Responding to homeowner complaints, Nevada has become the first state in the nation to make illegally repossessing a home a felony, and cash may send bankers to jail for doing such. The new law was enacted after tens of thousands of homeowners complained to lawmakers about their homes being foreclosed without proof of ownership. The outcry of consumer complaints over illegal robo-signing tactics has produced a series of lawsuits against mortgage servicing companies and banks in Nevada, which has led the U.S. in foreclosures six straight years.
The Nevada law makes it a felony for a mortgage servicer or trustee of a mortgage to make false representations concerning a title such as claiming that they are an executive of a bank or mortgage servicer, which was the case in at least hundreds of thousands, perhaps millions of robo-signings. A $5,000 fine will also be assessed if fraud is found. The law requires mortgage companies to provide a new affidavit with the amount owed on the loan, the person who is in possession of the note and the individual with the authority to foreclose on the property.
Some 26 U.S. states conduct foreclosures through the courts, but the new law does not make Nevada a judicial foreclosure state. Foreclosures have been delayed in many cases since the law went into effect Oct. 1 st. price reduced
Cathe Cole, vice president of default for Trustee Corps., and foreclosure counsel in Nevada for Freddie Mac said as long as trustees can show a clear chain of title, including the named servicer of the mortgage there would be nothing for companies carrying out foreclosures to fear. “They just want to make sure we're doing things correctly,” said Cole.
Nevada’s state attorney general is attempting to halt illegal foreclosure practices such as robo-signing with the new law, which they believe are still taking place. Proof of ownership title is critical to the chain of title. If the proof has been lost or never forwarded to a mortgage servicing company the foreclosing party may have no right to formally foreclose and take the real estate.
The Nevada law could provide an example for other states to follow implementing the new law. Homeowners throughout the U.S. have filed lawsuits against mortgage servicing companies alleging fraud in foreclosure proceedings used to formally repossess their homes after Mortgage Electronic Registration Systems (MERS) reportedly failed to provide the physical documents on foreclosures their electronic system was used for to provide foreclosures through. MERS ordered mortgage servicers and banks to halt foreclosures in its name earlier this year.
