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Ignorance is not a defense. For that reason, as note investors, there is a critical need to be aware of the ever-changing laws in every state we do business. Because most of the statutory changes are mere “tune-ups” of existing rules and procedures (and we already know those, right?), most regulatory changes have little impact on day-to-day operations. Occasionally, however, a law (or set of laws) is passed that does change how the note business is conducted within a state.
1) Applicable to defaults and actions AFTER December 2, 2016 – If the borrower was in default before and is still in mediation or the court system, these rules may not apply.
2) Beneficiary Registration – Prior to September 1, 2017 each beneficiary of the deed of trust needs must submit their contact information to Home Means Nevada, Inc., a state-run non-profit organization tasked with overseeing the program.
3) No Default Necessary for Mediation – A homeowner does not necessarily have to be in default to file a mediation request with the state. As specific requirements need to be met, we do not expect this to be very common but the fact that it is an option means that it will.
4) Short Response Time - You now have to file your “answer for mediation” with the district court within 10 days of receiving notice of a mediation request.
5) Documents and Appearance Required – You, or an authorized representative, must be physically present, with original or certified copies of the collateral documents. You must also bring any documents created in connection with a loan modification. Since the new rule isn’t particularly clear about what docs are actually needed, bring them all.
6) Requesting Relief – The rules provide that within 10 days of the mediator’s submission of its statement to the Court, either is to submit request for relief. Since no further clarification is provided, talk with your attorney to determine what else might be needed as a request may be necessary from both parties regardless of the mediator’s recommendation.
7) Relief Awarded –Finally, the last rule requires that the District Court enters an order at the conclusion of mediation. This order should state one of three outcomes: 1) the terms of a modification or settlement, 2) a dismissal of the petition, or 3) details about any sanctions imposed.
Item number 2, above, seems to be the most important thing for a Nevada note owner to be aware of – a failure to provide contact information may result in a mediation petition filed by a homeowner that goes unanswered, in which case an unfavorable award or even sanctions may be awarded.
Rule changes happen. Sometimes for the better, sometimes for the worse, and sometimes just to make everyone wonder, it seems. But regardless, when a rule changes it can (and does) affect you.
As a note investor, you need to stay on top of these things. As a servicer, Main Street does stay on top of these things in all fifty states. If think you are affected by any rule changes, why don’t you tell us?