Foreclosure


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  On May 13, 2013 I wrote to you about the Nevada Homeowner’s Bill of Rights.  The link is here.

Short Sale – “Dual Tracking” and the Homeowner’s Bill of Rights in Nevada May 2013

Tomorrow October 1, 2013 it becomes law.  You can review the law by clicking the post above. As a reminder here are some bullet points that affect sales:

TO WHOM DOES IT NOT APPLY, YOU ASK?

(a)    Notice that these additional restrictions apply only to a notice of default and election to sell which is recorded on or after October 1, 2013.

(b)   Lenders with less than 100 foreclosures per year, are exempt.

(c)    A lender that complies with United States of America et al. v. Bank of America Corporation et al., is exempt from these provisions.

UNIQUE EFFECTS OF THE  LAW

Duel Tracking Prohibited.  Prohibits the lender  from continuing the foreclosure process while an application for a foreclosure prevention alternative is pending (short sale). (Section 13).

Arm’s Length Not Required. Sec. 16.5. declares a short sale cannot be denied based upon the . No provision of the laws of this State may be “non arm’s length,” in other words, if you relative buys the property, that cannot be the reason for lender denial.  This is big point, the exact language if a lender asks for it is “Sec. 16.5. 1. No provision of the laws of this State may be construed to require a sale in lieu of a foreclosure sale to be an arm’s length transaction or to prohibit a sale in lieu of a foreclosure sale that is not an arm’s length transaction.” That’s found on page 17 of Nevada Senate Bill 321.

Single Point of Contact. The Lender must provide a single point of contact for a borrower who requests a foreclosure prevention alternative (short sale).

Notice of Information. At least 30 calendar days before recording a notice of default and election to sell and at least 30 calendar days after the borrower’s default, the lender must provide to the borrower information concerning the borrower’s account, the foreclosure prevention alternatives offered by the lender and a statement of the facts supporting the right of the mortgagee or beneficiary to foreclose.

Rescission of Notice of Default.  Any notice of default and election to sell recorded must be rescinded, and any pending foreclosure sale must be cancelled, if:

(a)    The borrower accepts a permanent loan modification

(b)   A notice of sale is not recorded within 9 months after the notice of default and election to sell is recorded

(c)    A foreclosure sale is not conducted within 90 calendar days after a notice of sale is recorded.

Did you catch that? A foreclosure has to start over, including new recording of notice of default, if the foreclosure does not take place if 1.) a notice of sale is not recorded 90 days after the notice of default and then the next deadline is 2.) if the foreclosure does not take place 90 days after the notice of sale.  That will be interesting.

$50,000 Penalty. If a Court finds a lender in violation of this law, the Court can order and award to the borrower the greater of treble actual damages or statutory damages of $50,000.

Alright, that should make it fun until Christmas 2013 at least.

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

HUD Suspends Pending Dual Agency Limitation – Short Sales 9.26.2013

Income Taxes & Foreclosures/Shortsales 12.21.2007

Income Taxes & Foreclosure/Short Sales 2013 Update

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com

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Web’s Chicken Coop

“Short Sale – Dual Tracking” during residential foreclosure is where the lender pursues foreclosure AND other loan modifications (short sales) simultaneously.

SB 321 has passed and is set to be signed by the Nevada Governor.

It affects foreclosure both statutory and judicial of owner-occupied property; providing civil remedies for failure to comply with certain provisions.  It extends the foreclosure mediation process to judicial foreclosures.

It is complicated and mostly concerns actions leading up to foreclosure.

However, for re-sales, likely the most important is the elimination of the practice commonly known as “dual-tracking” by prohibiting the continuation of the foreclosure process while an application for a foreclosure prevention alternative is pending or while the borrower is current on his or her obligation under a foreclosure prevention alternative.  So, for example, if the owner enters into an arrangement with the lender, a foreclosure prevention alternative, which could arguably include a short sale, the lender is prohibited from continuing the foreclosure process until such time as the foreclosure prevention alternative is ended. This may end the surprise foreclosures the day before short sale close of escrow.

Read the whole bill here:  SB 321

Here is the Nevada Legislative Counsel’s Digest:

  Under existing law, the trustee under a deed of trust concerning owneroccupied housing has the power to sell the property to which the deed of trust applies, subject to certain restrictions. (NRS 107.080, 107.085, 107.086) Existing law also provides for a judicial foreclosure action under certain circumstances for the recovery of any debt or for the enforcement of any right secured by a mortgage or other lien upon real estate. (NRS 40.430)

  Sections 2-16 of this bill establish additional requirements for the foreclosure of owner-occupied housing securing a residential mortgage loan.

  Under section 7.5 of this bill, these additional restrictions do not apply to a financial institution that, during its immediately preceding annual reporting period, as established with its primary regulator, has foreclosed on 100 or fewer owner-occupied homes located in this State.

  Under section 30 of this bill, these additional restrictions apply only to a notice of default and election to sell which is recorded on or after October 1, 2013.

  Section 10 of this bill provides that at least 30 calendar days before recording a notice of default and election to sell or commencing a judicial foreclosure action and at least 30 calendar days after the borrower’s default, the mortgage servicer, mortgagee or beneficiary of the deed of trust must provide to the borrower certain information concerning the borrower’s account, the foreclosure prevention alternatives offered by the mortgage servicer, mortgagee or beneficiary and a statement of the facts supporting the right of the mortgagee or beneficiary to foreclose.

  Section 11 of this bill prohibits the recording of a notice of default and election to sell or the commencement of a judicial foreclosure action involving a failure to make payment until the mortgage servicer complies with certain requirements regarding contact with, or attempts to contact, the borrower.        Section 13 of this bill prohibits the practice commonly known as “dual-tracking” by prohibiting a mortgage servicer, trustee, mortgagee or beneficiary of a deed of trust from continuing the foreclosure process while an application for a foreclosure prevention alternative is pending or while the borrower is current on his or her obligation under a foreclosure prevention alternative.

  Section 14 of this bill requires a mortgage servicer to provide a single point of contact for a borrower who requests a foreclosure prevention alternative.

  Section 15 of this bill requires that under certain circumstances, a mortgage servicer, mortgagee or beneficiary of a deed of trust must dismiss a judicial foreclosure action or rescind a recorded notice  – 2 – – of default and election or notice of sale.

  Section 16 of this bill provides for certain civil remedies for a material violation of the provisions of sections 2-16.

  Section 16 also provides that a signatory to the consent judgment entered in the case entitled United States of America et al. v. Bank of America Corporation et al., who complies with the Settlement Term Sheet under that judgment is deemed to be in compliance with sections 2-16 and is not liable for a violation of those provisions.

  Section 16 further provides that if the consent judgment is modified or amended to permit compliance with the Final Servicing Rules issued by the federal Consumer Financial Protection Bureau to supersede the terms of the Settlement Term Sheet under the consent judgment: (1) a signatory to the consent judgment who complies with the modified or amended Settlement Term Sheet while the consent judgment is in effect is deemed to be in compliance with sections 2-16 and is not liable for a violation of those provisions; and (2) any mortgage servicer, mortgagee or beneficiary of the deed of trust who complies with the Final Servicing Rules is deemed to be in compliance with sections 2-16 and is not liable for a violation of those provisions.

  Section 18 of this bill provides that in a judicial foreclosure action concerning owner-occupied property, the mortgagor may elect to participate in the Foreclosure Mediation Program.

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales 12.21.2007

Income Taxes & Foreclosure/Short Sales 2013 Update

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com

Happy Birthday Webster The Nevada Supreme Court issued a ruling concerning MERS on Thursday September 27, 2012. Edelstein v. Bank Of New York Mellon, the Las Vegas Review Journal reported it was a “win” for the banks in foreclosure?

What does it mean?  The banks that relied on MERS are allowed to foreclose.  What is MERS?  See below.

  SHORT ANSWER  – MERS (Mortgage Electronic Registration System, Inc.), was confirmed as a proper player in the foreclosure process, and the assignments to and from MERS were upheld. The Court clarified however that the holder of the note and the holder of the deed must be the same. So, to say it is a win for the banks?  I guess you could look at it that way.  Mostly it clarified that at the time of foreclosure, the note holder (lender) and the deed holder (usually MERS) must be the same.  So MERS must assign the deed to the note holder (lender) for foreclosure to proceed.  In this case the note and deed were held by the foreclosing bank, so the Court allowed the foreclosure.

LONG ANSWER – It is obviously more complicated than that, Bank of New York Mellon’s trustee ReconTrust, BNY Mellon’s trustee, physically possessed the note a the time of the Nevada Supreme Court Mediation and used their servicer Bank of America as their representative in the Nevada Supreme Court Mediation Program.  But at the end of the day, the note and deed were held by the same bank and that bank was allowed to foreclose. So, a win for the banks? Not really, another way to look at it is that the banks must, yet again, clean up their paper work and hold both the note and deed at the time of foreclosure. This is not going to cause a landslide of foreclosures. It was not the impediment per se. It will make some mediations in the Nevada Supreme Court program perhaps go smoother.

What is this MERS you speak of centurion? MERS is often the holder of a deed of trust, and it is shown to that effect on the deed.  However, often the rights to the deed are transferred but not recorded at the county recorder. The Court explained MERS in a pretty succinct manner,

Typically, when a loan is originated, MERS is designated in the deed of trust as a nominee for the lender and the lender’s ‘successors and assigns,’ and as the deed’s ‘beneficiary’ which holds legal title to the security interest conveyed. If the lender sells or [transfers] the … [note] to another MERS member, the change is recorded only in the MERS database, not in county records, because MERS continues to [be the beneficiary of record] on the new lender’s behalf. So long as the sale of the note involves a MERS Member, … [t]he seller of the note does not and need not assign the [deed of trust] because under the terms of that security instrument, MERS remains the holder of title to the [deed of trust], that is, the mortgagee, as the nominee for the purchaser of the note, who is then the lender’s successor and/or assign. According to MERS, this system ‘saves lenders time and money, and reduces paperwork, by eliminating the need to prepare and record assignments when trading loans.

In Nevada to perform a non-judicial foreclosure on an owner-occupied residential property …(in other words not a judicial foreclosure NRS 40.430 nor a non-owner occupied foreclosure) the lender must meet certain requirements…

The Court confirmed that to enforce a foreclosure the deed and note must be held together by the same person/entity.  In this case MERS held the deed and note was held by a number of different lenders.  At the time of foreclosure MERS transferred the deed to the current note holder. The Court concluded, that the temporary separation (when one group held the deed and another held the note) was not irreparable or fatal to either the promissory note or the deed of trust. However, if they are not brought together, it prevents enforcement of the deed of trust through foreclosure. The two documents must ultimately be held by the same party.

The Court concluded that when MERS is the named beneficiary and a different entity holds the promissory note, the note and the deed of trust are split, making nonjudicial foreclosure by either improper. However, any split is cured when the promissory note and deed of trust are reunified. Because the foreclosing bank in this case became both the holder of the promissory note and the beneficiary of the deed of trust, proceeding to foreclosure was proper.

More importantly were the three cases before the Nevada Supreme Court this morning, addressing, statute of limitations on short sales, and junior liens and the right to sue borrowers as passed by the Nevada Legislature in 2011.

 Sandpointe Apartments., LLC vs. Dist. Ct. (CML-NV Sandpointe, LLC) Docket No. 59507

Nielsen vs. Dist. Ct. (Branch Banking and Trust Co.) Docket No. 59823

Lavi vs. Dist. Ct. (Branch Banking) Docket No. 58968.

These upcoming decisions will affect thousands of Nevadans that have been foreclosed upon or sold via a short sale.  I will let you know when I hear more.

Questions:  darren@dwelshlaw.com

ImageThis is an update to May 26, 2009 Eviction of Tenants In the Event of Foreclosure.

 “Helping Families Save Their Homes Act May 20, 2009” (S. 896) has been extended by the Dodd-Frank Act (Pub. L. 111–203, approved July 21, 2010) to December 31, 2014.

To fall under the Act, a bona fide lease (defined below) must be entered into prior to the date of the notice of foreclosure, which is defined as ‘‘the date on which complete title to a property has been transferred to a successor entity or person as a result of an order of a court or pursuant to the provisions in a mortgage, deed of trust, or security deed.’’  In other words AFTER the foreclosure?  So it appears you can enter into a bona fide lease the day before the trustee sale? That is not advisable.

A bona fide lease is one in which: (1) The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state, or local subsidy.

The entire notice can be found by clicking here.  Go to page 15379.  Also I found this three page manual from the Comptroller of the Currency Administrator of National Banks  click here ——> here.

If the Federal law expires in 2014 we have NRS 40 in Nevada  what is known as the form NOTICE TO TENANTS OF THE PROPERTY,  in this statute tenants now get a minium of 60 days to vacate.

There is a helpful Renters in Foreclosure Toolkit  from The National Low Income Housing Coalition.

Questions:  darren@dwelshlaw.com

Short sales are looking more attractive.

Foreclosure changes in the state of Nevada are making short sales more attractive.  Recently a number of lenders have commenced foreclosure through the judicial foreclosure process.  A judicial foreclosure is governed by NRS 40.  These are different from what the public is used to, the non-judicial process, governed by NRS 107.  The judicial foreclosure is a lawsuit filed in court, just like any breach of contract case.

Deficiency Judgments.  The potential issue with a judicial foreclosure is a deficiency judgment.  In a normal foreclosure, there is potential liability to be pursued for the difference between what the property sells for at the trustee sale and the outstanding debt.  Nevada is a recourse state.  If you do not pay back your loan, you can be sued.  (There have been some recent rules enacted to alleviate this issue (see the legislative memo —->here, but the Nevada Supreme Court is poised to limit these applications,  Volkes v. BAC Home Loans Servicing, No. 57304, 2012 WL 642673 (Nev. Feb. 24, 2012)).  Typically, in the last few years, foreclosure did not usually lead to the filing of a lawsuit by the lender for a “deficiency judgment.”  In Nevada this lawsuit to seek this debt has to be filed within 6 months of the trustee sale date.  See my post on this here.  These lawsuits were simply not being filed, for the most part, by the large institutional lenders, only typically by the local, regional lenders.  That has changed.  Lenders are beginning to seek foreclosure via the judicial foreclosure process. (WHY? See the short history below.)  Now, remember, the judicial foreclosure is a lawsuit.  So, instead of the previous scenario where the lender had to decide after foreclosure, if they wanted to hire a Nevada attorney and pursue the homeowner; the lender is already in court.  The judicial foreclosures showing up on line (search the filings here at the —->Eighth Judicial District Court) are demanding two causes of action: 1.) Judicial Foreclosure and 2.) Request For A Deficiency Judgment.  The lender is already engaged with a Nevada attorney, so the lender does not have to make the decision to pursue the homeowner, they simply go to the next step and ask for a judgment immediately after the sheriff’s sale.  Hundreds of these lawsuits have been filed in the Eighth Judicial District Court in Clark County in only the past 90 days.

Short Sales.  Thus, a successful short sale, coupled with the lender releasing the seller of future deficiency liability (see my post on release language –> HERE) is an attractive option for a seller in Nevada.

Short History.  Back in the summer of 2011 the Nevada Legislature passed Assembly Bill 284.  AB 284 changed Nevada Foreclosure Law by adding stricter requirements for the foreclosure process.  It’s complicated.  You can read the Nevada Attorney General’s comments about it here.  You can read the whole bill here.  The NRS statute is 107.080.  In summary – it required lenders/trustee to sign documents prior to foreclosing, which, if done improperly triggers potential civil and criminal penalties.  This effectively slowed the number of trustee sales, notice of defaults, etc. There has been much discussion on this.  Such as the Nevada Attorney General issuing a statement.  Even the legislators that sponsored the bill wrote a memo about this subject recently.  This is rare.  And here we are, judicial foreclosures have commenced.

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This is part of my short sale series listed below in alphabetical order:

7 Tips for Short Sale

Addendum to Short Sale Listing

Advance Fees Continued and the FTC

Advance Fees – Short Sales – FTC II

Charging for negotiating short sales/Negotiators

Deficiency Judgments Nevada

Foreclosure and the One Action Rule in Nevada

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

IRS PUBLICATIONS shortsales/foreclosures:

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Ten Facts about Mortgage Debt Forgiveness

Questions? Call me. Darren Welsh, Esq. 702 245 1787 email me darren@dwelshlaw.com or drop me a TPS by filling out this form

 

On July 15, 2011 FTC DECLARES:

  • real estate brokers can conduct short sales and
  • can collect advance fees if they follow their own state guidelines.
  • real estate brokers do not have to make several disclosures required by MARS.
  • that as more and more American homeowners seek short sales, it is especially important that MARS not inadvertently discourage real estate professionals from helping consumers with these types of transactions.

I am keeping track of the Federal Trade Commission (FTC) Mortgage Assistance Relief Services (MARS) Rule.  My previous post proposing that MARS did not apply to the real estate profession from May 4, 2011 is here Advance Fees – Short Sales – FTC II.  As stated prior, I believe MARS should not affect licensed real estate sales persons, rather is directed at individuals and companies that do not already have a structure in place to police their conduct.

As of July 15, 2011 the FTC has stayed enforcement of many of the provisions of MARS against real estate professionals helping consumers obtain short sales.  The FTC declared the stay on enforcement includes a stay on the collection of advance fees.  Therefore brokers can conduct short sales and can collect advance fees if they follow their own state laws and regulations. See the July 15, 2011 FTC press release here:  http://www.ftc.gov/opa/2011/07/mars.shtm The FTC has ruled on a unanimous vote the following:

FTC will not enforce most of the provisions of the MARS Rule against real estate professionals who are engaged in obtaining short sales for consumers. The stay applies only to real estate professionals who:

1) are licensed and in good standing under state licensing requirements;

2) comply with state laws governing the practices of real estate professionals; and

3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes.

The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule’s ban on misrepresentations. As a result of the stay on enforcement, these real estate professionals will not have to make  several disclosures required by the Rule that, in the context of assisting with short sales, could be misleading or confuse consumers. As more and more American homeowners seek short sales, it is especially important that the Rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions.”

See my earlier blogs on Advance Fees

Advance Fees – Short Sales – FTC II May 4, 2011
Advance Fees Continued and the FTC 01.06.2011
Short Sale Advanced Fees 12.3.2010
Charging for negotiating short sales/Negotiators 10.1.2010

   I.    Junior (Seconds) Lien Holders  Right To Sue After Short Sale & Foreclosure –  AB 273 -

READ the entire bill here ===>http://www.leg.state.nv.us/Session/76th2011/Bills/AB/AB273_EN.pdf

There are changes to debt collection as to short sales in Nevada.  This bill has many points, from Seconds to Guarantors.  For real estate sales the major change is effective July 1, 2011.  There are certain restrictions on the ability to recover deficiency at all by Junior Lien Holders of a secured note created after June 2011.  But the 5 star change, is that as of July 1, 2011  junior lien holders (and perhaps senior) have only six (6) months to file suit against a home owner after the foreclosure.

A civil action by the junior lien holder against the home owner after a foreclosure sale of the real property or a sale in lieu of a foreclosure sale may only be commenced within 6 months after the date of the foreclosure sale or sale in lieu of a foreclosure.  This six month rule section applies only to an action commenced after a foreclosure sale or sale in lieu of a foreclosure sale that occurs on or after July 1, 2011.  But that is only foreclosures you ask?  Nope.  It is for short sales also.  A “sale in lieu of a foreclosure” is a short sale.  Sale in lieu of a foreclosure means a sale of real property pursuant to an agreement between the seller and lender in which the sales price of the real property is insufficient to pay the full outstanding balance of the obligation and the costs of the sale.  The short sale (close) or foreclosure (trustee sale) must occur after July 1, 2011.  Then, the Second Lien holder has 6 months, NOT SIX YEARS as was previous rule, to file a law suit for debt collection.  Here exactly what the law says,

A civil action not barred by NRS 40.430 or section 3 of this act by a person to whom an obligation secured by a junior mortgage or lien on real property is owed to obtain a money judgment against the debtor after a foreclosure sale of the real property or a sale in lieu of a foreclosure sale may only be commenced within 6 months after the date of the foreclosure sale or sale in lieu of a foreclosure.”

This Section 3.3 this act apply only to an action commenced after a foreclosure sale or sale in lieu of a foreclosure sale that occurs on or after July 1, 2011.

The explanation of this Section from the Legislature is here —-> Existing law authorizes a creditor under an obligation secured by a junior mortgage or deed of trust to bring an action to obtain a personal judgment against the debtor only if the action is commenced within 6 years after the date of the debtor’s default. (NRS 11.190) Under property securing such an obligation is the subject of a foreclosure sale, a trustee’s sale or a sale or deed in lieu of such a sale, the creditor may bring an action to obtain a personal judgment against the debtor only if the action is brought within 6 months after the foreclosure sale, the trustee’s sale or the sale in lieu of a foreclosure sale or trustee’s sale.

WHAT what does it mean?.  Since the complete ban on debt pursuit only applies to loans from here on, a consumer will not be able to rely on that now.  BUT, what is important is that all short sales (close) and foreclosures (trustee sale), after July 1, 2011, now leave the homeowner exposed for a law suit from the Junior Lien Holder for only six months.  This appears to be both owner occupied and investor.

II.  First Deed Rights To Sue On Short Sale –  SB 414

READ the entire bill here ===>    http://www.leg.state.nv.us/Session/76th2011/Bills/SB/SB414_EN.pdf

There are changes to debt collection as to short sales in Nevada.  The blog – TGIF Legal Tip: FORECLOSURE / DEFICIENCY is now outdated.  Effective June 13, 2011.  Pursuant to SB 414,  an owner occupied seller involved in a short sale, is not liable for a deficiency judgment provided 1.) the obligation secured by a mortgage or deed of trust was created on or after October 1, 2009; 2. ) the debt on the property was used to purchase 3.) the seller continuously occupied the home as her principal residence 4.) the lender approved the short sale and either A) did not mention the amount of money still owed or B) the lender specifically waived its right to recover the amount owed.

What does it mean?  The short sale lender approval is more important than ever.  Obviously if the deficiency is waived, great, but now if the approval does not declare exactly what future monies are owed, the lender is barred from seeking these monies (but only on loans issued since 2009 and owner occupied, personally it really does not seem to cover many homeowners.)

But the 6 star (bigger than 5) question is what about investor short sales?  Is the statute of limitations 6 months or 6 years for first on short sales?  Not clear.  NRS 40.455 which states, “the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the of the foreclosure sale or the trustee’s sale” must file.  It does not appear that this section was modified.  If this section is modified elsewhere in the law to define “foreclosure sale or the trustee’s sale” to include “short sale” as was clearly done when it comes to Junior Liens, this question will be answered.

***

This is part of my short sale series listed below in alphabetical order:

7 Tips for Short Sale

Addendum to Short Sale Listing

Advance Fees Continued and the FTC

Advance Fees – Short Sales – FTC II

Charging for negotiating short sales/Negotiators

Deficiency Judgments Nevada

Foreclosure and the One Action Rule in Nevada

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sale Wallet Size Answer Sheet

IRS PUBLICATIONS shortsales/foreclosures:

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Ten Facts about Mortgage Debt Forgiveness

Questions?  Call me. Darren Welsh, Esq. 702 245 1787  email me darren@dwelshlaw.com or drop me a TPS by filling out this form

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