Agency gets authority to set fines for bilked homeowners

By Cy Ryan

Thursday, Aug. 27, 2009 | 1:55 a.m.

CARSON CITY – Nevada's high home foreclosure rate has resulted in a lot of homeowners being bilked. People who pass themselves off as consultants promise the homeowner that in exchange for a fee of $3,000 or $4,000 they will save their home or get them a lower interest rate, but never deliver.

Joseph Waltuch, the state commissioner of mortgage lending, adopted rules Tuesday giving his agency authority to license such consultants and to take disciplinary action, including fines up to $10,000 for violations.

Waltuch says his office receives about 25 complaints a month, mostly from Las Vegas, from homeowners who say they paid up-front and were promised help to save their residences, but nothing was done.

The homeowner fills out an application, giving personal information, including his credit card and bank numbers.

In one case, Waltuch said an individual collected a “ton of money” from Nevadans and fled to the Philippines. And he had their credit card information, allowing him to cash in at the expense of the homeowner.

Assemblyman Marcus Conklin, D-Las Vegas, one of the prime backers of a 2009 bill, said legislation was passed in 2007 to regulate the industry. But he said the attorney general’s office said the law wasn’t specific enough to allow the mortgage lending division to take control.

He said the abuses in Southern Nevada are “enormously prevalent.” The 2009 law made it clear the mortgage lending division had authority to regulate this practice.

To show urgency, the Legislative Commission approved the regulations a day before Waltuch held his final hearing and adopted them. Only once or twice in the last 15 years has the commission approved the regulations before they were adopted.

Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, said Nevada had the highest foreclosure rate in the nation. “It would be wrong if we don’t do anything,” she said.

This regulation won’t stop foreclosures, Waltuch says. But it gives his agency some teeth to stop some of the related fraud.

The division has the authority to license and do background checks on foreclosure consultants and loan modification consultants. Businesses that perform this service also must be licensed.

These companies or agents must place the up-front money collected from the homeowner in a trust account and can draw down only when they deliver a service.

Education requirements are in place that those in the business must get anywhere from 15 hours to 25 hours of instruction. Bonds must be posted with the lowest amount at $75,000.

Meanwhile the Nevada Supreme Court announced that the first two mediation sessions in a new foreclosure program will be held Sept. 14 in Las Vegas.

Under the program the homeowner and representatives of lenders get together with a mediator to work out an agreement to save the home from foreclosure. The Legislature put the program under the Supreme Court.

Verise Campbell, manager of the program, said the first 97 mediators were appointed last week. And there are more than 650 requests for mediation so far.