Some states, like Nevada, offer mediation to homeowners who are behind in mortgage payments and facing a foreclosure.
In foreclosure mediation, the borrower, the foreclosing party (the "bank"), and an impartial third party (the mediator) meet and try to work out a foreclosure alternative. While Nevada's mediation law was supposed to expire in 2017, the state legislature has now made the program permanent.
To learn the basics about foreclosures in Nevada and how the state's foreclosure mediation process works, read on.
Most Nevada foreclosures are nonjudicial, which means the bank does not have to go through state court to foreclose. As part of a Nevada nonjudicial foreclosure, the bank must offer you the opportunity to attend mediation to explore alternatives to foreclosure. (To learn more about the nonjudicial foreclosure process in Nevada, see Nevada Foreclosure Laws and Procedures.)
Sometimes, foreclosures in Nevada are judicial (through the court system) rather than nonjudicial. When Nevada's mediation law was first implemented, homeowners in judicial foreclosures didn't get the right to participate in mediation. Nevada's Homeowner's Bill of Rights, however, which was passed in 2013, expanded the mediation program to homeowners in judicial foreclosures.
In foreclosure mediation, the borrower, the bank (or the servicer on behalf of the bank), and a mediator attend a meeting to discuss ways to avoid a foreclosure. The mediator acts as a neutral facilitator at the meeting. The parties discuss the borrower's finances and try to resolve the delinquency.
Potential outcomes of mediation include:
If the mediation is successful and the parties agree on a way to avoid a foreclosure, then the foreclosure stops. But if the parties can’t reach an agreement—or if you don’t opt in to the mediation program (see below)—the foreclosure will continue.
Nevada law says that borrowers get the option to participate in mediation if the property is owner-occupied. (Nev. Rev. Stat. § 107.086).
When you can choose mediation. Generally, you may participate in mediation once:
Even if you’re not already behind in payments (called being in “default” on the loan), you may participate in mediation if default is imminent and you have a documented financial hardship. Eligible hardships include the death of a co-borrower, serious illness, divorce or separation, a long-distance job transfer, job loss, a reduction in pay, or some other event that prevents you from repaying the loan.
Exclusions. You aren't eligible for mediation if:
To opt into mediation, you have to file a Petition for Mediation Assistance with the District Court and pay a fee, usually $250, plus a filing fee of around $25.
How to participate in mediation if a nonjudicial foreclosure has started. If foreclosure has already begun, you’ll receive a copy of the Petition in the mail, or in some cases, through electronic transmission (email). No later than 30 days after the notice of default and election to sell is served, you must complete the Petition for Mediation Assistance and deliver it, along with the required fee to the District Court. You also have to serve a copy to Home Means Nevada, Inc. (the program administrator), the lender, and to the trustee, by certified or registered mail, return receipt requested (or by electronic transmission if the parties have authorized it). Note that if you miss the deadline, your lender might still agree to participate in mediation.
How to participate in mediation if a judicial foreclosure has started. In a judicial foreclosure, you’ll get a copy of the Petition for Mediation Assistance along with the complaint that starts the foreclosure. You can opt in by filing the Petition with the court, serving it to the involved parties, and paying the mediation fee by the deadline to answer the complaint.
How to participate if you think you’re about to fall behind in payments. If you believe you are in imminent danger of defaulting on the loan and want to participate in mediation, contact a HUD-approved housing counselor or agency to get a recommendation. The counselor or agency has to certify that you have a documented financial hardship and you're in imminent risk of default. You'll also have to file the Petition with the District Court, serve it to the various parties, and pay the required fee.
Hiring an attorney to represent you in mediation will ensure that your legal rights are protected in the process. (An attorney can also make sure that you follow all procedures needed to opt into the program.) In addition, if you want to learn about potential defenses to a foreclosure, you should consider talking to an attorney to learn about your specific options.
Also, be aware that if you're a Nevada homeowner facing a potential foreclosure and want to save your home, you might qualify for financial assistance from the state's Hardest Hit Fund program.