New Participation Rules for Nevada Mediation Program
Jeffrey J. Todd, Esq.
Beginning in 2013, Nevada’s Foreclosure Mediation Program will be implementing a new set of rules that will change the way in which lenders and trustees must prepare and participate in the mediation process. Unfortunately, the rule changes will make mediations more time-intensive and demanding upon lenders. In particular, there are now at least four new steps (i.e., pre-mediation conferences/document exchange letters) which lenders must participate in to be fully prepared to offer a loan modification proposal, if available, at the actual mediation and not simply to be discussed in the future. There are also additional documents that must be collected and certified.
Here is a synopsis of major mediation changes:
- Rule 3 – Mediations must conclude within 90 days of assignment to the Mediator. This extends the length of time that a mediation file can remain open.
- Rule 8 – The Trustee is required to provide a list of all documentation that the lender will need for the mediation. This list must be included with the Mediation Election instructions.
- Rule 11 – This is where the bulk of the changes in the new rules are. In a nutshell, the FMP is attempting to facilitate the exchange of financial documents in advance of the mediation to prevent the lenders from appearing at mediation and saying that they cannot make a decision due to missing documents. In fact, if the lender does not raise the document deficiencies in advance, the new rules say that the lenders is “estopped” from claiming that a review is not possible. Here is the new timeline of activity under Rule 11:
- The Mediator will contact the lender to set an “exchange of documents conference”.
- 5 days before the conference, our office will send a document chase letter to the Borrower & Mediator.
- We will then appear at the conference and explain the documents that are needed.
- The Borrower then has 15 days to submit the requested documentation.
- Within 15 days of receiving the Borrower’s documents, the lender (through our office) MUST send a letter stating any documentation that is missing or that needs to be corrected. As discussed above, failing to complete this step will result in the lender being estopped from using a lack of documents as a defense.
- Borrower then had 15 more days to submit updated/corrected documents.
- Lender then has 5 days to identify any inadequacies or request clarification.
- Borrower then has 5 more days to fix the inadequacies and provide clarification. At this time, the document exchange ends.
- With all of the documents presumably in hand, the Mediation Program believes that the lender should appear at the Mediation ready to make offers at that time. This will be a significant change for many lenders that provide telephone representatives who have not received a pre-approval on a modification offer in advance. Lenders will need to expedite reviews of the documents and some up with definitive offers prior to mediation.
- More from Rule 11:
- Lender docs are still to be submitted 10 days in advance of the Mediation.
- With the lender’s docs, a servicer must provide the original or a certified copy of the document giving the servicer its authority. For instance, a Pooling and Servicing Agreement or a Power of Attorney would be sufficient, so long as they are clearly giving authority from the Trust to the servicer.
- Lenders must be prepared at Mediation with detailed information on a short sale, including a proposed listing price, a timeline for how long it will take for an acceptance to be given after the offer is submitted, the maximum length of time that escrow may be opened, and a definitive determination on whether the deficiency will be waived.
- These requirements run contrary to the general approach of short sales with most lenders. It will be important to develop a consistent approach to these requirements in advance of the mediations.
- Rule 14
- Continuances of a mediation are now permissible for up to 30 days (plus 15 additional days) when the parties agree to the continuance in advance.
- Rule 16
- The term “Vacate Date”, as used in recent years is changing. It is being replaced by “Certificate issuance Date”, which is required to be stated in any temporary agreement (i.e., short sale marketing periods, forbearance, etc.).
- When the parties now reference a “Vacate Date”, it will mean a date in which the owners agree to leave the premises.
These are only a portion of the rule changes, but these are the changes most likely to affect lenders and this firm’s representation in mediation. I strongly encourage you to review the full text of the rules for a complete review of the changes.