In February 2012, 49 state attorneys general, including Nevada’s AG, and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers:

Foreclosure Problems



•Bank of America


•JPMorgan Chase

•Wells Fargo


This is the largest consumer financial protection settlement in US history.

The agreement settles state and federal investigations finding that the country’s five largest mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.  Both of these practices violate the law.

If you lost your home to foreclosure in Nevada between 2008 and 2011, you have probably already been notified that you may be eligible to participate in Nevada’s settlement with the National Mortgage Settlement Administrator.  THE FINAL DAY TO SUBMIT A CLAIM FORM TO BE ELIGIBLE TO RECEIVE PAYMENT IS FRIDAY, JANUARY 18, 2013.

To see if you are eligible, you may visit


Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topics

Click here to listen to the Legal Hour on KDWN AM720 from November 7th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Bubba Grimsley, Esq., an attorney licensed in Alabama.  Mrs. Black Chernine and Mr. Grimsley discuss post-election issues (2:40), voters’ decision making process (3:45), misplaced priorities between domestic vs. foreign issues (6:00), results of the election (7:30), recreational marijuana initiatives (11:05), federal vs. state law (12:25), snapshot of current big banks’ legal trouble  (15:02), Nevada’s real estate ghost inventory (19:53), how HOAs can foreclose on a property and its responsibilities to home owners (21:36) and how to deal with a mechanics lien (28:23).

Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topics

Click here to listen to the Legal Hour on KDWN AM720 from April 25th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Bubba Grimsley, Esq., an attorney based in Alabama.  Ms. Black Chernine and Mr. Grimsley discuss how a bankruptcy case in Louisiana shows how mortgage servicers take advantage of homeowners (2:00)(20:00)(30:15), bank fees charged during a default (12:15), chapter 7 vs. chapter 13 (14:00) and how divorce affects bankruptcy(17:40).

Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

Wall Street knew all of the mortgages were bad when they created or bought and sold them. Furthermore, they knew the warranties of quality they made regarding the caliber of the loans, whether to the certificate purchasers of the Residential Mortgage Backed Securities (“RMBS”) pools or the Government Sponsored Entities (“GSE”), were meaningless when they made them. It did not take hindsight to determine that those pools should not have been rated “AAA.”

Fannie Mae and Freddie Mac knew that the related documentation and the serving records were problematic for over a decade.  The Federal Government has also known of the problems as evidenced by consent orders signed over a year ago by 14 of the major servicers. They promised then to do what should have been done all along: abide by laws and sound business practices.

Congress knows. The Senators know. The Attorneys General are aware. Countless committees, reports, investigations and press releases cite the blasphemous practices and unconscionable conduct of the industries related to real estate and its financing. Each have blustered “something must be done,” “what an outrage,” “vote for me, I will change all of this.”

Borrowers also knew it was too good to be true.  Even if they did not have to produce documents to support stated income on mortgage applications, they knew that the applications were often falsified by originators who would never have any “skin in the game” of the debt roulette they were playing.

Is there anyone left who can claim ignorance that our mortgage market from start to foreclosure is rife with fraud, felons, misfits and idiots? Ironically, everyone claims it is someone else’s fault and that some other party should suffer the finger-pointing and scaffold. Poppykosh!

This dreadlock of mortgage morass, main street malaise and political uselessness has been twisting up for decades. The notion that it can be undone with the stroke of a pen is just that, a notion. You cannot be fit without discipline. You cannot cure lethargy without energy and you cannot fix systemic corruption and the real estate market with the Multi-State Settlement.

The Multi-State Settlement (“MSS”) involves every state, save and except Oklahoma.  The MSS was entered into by the participating states and the following five major lenders (“Banks”):

  1. Bank of America $11.82 Billion (who holds the Countrywide loans that were not sold);
  2. Wells Fargo $5.35 Billion;
  3. Ally Financial $310 Million (formerly GMAC);
  4. JP Morgan Chase $5.29 Billion; and
  5. CitiCorp $2.2 Billion.

However, the Banks are not the only beneficiaries of the MSS for there is a release that includes their subsidiaries, affiliates and related entities, regardless of whether the subsidiaries to these companies are past, present or (presumably) acquired in the future.  The net is cast quite far and wide in terms of Bank releases. The activities covered are similarly endless. However, they are listed as the acts or failures that relate to origination, servicing and foreclosure; the entire mortgage process.

Who, besides Banks and offending entities, were eager to see the settlement executed? None other than the Department of Justice (whom we pay to peruse and convict criminals, not settle with them); the Federal Reserve Board; the Conference of State Bank Supervisors; the Federal Housing Finance Authority (Freddie and Fannie Regulator); and the HUD. Many of these players have filed, pursued or exacted their own settlements with the Banks.

It is also interesting to note which states’ Attorneys General and federal actors were involved in the committee that put the proposed settlement together. It shall be interesting as well to watch these individuals get federal or other coveted appointments in the future.

  1. Pam Bondi, Florida Attorney General
  2. Tom Miller, Iowa Attorney General
  3. Eric Holder, U.S. Attorney General
  4. Sean Donovan, U.S. Secretary of Housing & Urban Development
  5. Lisa Madigan, Illinois Attorney General

It will also be these “civic-minded” individuals that lead the MSS complaint/compliance committee. You should be asking yourself now whether these individuals are the best suited for the continued oversight and enforcement of this program as they were the very soft-heeled ones to come up with it.

Despite being cash-strapped and eager to receive an infusion of capital to cover budget shortfalls (like many other states in the Union) the following states were hold-out states, true hold-out states. They actually worked out a more advantageous deal for their constituents.

  1. Arizona
  2. California
  3. Delaware
  4. Massachusetts
  5. New York
  6. Nevada
  7. Oklahoma (never signed on to MSS, but took the hard money and not the opportunity for write-downs).

The states’ Attorneys General were forced to choke down the MSS much like a goose making pate for bankers. Thankfully, Nevada managed to secure a better settlement than most, and so we should have, as we are the hardest hit state.

Tisha Black Chernine, Esq.

Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topicsClick here to listen to the Legal Hour on KDWN AM720 from January 11th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses breach-of-contract issues (3:05), short sale approval during the foreclosure process (5:34), if quit claiming fix credit issues (11:00), how safe is it to refinance (15:20), New York’s investigation forced placed insurance policies (19:50)(31:10), how the eviction process works (21:55), using an abandoned house for  garage sales (25:50), the status of the Supreme Court Case regarding MERS (32:22) and help for VA loans (36:30).

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

Wells Fargo in Trouble With the Fed

Last Wednesday, the Federal Reserve  issued a consent cease and desist order and assessed an $85 million civil money penalty against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines. This has been a long-time coming since the Federal Reserve began its investigation into one Wells Fargo for fraudulent and neglectful lending practices, such as steering prime-eligible buyers into subprime mortgages and falsifying borrowers’ financial information.

While Wells Fargo has yet to admit to any serious malfeasance, the company entered into the agreement with the Federal Reserve to overhaul its mortgage practices.  As John Stumpf, chairman and CEO of Wells Fargo, put it, “The alleged actions committed by a relatively small group of team members are not what we stand for at Wells Fargo. Fair and responsible lending practices have been at the core of our culture, and they will continue to guide us as we work closely with the Federal Reserve to provide restitution to customers who may have been harmed, and to reinforce internal controls so they further reflect Wells Fargo’s commitment to helping customers succeed financially.”

Tisha Black Chernine, Esq.

The Nevada Supreme Court recently addressed a critical issue involving the Foreclosure Mediation Rules in the case of Leyva v. National Default Servicing Corp., App. No. 55216, Appeal from the Clark Co. District Court, A-10-600-651, 127Nev. ___, ___ P.3d ___ (Adv. Op. No. 40, July 7, 2011).  The issue relates to the obligation of the lender to bring documents to the mediation that reveal who is the owner of the deed of trust and mortgage note.  The Court’s ruling in this case will immediately arm homeowners with a serious weapon against the big banks and their servicers.  Used in the correct way, many foreclosures may be stopped because of this recent opinion.

The State of Nevada Foreclosure Mediation Program was created in 2009.  Facing foreclosure, the homeowner may request mediation through which a modification to home loan may be achieved.  Once the homeowner requests mediation, no further action may be taken to exercise the power of sale until the completion of the mediation.  The Nevada Supreme Court created the Foreclosure Mediation Rules (“FMR”) to govern those mediations.

The Leyva case presented the Nevada Supreme Court with an opportunity to interpret a critical portion of the mediation program requirements.  NRS 107.086(4) and FMR 5 (8) (a) both provide: “In addition to the documents required by Rule 8 herein, the beneficiary [usually the lending bank] must bring to the mediation program the original or a certified copy of the deed of trust, the mortgage note and each assignment of the deed of trust and the mortgage note.”  NRS 107.084(5) provides that “[i]f the beneficiary of the deed of trust or the representative fails to attend the mediation, fails to participate in the mediation in good faith or does not bring to the mediation each document required by section 4 or does not have authority or access to person with authority required by section 4, the mediator shall prepare and submit to the Mediation Administrator a petition and recommendation concerning imposition of sanctions against the beneficiary of the deed of trust or the representative, as the court deems appropriate, including, without limitation, requiring a loan modification in the manner determined proper by the court.”

The Nevada Supreme Court faced the issue of whether the lender’s failure to bring the required assignments and other documents as required by NRS 107.086(4) constituted bad faith under NRS 107.086(5).  The answer to the question is not clear from the language of the statute or the FMR.

At the mediation in Leyva, the lender failed to deliver the assignments of the deed of trust and the mortgage note.  However, the mediator did not find that the lender’s failure to provide the documents or other actions constituted a bad faith. Leyva disagreed and appealed the decision of the mediator to the Clark County District Court, Judge Donald Mosely.  Ultimately, Judge Mosely agreed with the lender and entered an order finding that “there is a lack of showing of bad faith…”

Leyva appealed the decision of Judge Mosely to the Nevada Supreme Court.  The Nevada Supreme Court issued its ruling on July 7, 2011 and rejected the lender’s arguments that it had participated in the mediation in good faith.  The Nevada Supreme Court determined that since the statute used the word “shall” in reference to the obligation to bring certain documents to the mediation, strict compliance, not substantial compliance, was required.  The Supreme Court went on the write “The legislative intent behind requiring a party to produce the assignments of the deed of trust and mortgage note is to ensure that whoever is foreclosing ‘actually owns the note’ and has the authority to modify the loan.”

The Supreme Court did not stop there.  It felt compelled to then discuss what constitutes a valid assignment of deeds of trust and mortgage notes.  By reaching this issue, the Supreme Court set the obligations for each lender with regards to their obligation to produce documents at mediation.

The Supreme Court then discussed the law regarding the assignment of a deed of trust.  Since an assignment of an interest in land must be in writing, the Supreme Court concluded that “to prove that MortgageIt properly assigned its interest in land via the deed of trust to Wells Fargo, Wells Fargo needed to provide a signed writing from MortageIt demonstrating that transfer of interest.”

The Supreme Court then analyzed the method by which the interest in a mortgage note may be transferred and looked to Nevada’s Uniform Commercial Code – Negotiable Instruments.  The Supreme Court wrote “[t]he obligor on the note has the right to know the identity of the entity that is “entitled to enforce” the mortgage note under Article 3, see NRS 104.3301, “[o]therwise, the [homeowner] may pay funds to a stranger in the case.”  (Citation omitted.)

The Supreme Court rejected the arguments of Wells Fargo that mere possession of the mortgage note was sufficient.  “[W]e conclude that Article 3 clearly requires Wells Fargo to demonstrate more than mere possession of the original note to be able to enforce a negotiable instrument under the facts of this case.”  To meet its obligation under the Uniform Commercial Code, Wells Fargo had to show both endorsement of the mortgage note to it by the original lender and possession of the note.

Alternatively, Wells Fargo could have also demonstrated a transfer of the note to it.  To demonstrate a transfer, Wells Fargo was obligated to prove that it was given the mortgage note for the purpose of enforcing it.

The Supreme Court then concluded that since Wells Fargo had failed to produced documents to demonstrate either a valid endorsement or transfer, Wells Fargo had neither demonstrated that it was entitled to foreclose on the property nor that it had authority to mediate with regards to the note.  The Supreme Court, relying on its other opinion issued the same day, Pasillas v. HSBC Bank, 127Nev. __, __ P.3d __, Adv. Op. 39, July 7, 2011), ruled that the failure of Wells Fargo to bring the required documents “is a sanctionable offense under NRS 107.086 and the FMRs.”  The Supreme Court then remanded the case to the district court for determination of the appropriate sanction.

This opinion seems to indicate that the “too big to fail” banks have met their match with the Nevada Supreme Court.  The ramifications of this opinion will make the huge banks think twice before they allow the Nevada Supreme Court to hear any other issues concerning their foreclosure processes.  This opinion arms homeowners, and especially their counsel, and creates an opportunity to stop the banks and their servicers from moving forward with a foreclosure with less that the full documentation proving their ownership of the mortgage note, and the authority to foreclose under the terms of the deed of trust.

The true scope and impact of the Leyva opinion on the foreclosure and mediation process in the Las Vegas valley will not be revealed any time soon.  The banks will likely take any steps necessary avoid sanction as well as prevent the Nevada Supreme Court issuing any other opinions regarding the foreclosure process or the mediation program.

Thomas G. Grace, Esq.

Government Programs and Principal Reductions

Treasury officials confirmed that the Administration was examining principal reduction as a tool in the modification arsenal. Shortly thereafter, Bank of America unveiled a principal reduction program for borrowers whose LTV ratios are more than 120% (which is a large percentage of Nevadans as approximately 62% of our market is thought to be underwater).  Hopes have been high as they were with prior announcements of principal reduction programs.

The  Bank of America program targets three mortgage products:  1) subprime loans; 2)payment-option mortgages with negative amortization features; and 3) 2-1 adjustables that offered teaser interest rates for the first two years then converted into annual adjustments. The program is an earned or phased in approach to the reduction. The idea being, if you stay current over a specified period of years, you will gradually earn the whole of the agreed upon reduction amount.

Following suit, Wells Fargo has also put together a selective principal reduction program for certain underwater loans. The hope is that, either through in-house or government leaning, principal reduction programs will begin to take root.  Accordingly, be aware and intrigued; question your lender or servicer if you are interested in keeping your home. If your inquiries are shut down or you are not certain as to what type of loan you purchased, you can utilize state or federal regulations to help you get the information that you need.

Tisha Black Chernine, Esq.

Tisha Black Chernine talks to KKLZ

Click here to hear a clip from the KKLZ radio show in which Tisha Black Chernine, Esq., explains why banks stopped some foreclosure proceedings due to not being able to produce proper documentation.

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Click here to read Katherine Porter’s testimony before the Congressional Oversight Panel at the Hearing on the TARP Foreclosure Mitigation Program in which she describes how the allegations of legal errors in the foreclosure process may impact the housing markets, the soundness of banks, and the overall financial markets.

Jail Foreclosure FraudThe leader of a nationwide investigation of foreclosure fraud told homeowners Tuesday that the probe will have some serious consequences for bankers.  To read the full article click here.

Freddie Mac  and Fannie Mae  are postponing foreclosure evictions on mortgage loans they own or back from December 20th to January 3rd.

Wells Fargo will freeze foreclosure sales for the holiday.  The lender’s freeze will run the same two week period as that of Fannie Mae and Freddie Mac.  It will only postpone sales of home loans that it owns.  For other loans that it only services, that are owned by others (“owners” or “ investors”), it will only postpone sales if authorized by the investor.

Bank of America may postpone foreclosure sales  on loans it owns or that  are owned by investors that give the bank delegated authority to act.   Like Wells Fargo, Bank of America will postpone sales of homes whose loans are held by investors only if authorized by the investor.

Carlos L. McDade, Esq.

A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.  To read the full article please click this link.

Tisha Black Chernine, Esq. is quoted in the Las Vegas Review Journal’s article, Homeowner gets foreclosure reprieve regarding the breakdown of communication between mortgage specialists and within banks’ mortgage departments.

Fannie Mae and Freddie Mac forced lenders to repurchase $3.1 billion in mortgages out of their books in the first quarter of 2010.   In a regulatory filing explaining the forced repurchases, Fannie Mae stated that when they discover delinquent loans that do not meet underwriting and eligibility requirements, Fannie Mae makes demands for lenders to either repurchase them or compensate for losses sustained to the loan.  According to regulatory filings made by the GSEs earlier in the year, the two companies are expecting to return as much as $21 billion in home mortgages to banks in 2010. The nation’s four largest lenders – Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase – are the largest sellers of home loans to Fannie and Freddie and will likely take the biggest hits.