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.)
What is Foreclosure Mediation?
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:
- the borrowers
- their lender, and
- an impartial third-party (the mediator).
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:
- loan modification
- forbearance agreement
- short sale, or
- deed in lieu of foreclosure.
(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 lender does not have to go through state court to get one. Instead, the lender initiates the foreclosure by recording 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.
Notice of the Availability of Mediation
Along with the Notice of Default, the trustee (a third-party that handles the foreclosure) must also provide the borrower with:
- an Election of Mediation form and
- a list of documents that may be required for mediation.
The Mediation Process
To participate in mediation, the borrower must complete and return the forms to the mediation administrator, together with $200, within 30 days. If the borrower 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 lender must also pay $200. The mediation is scheduled to take place within 135 days after the program administrator receives the homeowner’s request for mediation, the submission of fees by both parties, and the production of required documents provided on behalf of the lender.
The administrator also assigns a mediator and the mediator must conclude the mediation within 90 days after being assigned to the case.
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.)
One recent change to the program is that mediations held in 2013 now require a Document Conference between the lender, homeowner, and mediator to determine what documents are needed for consideration by the lender. Lenders are required to send to homeowners a Required Documents List five days after the conference. Homeowners must return the required documents to the lender and mediator within 15 days. 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 1-855-457-4638 statewide to obtain assistance.
Who Must Attend the Mediation
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 often 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.
After the Mediation
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.
Should You Participate in the Foreclosure Mediation Program?
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 http://foreclosure.nevadajudiciary.us/index.php/about-program.
Mediation Extended to Judicial Foreclosures
Nevada's recently-passed Homeowner's Bill of Rights expanded the mediation program. As of October 1, 2013, homeowners in judicial foreclosure may elect to participate in foreclosure mediation as long as the property is owner-occupied. Stay tuned for details.