders with less than 100 foreclosures per year are exempt.