, Ap dritilkeci 

129 Nev., Advance Opinion 61 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

WARREN MARKOWITZ, AN 

INDIVIDUAL;AND JACQUELINE 

MARKOWITZ, AN INDIVIDUAL, 

Appellants, 

vs. 

SAXON SPECIAL SERVICING;AND 

DEUTSCHE BANK NATIONAL TRUST 

COMPANY, 

Respondents: 

No. 58761 

FILED 

OCT 0_3 2013 

Appeal from a district court order den ying a petition for 

judicial review in a Foreclosure Mediation Pro gram matter. Eighth 

Judicial District Court, Clark Count y;Jessie Elizabeth Walsh, Judge. 

Affirmed. 

Law Office of Jacob L. Hafter & Associates and Jacob L. Hafter and 

Michael K. Naethe, Las Vegas, 

for Appellants. 

McCarthy& Holthus, LLP, and Kristin A. Schuler-Hintz, Las Vegas, 

for Respondents. 

BEFORE PICKERING, C.J., GIBBONS, HARDESTY, PARRAGUIRRE, 

DOUGLAS, CHERRY and SAITTA, JJ. 

OPINION 

PER CURIAM: 

Under Nevada's Foreclosure Mediation Program Rules, the 

deed-trust beneficiarymust submit an appraisal and/or a broker's price 

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opinion prepared "no more than 60 days before the commencement date of 

the mediation" that provides a valuation for the home that is the subject of 

the mediation. Saxon Special Servicing attended the underlying 

mediation and provided a broker's price opinion that was 83 days old at 

the time of mediation. We are asked to decide whether the mediation rule 

requiring an appraisal or broker's price opinion that is no more than 60 

days old at the time of the mediation mandates strict or substantial 

compliance. We conclude that because a current appraisal or broker's 

price opinion is intended to facilitate good-faith mediation negotiations, 

the rule's content-based provision governing the appraisal's age is 

directory rather than mandatory, and thus, substantial compliance with 

the 60-day provision satisfies the mediation rule. Because the broker's 

price opinion here contained a recent appraisal of the home's value 

adequate to facilitate negotiations, and the homeowners did not 

demonstrate that they were prejudiced by the 23-day age differential 

between the price opinion provided and the rule's age provision, Saxon 

Special Servicing substantially complied with the foreclosure mediation 

rule requiring a current appraisal, and we therefore affirm the district 

court's order denying the petition for judicial review. 

I. 

Appellants Warren and Jacqueline Markowitz obtained a 

home loan from Fremont Investment & Loan, for which they executed a 

promissory note in Fremont's favor. The note was later assigned to 

respondent Deutsche Bank National Trust Company and serviced on 

Deutsche Bank's behalf by respondent Saxon Special Services. After the 

Markowitzes stopped making payments to Saxon, a notice of default was 

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recorded. The Markowitzes then elected to mediate in Nevada's 

Foreclosure Mediation Program (FMP). 

The mediation occurred on December 28, 2010. Warren 

attended the mediation in person along with counsel, and Jacqueline 

attended by telephone. Saxon, purporting to represent Deutsche Bank, 

appeared through counsel. Saxon provided all of the required documents 

for the mediation, including an 83-day-old broker's price opinion (BP0). 1 

During the mediation, the Markowitzes raised concerns about Saxon's 

authority to participate. Saxon's counsel explained that she had the 

authority to negotiate a loan modification. The mediator spoke by 

telephone with a representative of Saxon who confirmed that Saxon was 

the servicer of the loan. Despite this confirmation, the Markowitzes were 

not convinced that Saxon had authority to negotiate a loan modification, 

and they elected to terminate the mediation. 

The mediator issued a statement indicating that the 

Markowitzes failed to provide certain documents for the mediation and 

that Saxon failed to bring a current BPO. The mediator's statement did 

not indicate that any party lacked authority to negotiate or failed to 

attend the mediation. The Markowitzes filed a petition for judicial review, 

which, after briefing and argument, the district court denied, concluding 

that the parties had negotiated in good faith with valid authority and that 

there was no reason to withhold the FMP certificate. This appeal 

followed. 

1A broker's price opinion is a "written analysis, opinion or 

conclusion. . . relating to the estimated price for a specified parcel of real 

property." NRS 645.2515(8). 

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A. 

The primary issue in this appeal concerns the 83-day-old BP0 

that Saxon provided for the mediation. The relevant foreclosure rule in 

place at the time of this dispute required that 

Mlle beneficiary of the deed of trust or its 

representative shall produce an appraisal done no 

more than 60 days before the commencement date 

of the mediation with respect to the real property 

that is the subject of the notice of default and shall 

prepare an estimate of the "short sale" value of the 

residence that it may be willing to consider as a 

part of the negotiation if loan modification is not 

agreed upon. 

FMR 8(3) (2010). The rule also permitted the mediator, in his or her 

discretion, to "accept a broker's price opinion letter (BPO) in addition to or 

in lieu of the appraisal." FMR 8(4) (2010). These rules have since been 

amended, 2but the amendments do not change our analysis. 

While the mediator here reported that Saxon failed to provide 

an "appraisal within 60 days of mediation," the district court, in its de 

novo review, concluded that although the BP0 was not prepared within 60 

days of the mediation, neither party acted in bad faith and there was no 

reason to withhold the FMP certificate. The Markowitzes maintain that 

document production at mediation requires strict compliance and that a 

2FMR 8 was renumbered to FMR 11, and the relevant portion of the 

rule currently provides that the trust-deed beneficiary or its 

representative must provide an "Appraisal and/or Brokers Price Opinion 

(BPO) not more than 60 days old (prior to the date of mediation)." FMR 

11(7)(e) (2013). 

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BP0 prepared beyond the 60-day limit precludes the issuance of an FMP 

certificate and mandates the imposition of sanctions. Respondents 

counter that the purpose of providing a BP0 or appraisal is to 

"substantiate the short sale value" that the parties may agree to in the 

event that a loan modification cannot be reached. Respondents insist that 

the BP0 provided at mediation set forth the value of the property that 

they would accept in a short sale, and that the Markowitzes were not 

prejudiced by the age of the BPO. In any case, respondents argue that 

because no short sale was ever discussed, as the Markowitzes elected to 

terminate the mediation, the BPO's age was of no relevance. 

To determine if a rule's provisions require strict or substantial 

compliance, this court looks to the rule's language, and we also consider 

policy and equity principles. Leyva v. Nat'l Default Servicing Corp., 127 

Nev. , 255 P.3d 1275, 1278 (2011). A rule may contain both 

mandatory and directory provisions. See Leven v. Frey, 123 Nev. 399, 408 

n.31, 168 P.3d 712, 718 n.31 (2007); see also Einhorn v. BAC Home Loans 

Servicing, LP, 128 Nev. „ 290 P.3d 249, 254 (2012); 3 Norman J. 

Singer, Statutes and Statutory Construction § 57:19 (6th ed. 2001). 

Generally, a rule is mandatory and requires strict compliance when its 

language states a specific "time and manner" for performance. Leven, 123 

Nev. at 407 n.27, 408, 168 P.3d at 717 n.27, 718. Time and manner refers 

to when performance must take place and the way in which the deadline 

must be met. See Village League to Save Incline Assets, Inc. v. State Bd. of 

Equalization, 124 Nev. 1079, 1088, 194 P.3d 1254, 1260 (2008) (discussing 

statutory deadlines); Leven, 123 Nev. at 407-08, 168 P.3d at 717-18 

(addressing three-day recording statute's deadline). "[F]orm and content" 

provisions, on the other hand, dictate who must take action and what 

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information that party is required to provide, Einhorn, 128 Nev. at , 

290 P.3d at 254 (stating that "who brings which documents. . . is a matter 

of 'form"). Because they do not implicate notice, form and content-based 

rules are typically directory and may be satisfied by substantial 

compliance, id., "sufficient to avoid harsh, unfair or absurd consequences." 

Leven, 123 Nev. at 407, 168 P.3d at 717 (quotation omitted). When 

substantial compliance is sufficient, a party's literal noncompliance with a 

rule is excused provided that the party complies with "respect to the 

substance essential to every reasonable objective" of the rule. Stasher v. 

Harger-Haldeman, 372 P.2d 649, 652 (Cal. 1962); see also 3 Sutherland 

Statutory Construction § 57:26 (7th ed. 2012). When a party accomplishes 

such actual compliance as to matters of substance, technical deviations 

from form requirements do not rise to the level of noncompliance. Stasher, 

372 P.2d at 652. 

Deciding whether a rule is intended to impose a mandatory or 

directory obligation is a question of statutory interpretation. See Village 

League, 124 Nev. at 1088, 194 P.3d at 1260 (interpreting a statutory time 

limit); see also Marquis & Aurbach v. Eighth Judicial Dist. Court, 122 

Nev. 1147, 1156, 146 P.3d 1130, 1136 (2006) (applying rules of statutory 

construction to the interpretation of a court rule). We review de novo 

issues of statutory construction. Leven, 123 Nev. at 402, 168 P.3d at 714. 

Our objective when interpreting a rule is to determine and implement its 

purpose. Village League, 124 Nev. at 1088, 194 P.3d at 1260; see Leyva, 

127 Nev. at , 255 P.3d at 1278-79. 

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1. 

FMR 8(3)'s language embraces both a mandatory time 

provision and a directory content provision related to the age of the 

appraisal used for negotiation purposes at the mediation. The rule states 

that the deed of trust beneficiary or its representative "shall prepare such 

papers and provide to the mediator, and exchange the items required to be 

exchanged with each other party . . . at least 10 days prior to the 

mediation."3FMR 8(1) (2010). One such paper is an appraisal and/or a 

BPO, which the deed-trust beneficiary "shall produce," and in so doing, 

"shall prepare an estimate of the 'short sale' value of the residence that it 

may be willing to consider as a part of the negotiation if loan modification 

is not agreed upon." FMR 8(3) (2010). The word "shall" is generally 

regarded as mandatory. Leyva, 127 Nev. at ,255 P.3d at 1279. Here, 

the rule provides that the deed-trust beneficiary or its representative 

"shall produce an appraisal" and "shall prepare an estimate of the 'short 

sale' value," FMR 8(3) (2010), and it "shall" do so ten days in advance of 

the mediation. FMR 8(1) (2010). The purpose of FMP mediation is to 

bring the parties "together to participate in a meaningful negotiation" to 

resolve the dispute. Einhorn, 128 Nev. at , 290 P.3d at 250 (citing Holt 

v. Reg'l Tr. Servs. Corp., 127 Nev. „ 266 P.3d 602, 607 (2011)). As 

the rule explains, the value of the home is key to the negotiation, FMR 

8(3) (2010), and providing the appraisal is one indicator that the trust3The current rule provides that "[t] he beneficiary of the deed of trust 

must prepare and submit, at least 10 days prior to the mediation" various 

documents to be provided to the homeowner and mediator. FMR 11(7) 

(2013). 

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deed beneficiary participated in the mediation in good faith. Pasillas v. 

HSBC Bank USA, 127 Nev. „ 255 P.3d 1281, 1284 (2011). Thus, 

the rule's mandatory language weighs in favor of requiring strict 

compliance, as the appraisal is a necessary document for the mediation 

and good-faith negotiations therein. 

2. 

But the rule also provides that the appraisal or BPO shall be 

prepared "no more than 60 days before the commencement date of the 

mediation." FMR 8(3) (2010). Separating the rule into its procedural and 

substantive parts, the "shall prepare such papers . . . at least 10 days prior 

to the mediation" language refers to the time when the deed of trust 

beneficiary is required to give the mediator and the homeowners the 

appraisal or BPO. This provision governs the time and manner for the 

deed of trust beneficiary to perform one of its duties to negotiate in good 

faith. Such provisions generally must be complied with strictly. Leven, 

123 Nev. at 408, 168 P.3d at 718. The rule's "no more than 60 days" old 

language, however, refers to the age of the appraisal or BPO, so that the 

parties may negotiate based on the home's present value, and thus, 

addresses form and content. Such requirements may generally be 

satisfied by substantial compliance. Id. 

The policy behind providing a recent appraisal and/or BPO at 

the mediation is to ensure that the fair market value of the property is 

known to both parties to the mediation at the time when they are 

negotiating a potential loan modification or determining whether a short 

sale would be appropriate. FMR 8(3) (2010). This allows for fully 

informed negotiations to occur and ensures that offers made are based on 

the present economic reality concerning the property and are consistent 

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with the FMP's purpose of bringing the parties together for meaningful 

negotiation. Einhorn, 128 Nev. at , 290 P.3d at 250 (citing Holt, 127 

Nev. at , 266 P.3d at 607). 

Requiring an appraisal or BPO to be no more than 60 days old 

facilitates informed negotiation based on accurate information, and this 

purpose may be met through substantial compliance, as a slightly older 

BP0 may be just as accurate as a 60-day-old BPO. See Leyva, 127 Nev. at 

255 P.3d at 1279. By contrast, a 200-day-old BP0 would likely reflect 

very different market valuations than a BP0 that was reasonably close to 

the FMR's 60-day valuation window. Providing a BP0 that is so old that 

it has become inaccurate frustrates the FMP's goal. Therefore, the policy 

concern regarding the age of an appraisal or BPO is a matter of content, 

which is directory, and the requirement may be satisfied by substantial 

compliance. Leven, 123 Nev. at 408, 168 P.3d at 718. 

3. 

In terms of equity concerns, despite the fact that the 

underlying 83-day-old BPO was beyond the 60-day limit, the Markowitzes 

made no effort to demonstrate that it was inaccurate. As such, there 

appears to be no prejudice or harm to the Markowitzes in having an 83- 

day-old BPO from which to negotiate a loan modification, see Einhorn, 128 

Nev. at , 290 P.3d at 254, and the goal of providing accurate 

information to ensure meaningful negotiations was accomplished. Id. at 

 , 290 P.3d at 250. Thus, in weighing the equities, where the 

Markowitzes have not shown any prejudice in their ability to negotiate a 

loan modification based on the BP0 age, and respondents would be denied 

the ability to exercise their contractual remedy of foreclosure for want of a 

strictly compliant 60-day or younger BPO, we conclude that withholding 

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the FMP certificate would be an inequitably harsh consequence, and 

equity favors reviewing the BPO for substantial compliance. See Holt, 127 

Nev. at , 266 P.3d at 606-07 (recognizing consequences of denial of the 

ability to foreclose). 

We therefore hold that an appraisal or BPO older than 60 

days may nevertheless substantially comply with the FMR sufficient to 

avoid the imposition of sanctions when there is no evidence that the BPO 

is so old that it would impair the FMP's policy of facilitating good-faith 

negotiations or the BPO's content is inaccurate to the extent that the 

homeowners would be prejudiced. Such is the situation in the present 

matter, and thus, the district court therefore correctly declined to impose 

sanctions and denied judicial review based on respondents' stale BPO. See 

Edelstein v. Bank of N.Y. Mellon, 128 Nev. „ 286 P.3d 249, 260 

(2012). 

B. 

One other issue remains for our consideration: whether 

respondents properly participated in the mediation session with the 

requisite authority to negotiate a loan modification. The Markowitzes 

argue that the mediation was flawed because Saxon did not establish valid 

authority to negotiate the loan. Respondents contend that Saxon, as 

Deutsche Bank's servicer, is a valid representative of Deutsche Bank for 

purposes of participating in the FMP and that the Markowitzes were 

aware of the relationship between Saxon and Deutsche Bank. 

The deed-trust beneficiary may participate in the FMP 

mediation directly or through a representative with proper authority to 

negotiate a loan modification. NRS 107.086(5). The record before us 

establishes Saxon's status as Deutsche Bank's loan servicer and its 

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authority to modify the loan in its capacity as Deutsche Bank's 

representative. The record contains the publicly recorded substitutions of 

trustee, which the Markowitzes included as exhibits to their petition for 

judicial review, and which demonstrate Saxon's status as the loan servicer 

and Deutsche Bank's status as the beneficiary of the deed of trust. 

Further, the evidence submitted in their judicial review proceeding shows 

that, until the Markowitzes ceased paying their mortgage, they made 

payments to Saxon, and thus, they recognized Saxon's role as the loan 

servicer. And before the Markowitzes defaulted on the loan, they entered 

into a stipulation that specifically recited that Saxon was the servicing 

agent for Deutsche Bank. Saxon therefore properly attended the 

mediation as Deutsche Bank's representative. See NRS 107.086(5); see 

also Edelstein, 128 Nev. at n.11, 286 P.3d at 260 n.11 (stating that a 

servicer is a valid representative under NRS 107.086(5)). 

The Markowitzes also contend that respondents lacked 

authority to participate in the FMP because MERS was incapable of acting 

as a beneficiary of the deed of trust, and thus, it could not have validly 

transferred the mortgage note to Deutsche Bank. This court rejected this 

argument in Edelstein, 128 Nev. at , 286 P.3d at 260-61 (holding that a 

MERS assignment of the deed of trust validly transfers the note), and 

based on the record in this matter, we conclude that through the valid 

MERS assignment, Deutsche Bank was the beneficiary of the deed of trust 

and holder of the promissory note, with authority to participate in FMP 

mediation and modify the loan. 4The district court therefore did not err in 

4Appellants also argue that the MERS assignment is invalid because 

it was executed in March 2009, but not notarized until June 2009. 

continued on next page . . . 

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Gibbons 

Parr 

. . 

determining that respondents validly appeared at the mediation with 

authority to negotiate a loan modification. Id. at , 286 P.3d at 260 

(explaining that the district court's factual and legal conclusions are 

reviewed for error, while the choice of sanction is committed to the district 

court's discretion). 

IV. 

We discern no violation that would preclude the FMP 

certificate from issuing, and we therefore affirm the district court's order. 

, C.J. 

Cherry 

Hardesty 

• continued 

Appellants do not cite to any Nevada authority that requires an 

assignment of a deed of trust to be acknowledged in front of a notary on 

the date it is generated. See Einhorn, 128 Nev. at n.4, 290 P.3d at 252 

n.4. 

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