In response to the ongoing foreclosure crisis in this country, many states, like Nevada, have implemented mediation programs to assist borrowers in finding ways to avoid foreclosure. Read on to learn more about how Nevada’s mediation program works and how you can benefit from the process.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
(For more articles on foreclosure in Nevada, visit our Nevada Foreclosure Law Center.)
Foreclosure mediation is a process that is used to help homeowners avoid foreclosure by coming up with an alternate solution that benefits both the borrowers and the lender. Mediation consists of a meeting between:
At the meeting, the parties discuss the borrower's financial situation and try to negotiate a way for the homeowner to keep the home or give up the property without going through a foreclosure. By working together, the parties are often able to reach an agreement.
Potential outcomes of mediation include:
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Nevada law requires that borrowers who are in foreclosure be given the option to participate in mediation, so long as the property is owner-occupied. (Nev. Rev. Stat. § 107.086)
In Nevada, most foreclosures are nonjudicial, which means the foreclosure does not have to go through state court. Instead, the trustee (a third party that manages the foreclosure process in Nevada) records a notice of default and election to sell in the county land records. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
To learn about the specific foreclosure laws in Nevada, see Summary of Nevada's Foreclosure Laws.
Homeowners in Nevada are automatically enrolled in mediation after the trustee files the notice of default. Not later than 10 days after filing the notice of default, the trustee must mail the homeowner a mediation enrollment form along with the notice of default and a list of documents that may be required for mediation.
(Mediation is also available in judicial foreclosures. Nevada's Homeowner's Bill of Rights in 2013 expanded the mediation program to homeowners in judicial foreclosure, who may elect to participate in foreclosure mediation if the property is owner-occupied. In a judicial foreclosure, the homeowner will receive an enrollment form for the mediation program along with the foreclosure complaint. Learn more about judicial foreclosures.)
To participate in mediation, the homeowner must complete and return the form to the mediation administrator, together with $200, within 30 days of receiving the notice of default (or within 20 days of receiving service of a judicial complaint in the event of a judicial foreclosure). The lender must also pay $200. If the homeowner waives his/her right to mediation or does not return the applicable forms, then mediation is not required and the lender is allowed to proceed with its foreclosure.
The mediation must conclude within 135 days after the program administrator receives the fees from both parties and the required documents provided on behalf of the lender.
The administrator also assigns a mediator. Then, a document exchange conference is scheduled and both parties must submit certain documents prior to mediation.
Nevada’s mediation program requires that borrowers and the lender provide the mediator and each other with certain documents prior to the mediation. The borrower must provide appropriate documentation, such as financial information, so that the lender can make a determination about whether the borrower is eligible for a loan workout. The lender must provide documents such as the original note, deed of trust, and assignments (or certified copies). (Learn more about assignments.)
Prior to the mediaiton, there is a document exchange conference between the lender, homeowner, and mediator (or the mediator must speak separately wth each party to ascertain what documents the lender needs to evaluate the homeowner for an alternative to foreclosure). If the lender needs certain documents, it must send the homeowner a list of required documents within five days of the document conference. The homeowner then gets 15 days after receiving the list to complete and return the documents. If you need help with this, the Home Again Nevada initiative will connect you with a HUD-approved housing counselor who can assist in preparing for mediation. Homeowners can call 855-457-4638 statewide to obtain assistance.
The borrower (and borrower's attorney, if the borrower has hired one) and a lender's representative attend the hearing. The lender's representative must have the authority to modify the underlying loan. This ensures that the lender’s representative can evaluate the borrowers’ situation, determine if there is a loss mitigation option available, and approve it on the spot. As a result, borrowers can walk away from the mediation with a loan modification or another loss mitigation option.
Because the lender is required to show up to the mediation prepared to make a deal, Nevada foreclosure mediations sometimes succeed in helping borrowers. According to the Nevada judiciary’s foreclosure mediation program fact sheet, 46% of mediation agreements in the first year of the program resulted in homeowners keeping their homes.
This is in contrast to other state mediation foreclosure programs, which are often not as successful -- probably because they don't require the same level of preparedness as the Nevada program.
Upon completion of the mediation, the administrator will issue a certificate of completion. If the mediation was successful and the parties have agreed on a loss mitigation option, like a loan modification, then the foreclosure is stopped. However, if the parties could not reach an agreement, the foreclosure will continue.
Even though participating in a Nevada’s foreclosure mediation program does not guarantee that a foreclosure will be avoided, it doesn't hurt to attend the meeting. The lender may be more likely to agree to a nonforeclosure solution at a mediation than if you approach it outside of the program. Or you might qualify for a loss mitigation option that you hadn’t previously considered. For more information on Nevada’s foreclosure mediation program, go to the State of Nevada Foreclosure Mediation Program website.