Once a lender files a Notice of Default (NOD) on a delinquent loan, it takes 3 months before they can file a Notice of Sale (NOS), then 3 more weeks before the Trustee’s Sale resulting in a Trustee’s Deed (TD ) can occur on the courthouse steps. Since AB 284 took effect on 1 October 2011 virtually halting NODs, it was possible that January foreclosure activity would show some impacts from AB 284. Didn’t happen.
NODs were up 30% to 36 in January from 28 in December and 15 in November. AB 284 still has a stranglehold on new NOD filings, though a few Fannie Mae held loans are starting to sneak through. NOSs fell to 346 from 401 in December and 372 in November. The drop off may be due to AB 284, but the minimal fall attests to the huge number of properties lurking out there with NODs filed prior to 1 October 2011 that are not affected by the bill’s reporting standards. TDs actually rose to 257 from 223 in December and 233 in November.
The Nevada Attorney General filed a suit a few months back against LPS (Lender Processing Services) over robosigning violations. LPS just shot back with a motion to dismiss, saying robosigning is explicitly OK per Nevada law. Read more about it HERE.
HOA – The initial Board of Directors of an HOA is appointed by the master developer. This allows the developer to control the project, the ability to change directions as market conditions dictate, and control the developer friendly terms of the CCRs (for example, the Montage CCRs contained a clause that residents couldn’t object to any other projects the developer might propose with 3 blocks!). Under Nevada Revised Statutes, when 25% of the properties are sold, one of the board members must be elected by the actual homeowners. At 50%, one-third of the board must be made up of members elected by the homeowners. When 75% of the properties within a development have been sold, the developer must within 60 days call for an election for an all-owner board and turn the HOA over to the board elected by the homeowners. This is right out of the Nevada Revised Standards (NRS) Chapter 116 regarding Common Interest communities.
The makeup for the Somersett HOA board of directors (currently 2 developer members and one homeowner member) is on the agenda, at the demand of homeowners, for the open session meeting coming up 9 February at 9 AM. They believe that the developer, Somersett Development LLC and related entities, does not control at least 25% of the 3062 units (3437 when Sierra Canyon II eventually annexes into the association) approved by Reno for the project, and must relinquish control of the board NOW. I’ve reviewed all the current developer owned properties, and have to strongly agree with the parties challenging the continued developer control of the board.
Control of the HOA board is the prized possession of any master developer, and it is hard to conceive of any developer not knowing (and playing) the loss of control threshold. Realistically and probably legally, Somersett Development should have ceded control of the board at least a year ago as they sold off some properties and lost others to foreclosure and deeds in lieu of foreclosure, and fell below the control threshold.
The second issue that will be addressed is can an “illegal” board enter into binding contracts, and can those contracts be unwound? The Somersett HOA recently entered into an agreement with the Somersett Golf and Country Club (SGCC), a separate private entity, that at heart provides up to a $7M subsidy from HOA member dues to SGCC over the next 10 years. Some of the Somersett homeowners are seriously not amused, and that could make the HOA meeting on the 9th Jerry Springer material.