Foreclosure hearings coming

Under rules adopted Tuesday by the state Supreme Court, homeowners facing foreclosure will have a chance to modify loan agreements with their mortgage companies.

The court action put into effect a law passed by the 2009 Legislature.

Under the rules, lending companies that file notices of foreclosure must also provide to delinquent buyers applications to allow them to request mandatory mediation hearings.

The lender and homeowner must each submit $200 in these applications to trigger a hearing before Supreme Court-appointed mediators. Mediators will meet with both parties to see whether a mutually acceptable loan change can be reached.

The rules and the application can be found on the Supreme Court’s Web site: www.nevadajudiciary.us. Under state law, the rules go into effect in 30 days.

Chief Justice James Hardesty predicted that 1,200 to 1,500 residents per month would file for foreclosure hearings. Hardesty said the hearings would start in August.

He said that more than 420 former judges, lawyers and trained mediators have filed applications to serve as mediators.

The rules adopted by the high court put into effect Assembly Speaker Barbara Buckley’s Assembly Bill 149, which was overwhelmingly approved in the Legislature and signed into law by Gov. Jim Gibbons.

During legislative hearings, Buckley, D-Las Vegas, predicted the mediation program would prevent 17,700 residents from losing their homes. About 77,000 Nevadans lost their homes to foreclosure last year.

The program is designed to help homeowners who still have jobs and can make some kind of payments on a mortgage.

Lenders, however, are under no obligation to make loan modifications that keep homeowners from losing their homes. But the hope is that many lenders will agree to the changes because of factors such as the glut of foreclosed homes on the market and the 34 percent decline in Las Vegas home values in the last year.

Under the rules, the homeowner must submit copies of financial records and indicate the amount of a mortgage payment that he or she can make. The lender must submit to the mediator current appraisals of the value of the home and estimates of what the home could sell for in a "short sale."

Short sales occur when lenders sell foreclosed homes for less than the mortgage on the home.

In documents submitted to the mediators, both the lender and homeowner must propose ways to keep the owner from losing the home.

A homeowner’s failure to act in "good faith" with the mediator could result in the home being lost to foreclosure. Lenders who fail to provide the necessary documents could prompt the mediator to ask the court to stop the foreclosure. Lenders must send someone to the mediation hearing who has the ability to modify the loan.

Requests for mediation can be filed only on owner-occupied homes, not vacation homes or second homes.

Court spokesman Bill Gang said the justices have been receiving calls from many people who have gotten notices of foreclosure from their lenders. The rules currently can do nothing to help them.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.