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Papers in foreclosure cases ruled insufficient
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Craig L. Moran/Las Vegas Review-Journal
A real estate sign with a bank-owned tag attached hangs June 15 by a home at 1701 N. Jernae Court. Supreme Court judges found that foreclosure certificates presented by lenders in two foreclosure cases before state district courts hadn't met legal standards. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
The Nevada Supreme Court has added teeth to the state's foreclosure mediation program in a pair of rulings that require lenders to produce all required documents before repossessing a house.
In both cases, one in Las Vegas and the other in Reno, district courts found that the lenders had produced enough of the paper trail to proceed with foreclosures. But without a precise record of the documents, the seven Supreme Court judges agreed unanimously that the foreclosure certificates had not met legal standards and referred the cases for further hearings at the district level.
When ruling on the appeal of Carl Piazza, who took out a $761,000 mortgage in 2006 and defaulted three years later, the court established a standard of "strict compliance" that lenders must follow in producing not only the original note and deed of trust but all subsequent assignments.
"(I)t does not appear that the District Court reviewed the assignments presented by (lender) CitiMortgage to ensure that they were in strict compliance," the court wrote.
On that basis, it ruled for Piazza and returned the case to Clark County District Court Judge Donald Mosley to review the documents.
A main motivation for creating the mortgage mediation program in 2009, where lenders and homeowners try rework defaulted loans with the help of a neutral arbiter, is that loans change hands so often it has became difficult for homeowners to find someone with decision-making authority.
Piazza attorney Jacob Hafter said the strict compliance standard would buy time for his client and those in similar situations. However, he added, "We'll probably keep going round and round, starting with another notice of default."
Caroline Karl, who defaulted in 2010 on a $232,000 loan taken out four years earlier, will also get another hearing at the trial level. The Supreme Court noted that the "record lacks clarity" about whether HSBC Bank USA had produced all the mortgage assignments to prove it would rightfully carry out a foreclosure.
HSBC had argued it met all the requirements, and Washoe County District Court Judge Patrick Flanagan agreed.
"If the (district) judges would enforce the law the way the Supreme Court has ruled, this wouldn't be an issue," said Terry Thomas, Karl's attorney. "They (the lenders) will produce what they say are documents and we will probably have to appeal again."
Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.
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Hooray for our Nevada Supreme Court.
At last, the law is being enforced on both sides, not only on homeowners. If one side commits a civil fault, and the other is committing felonies, where should the balance of justice fall?
Perhaps the 5th Amendment of the US Constitution is not quite dead. Due process!