Foreclosure and Mediation Process (continued)

Foreclosure and Mediation Process (continued)

The biggest change the foreclosure mediation program has thrust upon lenders is the facts that they must be found to have participated in good faith in order to foreclose. Id. At this point, you may be asking yourself what constitutes “good faith?” At the very least, it means the lender made some reasonable offers, did not bring an “agenda” into the mediation, and brought supportive documents indicative of the original loan. The lender or “beneficiary of the deed of trust shall bring to mediation the original or certified copy of the deed of trust or mortgage note.” AB149 § 4. Moreover, if “the beneficiary of the deed of trust is represented at the mediation by another person, that person must have authority to negotiate a loan modification on behalf of the beneficiary of the deed of trust or have access at all times during the mediation to a person with such authority.” Id. If a beneficiary fails to provide adequate documents or representation they will be found to have participated in bad faith and will be unable to foreclose on the subject property.

Even worse for the lender is the prospect of court interference should the mediator made a finding of bad faith participation. “The court may issue an order imposing such sanctions against the beneficiary of the deed of trust or his representative as the court determines appropriate, including, without limitation, requiring a loan modification in the manner determined by the court.” Id. at § 5. Thus, good faith participation on the part of the lender is essential to foreclosing on a particular property, or at least arriving at a beneficial solution. In order to foreclose, once mediation has been elected, the lender must obtain a certificate of good faith participation in mediation. NRS 107.

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