how the deed of trust was transferred back to Wells Fargo before its
assignment to U.S. Bank.
After the mediation concluded without resolution, the Augers
filed a petition for judicial review with the district court, seeking a
determination that Wells Fargo had participated in the mediation in bad
faith. The district court found that the assignments created confusion
over whether the proper beneficiary was present and whether that party
had authority to negotiate the loan modification. Despite finding that the
assignments did not comply with the mediation program requirements,
the court determined that Wells Fargo participated in good faith.
However, the court sanctioned Wells Fargo in the amount of $15,000 for
the existence of an alleged error in the 2004 assignment and a pattern of
documentary mistakes. The court declared that it would order the
issuance of a foreclosure certificate once the sanctions were paid.
Payment has been stayed pending the outcome of this appeal. The Augers
and U.S. Bank, through Wells Fargo, now appeal and cross-appeal,
respectively, the district court's order.
The Augers argue that they were denied a meaningful
mediation because Wells Fargo failed to bring accurate documentation of
the assignments to the mediation. When participating in foreclosure
mediation, a deed of trust beneficiary must: (1) attend, (2) participate in
good faith, (3) bring all required documents, and (4) if attending through a
representative, have a person present, or have access to a person, with
authority to modify the loan. Pasillas v. HSBC Bank USA, 127 Nev., Adv.
Op. 39, 255 P.3d 1281, 1285 (2011); see also NRS 107.086(5). Those
required documents include "the original or a certified copy of the deed of
trust, the mortgage note and each assignment of the deed of trust or
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mortgage note." NRS 107.086(5). If the district court finds noncompliance
with the aforementioned requirements, a certificate of completion must
not issue. Pasillas, 127 Nev., Adv. Op. 39, 255 P.3d at 1286 (noting that
failure to comply with any of these four requirements is a statutory
violation, which would "prohibit[ ] the program administrator from
certifying the foreclosure process to proceed and may also be
sanctionable"); see Holt v. Reg7 Tr. Servs. Corp., 127 Nev., Adv. Op. 80,
266 P.3d 602, 607 (2011) (stating that "denial of [a] foreclosure mediation
program] certificate follows automatically from a finding• [that] the
statutory [program] requirements have been shirked").
The district court found that Wells Fargo did not strictly
comply with the mediation program requirements because it failed to
produce an assignment document showing that J.P. Morgan had
transferred its interest back to Wells Fargo before assigning it to U.S.
Bank. Nevertheless, the district court found that Wells Fargo's
noncompliance did not preclude the issuance of a certificate of completion.
We conclude that the district court erred in ordering a
mediation certificate to be issued after it expressly found noncompliance
with NRS 107.086(5). Wells Fargo did not produce the assignments as
required by NRS 107.086(5) and, thus, the Augers were denied a
meaningful mediation. There was clearly a missing assignment and some
confusion about whether Wells Fargo had authority to negotiate the loan
modification. Specifically, documents evidencing a post-2004 assignment
from J.P. Morgan to Wells Fargo/Wachovia, or showing that Wells Fargo
was the proper representative of the beneficiary of the deed of trust, were
not before the foreclosure mediation.
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Because Wells Fargo violated the statutory foreclosure
mediation requirements, the certificate of completion should not have been
issued. Holt, 127 Nev., Adv. Op. 80, 266 P.3d at 607. We therefore
remand this matter to the district court with instructions to order a new
mediation and we decline to reach the parties' other arguments.
Accordingly, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.
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