Nevada Supreme Court: Violation Of State Mediation Rules A Sanctionable Offense, Slams Brakes On Foreclosure; Lower Court Reversals Continue

In a recent ruling, the Nevada Supreme Court "consider[ed] issues arising out of Nevada's Foreclosure Mediation Program and address whether a lender commits sanctionable offenses when it does not produce documents and does not have someone present at the mediation with the authority to modify the loan, as set forth in the applicable statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs)."

The court sets forth its general legal analysis in the following nutshell:

• Because NRS 107.086 and the FMRs expressly require that certain documents be produced during foreclosure mediation and that someone with authority to modify the loan must be present or accessible during the mediation, we conclude that a party's failure to comply with these requirements is an offense subject to sanctions by the district court.
  
  In such an event, the district court shall not direct the program administrator to certify the mediation to allow the foreclosure process to proceed until the parties have fully complied with the statute and rules governing foreclosure mediation.
  
  Here, because respondents HSBC Bank USA, Power Default Services, and American Home Mortgage Servicing, Inc. (AHMSI), did not bring the required documents to the mediation and did not have access to someone authorized to modify the loan during the mediation, we conclude that the district court erred in denying appellants Emiliano and Yvette Pasillas's petition for judicial review. Therefore, we reverse the district court's order and remand this matter to the district court so that the court may determine sanctions.

For the entire ruling, see Pasillas v. HSBC Bank USA, 127 Nev. Adv. Op. No. 39 (Nev. July 7, 2011).

For a discussion of this and a companion case issued by the Nevada Supreme Court on the same day, see Credit Slips: Nevada Supreme Court: You Gotta Prove Chain of Title.