In 2011, Nevada passed a strict law (Assembly Bill 284) that made it a felony for bank employees to make false representations when signing off on foreclosures, thus making robosigning illegal. As a result, foreclosures in the state ground to a halt.
On June 1, 2013, Governor Brian Sandoval signed Assembly Bill 300, which changed a key provision of Nevada's robosigning law to make it easier for lenders to foreclose. Read on to learn more about Nevada’s current robosiging law and find out what it means for homeowners facing foreclosure.
(For more articles on Nevada foreclosure law and assistance for Nevada homeowners facing foreclosure, visit our Nevada Foreclosure Law Center.)
Nevada’s Robosigning Law
In October of 2011, the State of Nevada passed Assembly Bill 284 (AB 284) designed to crack down on robo-signing (when a representative of the lender or servicer signs foreclosure documents without reading them or having any personal knowledge about the accuracy of the information contained in them).
(Learn more about the problem of robosigning in the mortgage and foreclosure industry.)
Nevada’s robosigning law requires that a notice of default and election to sell (the first step in the Nevada foreclosure process) include an affidavit based on the personal knowledge of the affiant setting forth certain information about:
- the deed of trust
- the amounts due
- the possession of the promissory note, and
- the authority to foreclose.
Among other things, AB 284 also required the lender to disclose every prior known beneficiary (lender) in the notarized affidavit.
Penalty for Violating AB 284
AB 284 contained a number of monetary and non-monetary penalties that could be imposed for violations of the law. For example, AB 284 made it a felony (Class C for a violation or Class B for a pattern of violations) to make false representations in foreclosure documents (like signing an affidavit without having personal knowledge regarding the contents), as well imposed sanctions of $5,000 or treble actual damages for noncompliance with the law.
The Effect of Assembly Bill 284
Immediately after the robosigning law took effect, the foreclosure process in Nevada stalled, with the number of notices of default filed falling from about 4,000 per month to about 1,000 per month. Ambiguous language in the law made lenders reluctant to foreclose on seriously delinquent mortgages, thus allowing homeowners who were behind in payments to remain in their homes for a longer period of time.
Realtors blamed the legislation for reducing the inventory of homes for sale in Nevada creating bidding wars among cash investors and making it difficult for owner-occupants to purchase a new home, even though home prices were reasonable and interest rates were low.
As a result, Assembly Bill 300 (AB 300) was introduced in March of 2013 to address the personal knowledge requirement and amend the robosigning law by doing things such as removing the requirement that the lender disclose each prior beneficiary.
AB 300 Amends Nevada’s Robosigning Law
AB 300 was approved by the governor on June 1, 2013, and became effective as of that date. It clarifies the personal knowledge requirement by providing that certain information in the affidavit could be based on “direct, personal knowledge” that the person who makes the affidavit obtains from:
- a review of internal business records, and
- either title paperwork or filings with the local county recorder.
Advocates of AB 300 have stated that the changes to the law will help the real estate market rebound quicker by helping banks foreclose. (Though this will probably not happen immediately since lenders must rewrite their foreclosure policies to adapt to AB300.)
Other Nevada Laws That Protect Homeowners
Ultimately, AB 284 had very strong protections in favor of homeowners, but was somewhat weakened by AB 300. While AB 300 helps lenders, Nevada also recently passed a Homeowner’s Bill of Rights to help homeowners in foreclosure.
Nevada’s Homeowner's Bill of Rights is designed to provide homeowners with better consumer protections, as well as ensure fair and honest treatment in the servicing of mortgage loans in default, especially when it comes to the loss mitigation process. (Read more about Nevada’s Homeowner’s Bill of Rights.)
Additionally, Nevada has a foreclosure mediation program that has had a high success rate in helping borrowers avoid foreclosure. (Learn more in our article Nevada's Foreclosure Mediation Program.)
To learn more about foreclosure in general, ways to defend against foreclosure, and programs to help struggling homeowners avoid foreclosure, visit our Foreclosure Law Center.
Learn More About Nevada’s Robosigning Law
To read the history and get a copy of Nevada’s recently revised robo-signing law, you can go to www.leg.state.nv.us. Hover over “Session Info,” then choose “77th (2013) Session,” then click on “Bill Information” and “History of Specific Legislation.” Choose “Assembly Bill” from the drop-down menu and enter “300” in the search box.