AB 284 was signed into law by the Governor on May 20, 2011. AB 284 makes substantial revisions to the provisions governing the exercise of the power of sale under a deed of trust. These provisions were to become effective on July 1, 2011, however AB 273 amended AB 284 and the effective date was moved to October 1, 2011. Of particular immediate concern is whether or not the law is retroactive, and it does not appear that AB 284 was intended to be retroactive nor is there language in the bill itself that would make it retroactive. Therefore:
If a notice of default was properly recorded prior to October 1, 2011, and providing that the foreclosure proceeds as normal and results in the recordation of a Trustee’s Deed, you may insure title in subsequent transactions pursuant to practices and underwriting guidelines as of October 1, 2011.
Some of the provisions of particular interest to us having substantial effect on foreclosures and the foreclosure process are as follows:
An "Affidavit of Authority" to exercise the power of sale must be included in the notice of breach. This Affidavit must be based on the personal knowledge of the person signing, must be under penalty of perjury and must be notarized. The Affidavit must disclose the full name and business address of the trustee, the current note-holder, the current beneficiary of record, and the loan servicer. It must disclose the full name and last known address of every prior known beneficiary of the deed of trust, the amount in default, the principal amount of the debt and a good faith estimate of the fees and costs. It must also provide a description, date, and recording information of each assignment of the beneficial interest. It must also state that the trustee has the authority to exercise the powers of sale and that the beneficiary or trustee has actual or constructive possession of the note.
The model affidavit is attached.
The trustee of a Nevada deed of trust must be a title insurer or title agent authorized to do business in Nevada, an attorney licensed to practice law in Nevada, or a person licensed pursuant to Nevada Revised Statutes dealing with Trust Companies.
A beneficiary of record may replace its trustee, but the appointment of a new trustee is not effective until the substitution of trustee is recorded.
For purposes of exercising the power of sale, a trustee under a deed of trust must not be the beneficiary of the deed of trust.
The trustee does not have a fiduciary obligation to the grantor or any other person having an interest in the property which is subject to the deed of trust.
Any assignment of the beneficial interest under a deed of trust must be recorded in the office of the recorder of the county in which the property is located. If not recorded, a lender cannot enforce its rights and a trustee cannot exercise the power of sale.
Any subordination relating to the deed of trust being foreclosed must be recorded.
Penalties and injunctive relief are available if a lender and/or trustee fail to comply.
When recording a Notice of Default or issuing a TSG where the Notice of Default has been recorded, confirm that the Affidavit of Authority is attached.
Include a note on the TSG drawing attention to Nevada Assembly Bill 284, which amended foreclosure provisions of Nevada Revised Statutes.
We should have some time before we are asked to insure title after the recordation of a trustee’s deed for a foreclosure started after October 1, 2011. Obviously that foreclosure process must be in compliance with the provisions of AB 284. Further bulletins will be issued regarding specific underwriting guidelines.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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