A law passed earlier this year in Nevada may help curtail the state’s foreclosure crisis, and could become a model for other states.

Nevada has led the nation in foreclosures for the last six years according to statistics kept by foreclosure tracking firm RealtyTrac, and has also suffered from illegal foreclosures, in which properties are seized by companies that do not hold the actual mortgage note.

But Assembly Bill 284, which took effect Oct. 1, makes it a felony “if a mortgage servicer or trustee made false representations concerning a title. There will also be a $5,000 fine assessed if fraud, such as robo-signing, is detected,” according to HousingWire Magazine, an industry trade publication for the mortgage market.

The new law also establishes procedures to verify that all the necessary paperwork is in order for the foreclosure process to move forward.

Cathe Cole, vice president of default for Trustee Corps, a designated foreclosure counsel in Nevada for Freddie Mac, told HousingWire that “as long as servicers and trustees show a clear chain of title through to the names of the entity servicers are foreclosing in the name of, there would be nothing to fear.”

Nevada is the first state to enact legislation allowing criminal action on foreclosure fraud. But according to HousingPredictor.com, a real estate news Web site, that law could become an example for other jurisdictions considering ways to protect their citizens from similar offenses.

Foreclosure fraud lawsuits have been filed across the country since the electronic system that was being used was unable to provide the documentation needed to verify the holder of the mortgage loan.

In a post, the blog “Stop Mortage Banks” warned bankers to beware, reminding them they can face jail time and a criminal record for committing a felony if they take possession of a home without the proper paperwork.