Appeals court dashes hopes for investors who bought foreclosed homes in Nevada
CARSON CITY — Real estate investors who took advantage of a Nevada law during the foreclosure crisis to acquire several thousand foreclosed homes at bargain prices got what could be bad news recently courtesy of the 9th Circuit Court of Appeals.
In a 2-1 decision Aug. 12, a court panel said a Nevada law requiring mortgage lenders to be alerted of a foreclosure by a homeowners association only if the lender had requested notice is unconstitutional. The panel said the requirement of an “opt-in” request is a violation of the 14th Amendment requiring due process.
In the specific case, the court sent the case favoring Wells Fargo Bank and against the Bourne Valley Court Trust back to District Court for further proceedings.
The complex disputes over Nevada’s foreclosure laws date to the foreclosure crisis that began in 2008. The law was changed by the Nevada Legislature in 2015 to resolve the notice issue and other concerns.
But if the appeals court ruling is upheld, the acquisition of thousands of homes by investors who paid just a few thousand dollars to satisfy HOA-filed super-priority liens could be in jeopardy. The sales could be nullified because of the 9th Circuit ruling, restoring the status of the foreclosed homes with the mortgage lenders again holding valid liens.
Copy of the opinion below…
Bourne Valley Court Trust v. Wells Fargo Bank, N.A.