If you are facing foreclosure and need assitance in Nevada, contact the Foreclosure Group of Nevada for more information.
Before the foreclosure crisis, which peaked in 2010, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. Now, however, federal and state laws heavily regulate loan servicing and foreclosure processes. And most of the laws give protections to borrowers.
Servicers generally have to provide borrowers with loss mitigation opportunities, account for each foreclosure step, and strictly comply with foreclosure laws. Also, most people who take out a loan to buy a residential property in Nevada sign a promissory note and a deed of trust, which is like a mortgage. These documents give homeowners some contractual rights in addition to federal and state legal protections.
In a Nevada foreclosure, you’ll most likely get the right to:
- receive preforeclosure notice
- apply for loss mitigation
- receive certain foreclosure notices
- get current on the loan and stop the foreclosure sale
- receive special protections if you’re in the military
- pay off the loan to prevent a foreclosure sale
- file for bankruptcy, and
- get any excess money after a foreclosure sale.
So, don’t get caught off guard if you’re a Nevada homeowner who’s behind in mortgage payments. Learn about each step in a Nevada foreclosure, from missing your first payment to a foreclosure sale. Once you understand the process, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.
What Is Preforeclosure?
The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the “preforeclosure” stage. (Sometimes, people refer to the period before a foreclosure sale actually happens as “preforeclosure,” too.) During this time, the servicer can charge you various fees, like late charges and inspection fees, and, in most cases, must inform you about ways to avoid foreclosure and send you a preforeclosure notice called a “breach letter.”
Fees the Servicer Can Charge During Preforeclosure
If you miss a payment, most loans include a grace period of ten or fifteen days, after which time the servicer will assess a late fee. Each month you miss a payment, the servicer will charge this fee. To find out the late charge amount and grace period for your loan, look at the promissory note you signed. You can also find this information on your monthly mortgage statement.
Also, most Nevada deeds of trust allow the lender (or the current loan holder, referred to as the “lender” in this article) to take necessary steps to protect its interest in the property. Property inspections are performed to ensure that the home is occupied and appropriately maintained. Inspections, which are generally drive-by, are usually ordered automatically once the loan goes into default and typically cost around $10 or $15.
Other types of fees the servicer might charge include broker’s price opinions, which are like appraisals, and property preservation costs, such as for yard maintenance or winterizing an abandoned home.
Federal Mortgage Servicing Laws and Foreclosure Protections
Under federal mortgage servicing laws, the servicer must contact, or attempt to contact, you by phone to discuss loss mitigation options, like a loan modification, forbearance, or repayment plan, no later than 36 days after you miss a payment and again within 36 days after each following delinquency. No later than 45 days after missing a payment, the servicer has to inform you in writing about loss mitigation options that might be available and appoint personnel to help you try to work out a way to avoid foreclosure. A few exceptions are in place for some of these requirements, though, like if you’ve filed bankruptcy or asked the servicer not to contact you pursuant to the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39, 12 C.F.R. § 1024.40).
Federal mortgage servicing laws also prohibit dual tracking (pursuing a foreclosure while a complete loss mitigation application is pending).
What Is a Breach Letter?
Many Nevada deeds of trust have a provision that requires the lender to send a notice, commonly called a “breach letter,” informing you that the loan is in default before the lender can accelerate the loan. The breach letter gives you a chance to cure the default and avoid foreclosure.
When Can Foreclosure Start?
Under federal law, the servicer usually can’t officially begin a foreclosure until you’re more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners with ample opportunity to submit a loss mitigation application to the servicer.
What Is the Foreclosure Process in Nevada?
If you default on your mortgage payments in Nevada, the lender may foreclose using a judicial or nonjudicial method.
How Judicial Foreclosures Work
A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. If you don’t respond with a written answer, the lender will automatically win the case. But if you choose to defend the foreclosure lawsuit, the court will review the evidence and determine the winner. If the lender wins, the judge will enter a judgment and order your home sold at auction.
How Nonjudicial Foreclosures Work
A nonjudicial foreclosure is also known as a “statutory foreclosure,” which means the foreclosure follows the requirements that state law sets out. In this kind of foreclosure, the lender conducts the out-of-court procedures described in the state statutes. After finishing the required steps, the lender can sell the home at a foreclosure sale. Most lenders opt to use the nonjudicial process because it’s quicker and cheaper than litigating the matter in court.
Which Is the Most Common Foreclosure Process in Nevada?
Again, most residential foreclosures in Nevada are nonjudicial. Here’s how the process works.
Preforeclosure Notice Under Nevada Law
At least 30 calendar days before officially starting a foreclosure and at least 30 calendar days after the default, the servicer or loan owner must send you (the borrower) a notice that contains information about the account. The notice must include the total amount needed to cure the default and information about foreclosure prevention alternatives, among other things. (Nev. Rev. Stat. § 107.500). This information might be included as part of the breach letter.
Notice of Default and Election to Sell
The Nevada nonjudicial foreclosure process formally begins when the trustee records a Notice of Default and Election to Sell (NOD) in the office of the recorder in the county where the property is located, providing three months to cure the default. (Nev. Rev. Stat. § 107.080).
A copy of the NOD must be sent to each person who has a recorded request for a copy and each person with an interest or claimed interest in the property by registered or certified mail within ten days after the NOD is recorded. (Nev. Rev. Stat. § 107.090).
For a residential foreclosure, a copy of the NOD must be posted on the property 100 days before the sale. (Nev. Rev. Stat. § 107.087).
The trustee or beneficiary (lender) must record a notarized affidavit along with the NOD that gives, based on a review of business records, information about the trustee, loan, and loan owner. (Nev. Rev. Stat. § 107.0805).
Foreclosure Mediation In Nevada
Nevada law requires that borrowers in foreclosure get the option to participate in mediation if the property is owner-occupied. (Nev. Rev. Stat § 107.086).
At least 60 days before the sale date, the trustee must provide the borrower with a separate “Danger Notice” stating that they’re in danger of losing their home to foreclosure, along with a copy of the original promissory note.
For owner-occupied housing, the notice must be:
- personally served to the borrower
- left with a person of suitable age and discretion (if the borrower is not available) and a copy mailed, or
- if a person of suitable age and discretion is not available, then the notice may be posted in a conspicuous place on the property, left with a person residing in the property, and then mailed to the borrower. (Nev. Rev. Stat § 107.085).
Notice of Sale
After the expiration of the three months following the NOD recording, the trustee must give notice of the time and place of the sale by recording the notice of sale and by:
- providing the notice of sale to each required party by personal service or by mailing the notice by registered or certified mail to the last known address 20 days before sale
- posting the notice of sale on the property 15 days before the sale
- posting the notice of sale for 20 days successively in a public place in the county where the property is situated, and
- publishing a copy of the notice of sale three times, once each week for three consecutive weeks, in a newspaper of general circulation in the county where the property is situated. (Nev. Rev. Stat § 107.080, § 107.087, § 107.090.)
The Foreclosure Sale
At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Nevada, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower, subject to some limitations (see below). If the lender is the highest bidder, the property becomes what’s called “Real Estate Owned” (REO).
But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money over and above what’s needed to pay off all the liens on your property—you’re entitled to that surplus money.
How Can I Stop a Foreclosure in Nevada?
A few potential ways to stop a foreclosure include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Of course, if you’re able to work out a loss mitigation option, like a loan modification, that will also stop a foreclosure. After the “breach and election to sell” is filed in Nevada, you have 30 days to apply for Foreclosure Mediation which is a state provided program. During the process the lender will have attempt to negotiate a settlement with the homeowner. A state appointed mediator will hear both sides and review the available information in hopes of reaching an agreement to avoid foreclosure.
Reinstating the Loan
For owner-occupied housing, the borrower gets a right to reinstate by paying the arrearage, costs, and fees. This right expires five days before the date of the foreclosure sale. (Nev. Rev. Stat. § 107.0805, § 40.430).
Redeeming the Property Before the Sale
One way to stop a foreclosure is by “redeeming” the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.
Some states also provide foreclosed borrowers with a redemption period after the foreclosure sale, during which they can buy back the home. However, Nevada law doesn’t provide a redemption period following a nonjudicial foreclosure sale. (Nev. Rev. Stat. § 107.080).
Filing for Bankruptcy
If you’re facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy. Once you file for bankruptcy, something called an “automatic stay” goes into effect. The stay functions as an injunction, which prohibits the lender from foreclosing on your home or otherwise trying to collect its debt, at least temporarily.
In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available to you, speak with a local bankruptcy attorney. the Foreclosure Group of Nevada can refer you to a list of local attorney’s familiar with Bankruptcy Proceedings.
Nevada Deficiency Judgment Laws
In a foreclosure, the borrower’s total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a “deficiency.” For example, say the total debt owed is $600,000, but the home sells for $550,000 at the foreclosure sale. The deficiency is $50,000. In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount—in our example, $50,000—from the borrower.
In Nevada, a lender may obtain a deficiency judgment following a foreclosure sale if it files the suit within six months. But the amount of the judgment is limited to the lesser of:
- the difference between the borrower’s total debt and the home’s fair market value as of the sale date, plus interest or
- the difference between the borrower’s total debt and foreclosure sale price, plus interest. (Nev. Rev. Stat. § 40.459).
If the party seeking the deficiency judgment acquired the right to obtain the judgment from a party that previously held that right, the judgment is limited to the difference between the amount the party paid to acquire the loan and the larger of the property’s fair market value or the amount paid for the property at the foreclosure sale, plus interest and reasonable costs. (Nev. Rev. Stat. § 40.459).
For loans taken out after October 1, 2009, deficiencies are prohibited for purchase money loans (that haven’t been refinanced) held by a bank or other financial institution on single-family residences owned by the borrower at the time of the foreclosure sale, which have been occupied continuously by the borrower since taking out the loan. (Nev. Rev. Stat. § 40.455).
Where to Find Your State’s Statutes and More Foreclosure Resources
In this article, you’ll find details on foreclosure laws in Nevada, with citations to statutes so you can learn more. Statutes change, so checking them is always a good idea.
How to Find Federal Foreclosure Laws
How to Find State Foreclosure Laws
To find Nevada’s laws, search online for “Nevada statutes” or “Nevada laws.” Make sure you’re reading the most recent, official laws. Usually, the URL will end in “.gov” or the statutes will be on an official state legislature webpage. We recommend contacting people that are experienced in the foreclosure proceedings of whatever state you’re located in. For Nevada, contact the Foreclosure Group of Nevada
How courts and agencies interpret and apply laws can change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure. If you have questions about Nevada’s foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.
For more information about Foreclosure Help in Nevada visit FGON.org