Lenders Feel Pressure in Foreclosure Process

The Nevada Supreme Court altered the foreclosure mediation landscape earlier this month when, in two separate cases, justices made it clear that lenders must bring all relevant documents to the table and make sure someone with loan modification authorization is readily available. A homeowner's lawyer in one of those cases, Terry Thomas of Reno, planned to ask Washoe County District Judge Patrick Flanagan to impose a $1 million fine against a lender who a mediator found acted in bad faith. Lenders have now been forewarned that the rules are not optional, and the two Nevada judges who review failed mediations have been put on notice that they must sanction lenders who fail to strictly comply with those rules. Bill Uffelman, president of the Nevada Bankers Association, says lenders believe the rules lean too far in favor of borrowers who might have a bad loan but nonetheless signed a contract to repay. Those bad loans are no longer the cause of most foreclosures, says Uffelman, noting that while subprime mortgages represent a fair number of the state's 90,000 foreclosures, the continued fallout can be blamed on the devastated economy and high unemployment. Uffelman also says the state Supreme Court's recent opinions expose lenders to potentially harsh monetary sanctions for minor noncompliance, like a document missing a page or a missed deadline, while borrowers face few demands to produce evidence.

Las Vegas Review-Journal (07/25/11) McMurdo, Doug