Archive for August, 2009
NV Law Change October 1 Restricts Deficiency Judgments on Foreclosed Homes
Posted by: | CommentsRobert Noggle, attorney with Black Lobello law firm, explains the new Nevada Deficiency Law that takes effect on October 1, 2009 in this guest contributor post.
“Change to Nevada Law prohibits deficiency judgments for loans made after October 1, 2009 to purchase primary residences.”
Nevada currently provides for the right of a foreclosing lender on real estate to pursue a deficiency judgment against the borrower on any type of property including a primary residence. Nevada is known as a full recourse state. The law provides for a six month period following the trustee’s sale in which the lender may file an action against the borrower to recover amounts owing.
Effective October 1, 2009, Nevada becomes a limited recourse state similar to California. Loans made after October 1, 2009; by a financial institution to a borrower who continuously occupies the property as a primary residence are nonrecourse. This means that the lender may not pursue a foreclosed borrower to recover a deficiency. Although some may consider this the equivalent of sending life boats and vests to the Titanic days after the sinking, it is a significant development in Nevada real estate law.
For the new law to apply the following requirements must be met:
- The real property is a single-family residence;
- The loan was used to buy the property;
- The borrower continuously occupied the property as a principal residence after the loan was made;
- The original loan was not refinanced;
- The loan was made by a financial institution.
NV Mandatory Mediation Program for Homeowners in Foreclosure
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The mandatory mediation program will have an impact on our market as 80% of all home sales in Las Vegas are foreclosed homes. I think one of the most clear and concise explanation of this new federal law is written by a local attorney who specializes in real estate law, Robert Noggle. He has graciously contributed the following article.
A new Nevada law allowing any homeowner receiving a notice of default from their lender to request mandatory mediation with that lender becomes effective on July 1st.
The purpose of the mediation program is to avoid a foreclosure by providing a forum for home owner and lender to negotiate a loan modification including a short sale.
The most important development is that the lender must be represented at the mediation hearing by a representative who has authority to modify the loan or who has telephone access to someone with such authority. The lender’s failure to do so may result in the mediator modifying the loan. Proposed court rules for the program allow a lender to participate by telephone if approved by the mediator.
The mediation is nonbinding. The lender retains complete discretion as to whether to modify the loan and, if so, on what terms. However, a trustee’s sale of the home may not occur until the mediation is completed. The trustee’s sale is the final step in the foreclosure process. As a general practice the lender makes the winning bid at the sale and becomes the owner of the home.
The cost of the mediation is $400 divided equally between the homeowner and the lender. According to the proposed rules the maximum period of time allotted to a mediation session is four hours. The homeowner must provide a financial statement together with a Housing Affordability Worksheet. The lender must provide a certified copy or original of the Deed of Trust and promissory note together with a copy of each assignment of the note and deed of trust.
The lender’s failure to provide the required documents may result in sanctions. The lender may also provide an estimate of the short sale value of the property if the loan cannot be modified.
Under the proposed rules the mediation must take place within 90 days of the filing of the notice of default. By law the foreclosure process can take no less than 111 days from the filing of the notice of default to the sale. The mediation program is mandatory at the homeowner’s request if the Notice of Default was filed July 1 or thereafter. The parties may stipulate to mediation if the notice of default was recorded prior to July 1.
Final mediation rules will be issued in the near future. However, as a new program there are many unanswered questions as to how effective the program will be. Whether lenders will participate in good faith to avoid foreclosures is unknown.
Based upon cases from around the country a lender’s ability to provide the necessary documentation including copies of all assignments could be a serious challenge for them. For the homeowner the ability to present a case for a loan modification will depend upon their ability to make their numbers work so as to persuade the lender of their ability to make future modified payments.
By: Robert B. Noggle, Attorney
Black & LoBello
Robert B. Noggle may be contacted at (702) 869-8801 or rnoggle@blacklobellolaw.com. For more information visit www.blacklobellolaw.com
Loan Modification Companies Must Have NV State License
Posted by: | CommentsOn July 8, 2009, Governor Jim Gibbons signed emergency regulations that require all persons conducting loan modification and foreclosure consulting activities to have state licenses.
The emergency regulations are effective immediately. The Governors act was authorized by Assembly Bill 152, which was passed in the last Legislative Session. AB 152 modified Nevada Revised Statute 645F, and required the Commissioner of Mortgage Lending to adopt regulations to license the loan modification and foreclosure consulting companies. The emergency regulations were promulgated recently and the Governors signature made them effective.
In addition to the license, loan modification and foreclosure consultants now must follow specific operating rules and regulations.
Read the rest of this blog post at the Black & Lobello Blog:
Top Online Resources to Avoid Foreclosure; Info on Short Sales & Loan Modifications
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We compiled this list of useful online resources to learn more about avoiding foreclosure,loan modifications, and short sales.
Avoid Foreclosure – Help, Information and Resource Sites:
- www.realtytrac.com National, state, county foreclosure statistics, trends, resources, information
- Making Home Affordable Find out if you are eligible for a Loan Modification or Refinance
- RentalForeclosure.com Tenants can find out if a property is in Foreclosure – NOD filed
- Freddie Mac – Working with Your Lender to Avoid Foreclosure
- Hope Now – an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance will maximize outreach efforts to homeowners in distress to help them stay in their homes and will create a unified, coordinated plan to reach and help as many homeowners as possible.
- Housing Help Now- National Foundation for Credit Counseling
- HUD.gov - Avoiding Foreclosure information & resource webpage
- Home Foreclosure and Debt Cancellation – (IRS.gov)
- The Mortgage Forgiveness Debt Relief Act of 2007 (IRS.gov)
Nevada Foreclosure Help and Resources
- Nevada Foreclosure Help – Useful resources and info from Nevada Department of Business & Industry
- Nevada Hope at Home collaborative effort between Nevada Public Radio, local nonprofit organizations and local financial institutions to help provide residents in southern Nevada access to reliable, easy-to-find information on the foreclosure crisis in southern Nevada
- HUD Approved Housing Counseling Agencies – Nevada list of HUD approved agencies
- Nevada Revised Statutes – Chapter 107 – Deeds of Trust
Nevada Foreclosure Process and Timeline
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The Foreclosure Process in the state of Nevada typically takes about 6 months from the time the Notice of Default is filed to the Eviction of the homeowner.
- Notice of Default starts the foreclosure process – it is prepared, recorded, mailed, posted, published and a copy sent to all parties (owner, all lenders, IRS, local, state, and federal tax agencies) who have an interest in the property.
- Reinstatement Period (month 1) – starts on the first day the notice of default is recorded. This is a 35 day period in which the homeowner can reinstate the loan by making any back payments, foreclosure fees and other allowable expenses.
- Redemption Period (months 2-3) – starts on day 36 from the recorded date of the Notice of Default. Now the homeowner is now responsible for paying the remaining loan balance along with all foreclosure fees and other allowable expenses. It should also be noted that approximately 10 days before the end of the redemption period, the trustee will notify the lender for permission to prepare the Notice of Trustee Sale for publication.
- Publication Period (month 4) - means the Notice of Sale must be published once a week for three consecutive weeks (21 days) prior to the Trustee Sale.
- Trustee Sale (month 5 ) is the final step in the foreclosure process and it is extremely important to remember the homeowner has no right of redemption after the sale is finalized. If there is a successful bidder at the sale, the new owner will purchase the property in “as is” condition with no warranties. If there are no bidders at the sale, the lender becomes the sole owner as an REO (Real Estate Owned).
- Eviction (month 6) process starts after the Trustee Sale is finalized. The eviction process is initiated by posting a 3 day Notice to Quit on the property. If there is no response, the new owner will file a 5 day Eviction Notice with the court. If there is no response by 5pm on the 5th day, the Constable will evict the resident.
Additional Resources:
- Nevada Foreclosure Help Useful resources and info from Nevada Department of Business & Industry
- Nevada Revised Statutes – Chapter 107 – Deeds of Trust
- Nevada Foreclosure Law Summary
Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale?
Contact us for a free consultation regarding your options – there are solutions!
Avoid Foreclosure … Call 702 – 497-7705
How does a short sale vs a foreclosure affect my credit?
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One of the best explanations of how a short sale affect ones credit score was written by Brian Beres and really gives the consumer the information they need to make an informed decision.
1st, In order to understand what impact a Foreclosure or Short Sale has on your credit report you must first know that one’s “Payment History” is 35% of their overall score and “Amounts Owed” is 30% of one’s score. So someone’s “Payment History” which means how one pays their bills, either on time or late and “Amounts Owed”, which means outstanding balance of the original loan or lien, together these 2 categories equal 65% of one’s overall credit score each month!
2nd, Credit scores are graded and re-calculated each and every month. Any accounts that are reported on ones credit will be updated monthly and reflect the accounts “Payment History and Amounts Owed” among other things such as Inquiries, New Credit and Length of Existing Accounts”.
Let’s get right down to it…
Round 1
Anyone who has a mortgage, whether it be a 1st, 2nd or H.E.L.O.C. who is late 30 days or more on their payment/s, will have their credit report impacted negatively each and every month with a late payment shown on their credit report. Each mortgage late that is reported on ones credit report has an “Average” 20 point reduction of the score. So if someone has not paid their mortgage payments for 5 months that would equate to a 100 point decrease in ones credit score. If someone let’s say has a 1st and 2nd mortgage and misses 5 payments that would equate to a 200 point decrease in their credit score. The longer one goes without making a monthly payment the lower the credit score is going to go, regardless of what the persons plans are, meaning should the person let the property go into Foreclosure or sell it as a Short Sale. Each and every late payment counts against you!
Round 2
Once someone has 4 or more mortgage lates reported on their credit report, the credit bureaus automatically update the credit report with a term shown under the account name saying “Foreclosures Proceedings Started”, regardless if the person is going to let their property go into Foreclosures or put the property up for sale as a Short Sale. The credit bureaus recognize that after 120 days late, which is 4 months, that the Lender will issue a “N.O.D.” Notice of Default and start Foreclosure Proceedings. So again if a customer who is not making their payments is pass due 4 or more payments, their credit report has already been impacted and will reflect “Foreclosure Proceedings Started” no matter if the property is up for sale as a Short Sale.
Round 3
Lenders only report to the credit bureaus if someone has paid their account on time or if they are late, and again each late counts against that person, no matter if the house is going into Foreclosure or being sold as a Short Sale. If a property is up for sale as a Short Sale, and the customer continues to not make their monthly payments, then each and every month there will be another mortgage late reflecting on the person’s credit report, which will continue in the lowering of their credit score each and every month until the account is settled by either Foreclosure or Short Sale.
Round 4
If a property goes into Foreclosure, naturally it will be reported on ones credit report as “Foreclosure”. If a property is sold as a Short Sale, it will be reflected on ones credit report as either “Paid Less than Full Balance” or “Settled Less than Full Balance”. So what do these terms mean when that person wants to apply for a new home loan down the road? Well, in the world of Home Lending, the terms Foreclosure, Paid Less than Full Balance and Settled Less than Full Balance, all mean the same thing to us as Loan Officers and an Underwriter when reviewing ones credit report. If a property was Foreclosed upon or was sold in a Short Sale and reflects the account as Settled, the CURRENT Underwriting Guidelines State that the customer may have to wait anywhere from 2 to 7 years to obtain an Home Mortgage Loan depending on the customer and situation with each case being looked differently.
Round 5
Last but not least, either of these accounts can remain on ones credit report for up to 10 years! People who pull credit reports for employment purposes, credit purposes or for any other reason, all know that the terms: Foreclosure, Paid Less than Full Balance or Settled Less than Full Balance, all mean the same thing, the account was in distress and not paid on time and was either Foreclosed upon or Sold for Less than the Full Balance, which does not look good to the person who is viewing ones credit report.
Round 6
It’s a draw! A Foreclosure VS. Short Sale has the same negative impact on ones credit report because the way that Lenders currently report the account to the credit bureaus. Neither way is going to report better nor worse on ones credit score, they are both the same. The more payments that one is late on, the lower ones credit score is going to be regardless of what the person does with property. This is very important to know when asked how a Foreclosure or Short Sale is going to affect ones credit score.
Thank you for taking the time out to read this. If you have any questions, comments or concerns about what’s mentioned above please feel free to contact me at anytime, thank you!
