As Ground Zero of the country's foreclosure crisis, Nevada has inevitably seen a rise in foreclosure fraud. A conviction carries fines, incarceration, and it may threaten the defendant's professional prospects.
In this article, our Las Vegas criminal defense attorneys describe the Nevada crime of foreclosure fraud under NRS 645F.400. Continue reading to learn about what constitutes foreclosure fraud, how courts penalize it, and ways these charges may be defended against and defeated.
When homeowners face foreclosure, they may consider hiring a "foreclosure consultant." Foreclosure consultants are people who try to stop or delay a foreclosure sale, and the homeowner pays them a fee in return for their services.
As with any profession, there are many laws governing the practice of foreclosure consulting. And sometimes a well-meaning foreclosure consultant violates the rules without realizing it. In Nevada, it is considered fraud for foreclosure consultants to do any of the following:
- to receive compensation or fees, or merely to charge compensation or fees, outside the terms of their contracts with a homeowner
- to take as compensation the homeowner's wage assignment, a lien, an assignment of the homeowner's equity, or any other interest in a residence or other security
- to receive money or property from any third party for services to a homeowner unless this transaction is first fully disclosed to the homeowner
- to take a homeowner's "power of attorney" for any reason other than to inspect documents as provided by law
- to misrepresent any aspect of any covered service provided by the foreclosure consultant(s)
- to make any claim about the benefits or performance of any the foreclosure consultants' services unless the consultants have "competent and reliable evidence" which backs up their claims
In short, a foreclosure consultant may be prosecuted for fraud if he/she acts dishonestly in any way with the homeowner with regard to his/her services, payment, and chances of success. Reno NV criminal defense attorney Michael Becker illustrates a classic foreclosure fraud scenario in Nevada:
Example: Jim, a foreclosure consultant, solicits Bob, a struggling homeowner in Henderson who does not have enough money to pay for Jim's services. As compensation for trying to delay a foreclosure, Jim takes a lien on Bob's home. If caught, Jim can be booked at the Reno Henderson Detention Center for foreclosure fraud.
Note that it does not matter if Jim's successful in delaying the foreclosure. Also note that it does not matter if Bob eventually pays Jim enough money to release the lien. Merely the act of taking a lien as compensation for foreclosure consulting services is a crime in Nevada.
Another common foreclosure fraud case in Nevada occurs when the consultants allegedly do not do any work. Elko NV criminal defense attorney Neil Shouse explains how this scam operates:
Example: John searches public records in Carson City to find out which houses have pending foreclosures. John then contacts the homeowners, claims he is a foreclosure consultant, and promises to stop the foreclosure in return for an upfront payment. John collects the payments without ever doing any work to prevent the foreclosure. If caught, he could be booked at the Washoe County Detention Center for foreclosure fraud.
Foreclosure consultants are vulnerable to criminal prosecution in Nevada whenever they do not perform all the services that they promised the homeowners. That does not mean that the consultants have to be successful in preventing foreclosure . . . they just have to have try and to carry out the terms of the contract.
Nevada's current foreclosure fraud laws were implemented only in late 2011. Therefore, there is little precedence for how prosecutors handle these cases. But this actually works to a defendant's advantage because it allows defense lawyers to be creative when crafting a defense. The following are just three common ways to fight Nevada allegations of foreclosure fraud:
- Lack of evidence. The prosecution has the burden to prove that a defendant is guilty beyond a reasonable doubt before the court can convict him/her. So if the defense attorney can demonstrate that the state's evidence is not sufficient, consistent and reliable enough to sustain a guilty verdict for foreclosure fraud, then the case should be dismissed.
- No fraud. When a foreclosure consultant fails to delay or stop a foreclosure, that does not necessarily mean he/she committed fraud. If a defense attorney can show that the consultant always abided by the law and was honest with the homeowner, he/she should not be held criminally liable.
- Illegal police search. Police may conduct searches and seizures of evidence as long as they do not overstep Constitutional bounds. If the police may have performed an illegal search in a foreclosure fraud case, the defense attorney would file with the court a motion to suppress evidence in Nevada. If the judge then grants the motion and disregards all the evidence obtained from a faulty search, the prosecution may be left with insufficient proof and may drop the whole case.
- 1 to 10 years in Nevada State Prison, and/or
- up to $10,000 in fines
But if the prosecutor believes the defendant has committed "a pattern" of foreclosure fraud, it is punished more harshly as a category B felony in Nevada carrying a sentence of:
- 3 to 20 years in Nevada State Prison and/or
- up to $50,000 in fines
Note that in addition to criminal penalties, defendants convicted of foreclosure fraud in Nevada face other penalties as well from the state, the alleged victims, and professional associations:
- Nevada's Commissioner of Mortgage Lending may levy a fine of up to $25,000. (The defendant is entitled to an administrative hearing first to protest the fine.)
- The homeowners in a foreclosure fraud case may bring a civil action against the foreclosure consultant in order to recover damages. The court may also award punitive damages and reasonable attorney's fees and costs.
- Foreclosure consultants may also lose their real estate and mortgage broker licenses.
Therefore, defendants who are accused of foreclosure fraud are encouraged to seek legal counsel as soon as possible. They may be able to resolve the case before the matter snowballs and to save the defendant's professional standing in the community.
Arrested? Call . . . .
If you are being charged with "foreclosure fraud" in Nevada, phone our Las Vegas criminal defense attorneys at 702-DEFENSE (702-333-3673) for a free consultation to discuss your options. We may be able to get the charges lessened or thrown out altogether. And we are also ready to take your matter to trial in pursuit of a "not guilty" verdict to keep your record clean.
To learn about California foreclosure fraud laws, go to our page on California foreclosure fraud laws.