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Nevada Supreme Court Reversed & Remand – “Foreclosure Mediation, Sanctions” | MALLOY v. WELLS FARGO

Nevada Supreme Court Reversed & Remand – “Foreclosure Mediation, Sanctions” | MALLOY v. WELLS FARGO






This is an appeal from a district court order denying a petition
for judicial review in a foreclosure mediation action. Second Judicial
District Court, Washoe County; Patrick Flanagan, Judge.
Following an unsuccessful mediation conducted under
Nevada’s Foreclosure Mediation Program (the Program), appellants
Patrick and Orlene Malloy filed a petition for judicial review in district
court. The Malloys contended that respondent Wells Fargo Bank’s
conduct was sanctionable because it failed to produce certain required
documents at the mediation. See NRS 107.086(4), (5). The district court
denied the Malloys’ petition and ordered that a foreclosure certificate be
issued. As explained below, we reverse.
Standard of review

“[W]e. . review a district court’s decision regarding the
imposition of sanctions for a party’s participation in the Foreclosure
Mediation Program under an abuse of discretion standard.” Pasillas v.
HSBC Bank USA, 127 Nev. „ 255 P.3d 1281, 1286 (2011).
Wells Fargo failed to produce the required documents
To obtain a foreclosure certificate, a deed of trust beneficiary
must strictly comply with four requirements: (1) attend the mediation, (2)

participate in good faith, (3) bring the required documents, and (4) if
attending through a representative, have a person present with authority
to modify the loan or access to such a person. NRS 107.086(4), (5); Leyva
v. National Default Servicing Corp., 127 Nev. „ 255 P.3d 1275,
1279 (2011) (concluding that strict compliance with the Program’s
requirements is necessary).

NRS 107.086(4) states that the deed of trust beneficiary or its
representative “shall bring to the mediation the original or a certified copy
of the deed of trust, the mortgage note and each assignment of the deed of
trust or mortgage note.” Moreover, the Foreclosure Mediation Rules
(FMRs) require the beneficiary or its representative to provide the
homeowner with an appraisal of the homeowner’s home prior to the
mediation. FMR 11(1), (3)(b).

Here, the record on appeal demonstrates that Wells Fargo
failed to produce a certified copy of the mortgage note and that it failed to
provide the Malloys with an appraisal prior to the mediation. Because
Wells Fargo failed to strictly comply with the Program’s requirements, the
district court abused its discretion in ordering a foreclosure certificate to
be issued. Levva, 127 Nev. at , 255 P.3d at 1279; Pasillas, 127 Nev. at
, 255 P.3d at 1286.

On remand, the district court must determine how Wells
Fargo should be appropriately sanctioned. Pasillas, 127 Nev. at , 255
P.3d at 1286-87 (construing NRS 107.086(5) to mean that a violation of
one of the four statutory requirements must be sanctioned and that the
district court is to consider several factors in determining what sanctions
are appropriate). Accordingly, we

ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.

[ipaper docId=70123911 access_key=key-x73lindxwi0mg2wsu2m height=600 width=600 /]


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