Assembly Bill No. 47
Nevada Revised Statutes Chapter 649 is Nevada’ Debt Collection Practices Act. Prior to the enactment of Assembly Bill No. 47, NRS 649.020 defined “collection agency” to exclude attorneys, retained to collect the claims of their clients, where any “collection, solicitation, or obtainment is incidental to the usual practice of their profession.” The quoted language has been deleted. As a result, attorneys and counselors at law are exempt as long as they are retained to collect debt “in the usual course of the practice of their profession.” In case you are wondering, this does not do much and it is not really much clearer.

Assembly Bill No. 440
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:

1. A foreclosure consultant must perform the agreed upon service before charging or collecting any fees;
2. A foreclosure consultant must disclose each individual charge and any payment by a third party to the homeowner;
3. A foreclosure consultant shall not take any security interest in the subject property or other security for the payment of compensation;
4. 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;
5. 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;
6. 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.

Assembly Bill No. 560
Currently, following a foreclosure sale, the debtor is entitled to the balance remaining after the obligations encumbering the property and expenses relating to the sale have been satisfied. Many times, the borrowers are unaware of their rights and distrusting of the foreclosure trustee creating an environment where less than honorable people are charging tens of thousands of dollars to recover excess proceeds. This bill amends Chapter 40 of the Nevada Revised Statutes to limit the scope and fees of those agreements. Under the revised statutes, a debtor may enter into an agreement with a third party for assistance in recovering the remaining balance following a foreclosure sale. The agreement must be in writing, signed, and notarized, and must be entered into within 30 days of the foreclosure sale.

In addition, any fees charged by a third party must be reasonable; a fee exceeding $2,500.00, excluding attorney’s fees and costs, is presumed unreasonable. Any fee exceeding $2,500.00 must be approved by the court, with the party seeking to recover that fee bearing the burden of proving that it is reasonable.

By Michael R. Brooks, Esq., Jolley, Urga, Wirth, Woodbury & Standish and Mindy C. Fisher, Jolley, Urga, Wirth, Woodbury & Standish. Michael Brooks can be contacted via email at mrb@juww.com