Nevada is turning back the clock, once again allowing distressed homeowners to leverage mediation services during the foreclosure process. The state’s previous mediation program was set to end in June, but due to a sunset provision, concluded on December 31, 2016, instead.
The sunset caused a six-month gap in which underwater Nevada homeowners had few options when facing foreclosure action. Thanks to Senate Bill 490, signed recently by Nevada Gov. Brian Sandoval, mediation options are once again available.
According to Geoff Giles, a real estate lawyer based in Reno, Nevada, SB 490 gives underwater borrowers a much-needed second chance.
“It gives homeowners who are behind in their mortgage payments and facing foreclosure a respite, as well as a chance to meet with the bank in order to restructure their mortgages and avoid losing their homes,” Giles told the Reno Gazette-Journal.
Unlike the law it replaces, SB 490 does not have a sunset provision. Instead, homeowners must petition for mediation no later than 30 days from receiving their default notice. After a petition is filed, the foreclosure process halts.
The new law will also be managed and administered by Home Means Nevada, a local nonprofit organization, rather than the state’s Supreme Court. The Nevada Department of Business and Industry will oversee the transition, but due to the changes, it could cause a hold-up in the mediation process for a few months, according to Giles.
“The old program was pretty established, but all of that is up in the air now,” he said. “It is unclear what the role of the District Courts will be in this process, and whether they will be able to intervene to address and correct problems that may arise.”
Mediation fees are slightly higher under the new law, rising from $400 to $500. The costs are split 50-50 between the homeowners and their mortgage lender.
According to the Gazette-Journal, the verdict is still out on whether the new law will allow lenders to send foreclosure company representatives to mediations.
“One thing that is unclear is whether the new program will address one key issue that proved to be a challenge in previous mediations,” the publication reported. “Under the old program, lenders would hire foreclosure companies that would then send representatives to take part in mediation negotiations.”