Recently enacted changes in the law will affect how loans are serviced and foreclosed upon in Nevada. These changes to Nevada law appear to be the latest response of a state legislature to the large number of foreclosures that have followed the financial crisis.
Two recent enactments will affect lenders seeking to foreclose upon deeds of trust.
First, NRS Chapter 106 has been amended to require that transfers of a mortgage or a deed of trust be recorded in the county where the property is located, and if it is not, the mortgage or deed of trust will be unenforceable until it is properly recorded. The statutory change is arguably retroactive with its only carve-out being for mortgages or deeds of trust dated before 1935.
Second, the new legislation also amends Nevada’s traditional nonjudicial foreclosure statute. Under the “new” NRS 107.080, the trustee under a deed of trust must be an attorney, a title insurer or agent, or a “Trust Company” as defined by another statute (NRS Chapter 669 et seq.). The new statute imposes tough penalties to ensure that it is strictly followed.
Third, before a lender may foreclose, its trustee under the deed of trust must record an “affidavit of authority” demonstrating its right to exercise the power of sale. The affidavit must state the name and address of the trustee, the name of the current holder of the deed of trust, the beneficiary of record and any servicers of the loan, the name of any prior beneficiaries on the deed of trust, and other obligations that will be of particular interest to holders of securitized loans, such as MBS or RMBS trusts.