State Supreme Court orders banks be sanctioned for not following foreclosure mediation

While the constitutionality of the state’s foreclosure mediation law is being challenged, the Nevada Supreme Court has ruled that penalties should be imposed on two lending companies that failed to follow those rules.

The court said Washoe District Judge Patrick Flanagan should determine the appropriate sanctions against Wells Fargo Bank and First American Loanstar-MERS for their conduct in two separate cases.

In 2009, the Legislature, responding to a wave of foreclosures, enacted a law setting up a system for lenders and homeowners to meet to see if some compromise might be worked out to avoid a foreclosure.

From September 2009 until June 30, 2011 there were 12,556 mediation meetings.

But in another case before the Supreme Court, Wells Fargo is challenging the validity of the foreclosure mediation law, saying it is taking real property without just compensation.

In the two cases decided Wednesday, the court ruled that in both instances the lending companies failed to bring to the mediation sessions certified copies of the mortgage note and appraisals of the property as required by law.

The court overturned both decisions of Flanagan, who issued foreclosure certificates after the unsuccessful mediations.

Rest here…