Nevada NV645 Law and Nevada NVAB440 Law Loan Modification

Nevada like many other jurisdictions has seen its share of opportunists that have created a cottage industry out of foreclosure rescue scams. This legislation was intended to address that issue. However, the legislation was enacted much too late to help many of those that were ripped off to the tune of hundreds of thousands of dollars.

Assembly Bill No. 440 pertains, in part, to the obligations and liabilities of foreclosure consultants. Chapter 645F of Nevada Revised Statutes is amended to define a “foreclosure consultant” as anyone who makes any solicitation, representation, or offer to a homeowner to perform for compensation any “covered service,” which includes the following: financial counseling; receiving money to distribute to creditors; contacting creditors; arranging an extension of the default period; arranging to delay the foreclosure sale; or advising or assisting with documents for bankruptcy filings.
Assembly Bill No. 440 further provides a list of persons who are not considered a foreclosure consultant, including attorneys, real estate brokers and sales persons, and debt adjusters, when acting in those professional capacities.

The statute provides a list of “shall not” activities of a foreclosure consultant:
A foreclosure consultant must perform the agreed upon service before charging or collecting any fees;

A foreclosure consultant must disclose each individual charge and any payment by a third party to the homeowner;

A foreclosure consultant shall not take any security interest in the subject property or other security for the payment of compensation;

A foreclosure consultant shall not receive any consideration from any third party in connection with a covered service provided to a homeowner unless the consideration is first fully disclosed to the homeowner;

Acquire, directly or indirectly, any interest in the residence in foreclosure of a homeowner with whom the foreclosure consultant has contracted to perform a covered service;

Accept a power of attorney from a homeowner for any purpose, other than to inspect documents as provided by law.

Any violation of these provisions will result in a fine of not more than $10,000. Further, any homeowner who is injured by a violation of these provisions may bring a private cause of action against the foreclosure consultant for damages plus attorney’s costs and fees. Punitive damages are also available, but not in an amount less than one and one half times the actual damages awarded.
Any foreclosure purchaser who engages in fraud or deceit against a homeowner, including “foreclosure reconveyance”, is guilty of a gross misdemeanor, punishable by not more than one year imprisonment, a fine of not more than $50,000, or both. If a foreclosure purchaser engages in fraud or deceit against a homeowner, including foreclosure reconveyance, the homeowner may rescind the foreclosure sale within two years of the date of recording. Assembly Bill No. 440 specifies the methods by which the homeowner may rescind in such an instance.

The statute defines a “foreclosure reconveyance” as a transaction whereby the homeowner transfers an interest in the property during a foreclosure proceeding whether by grant deed, deed of trust or other security document and then promises to transfer the property back to the homeowner after the foreclosure allowing the homeowner to remain in possession of the premises following the completion of the foreclosure.