This is a good question that is best answered by a qualified Real Estate Attorney. Before you talk to any attorney about short sales or foreclosure, discuss with us what things you should ask an attorney so that you do not get taken advantage of.
What you should know is that Nevada has both Judgment and Non-Judgment Deficiency laws which have changed within our state. For a homeowner who obtained a purchase money loan for their property prior to October 1, 2009 and subsequently be foreclosed upon, the 1st lien holder has 6 months to pursue a deficiency judgment for the balance owed to the bank. Junior lien holders (2nd, 3rd mortgages) have a total of 6 years to pursue a deficiency judgment.
Effective October 1, 2009, Nevada became 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. This law does not change the statutes that effects short sales… it only applies to foreclosed homes and borrowers.
The following requirements must be met in order for the new law to apply:
- 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
For those that are still at risk of a deficiency judgment, we fight for deficiencies to be waived right in the short sale approval letter. For more specifics on this topic, please refer to the Nevada Revised Statutes(hyperlink to http://www.leg.state.nv.us/nrs/nrs-040.html )and consult a qualified Real Estate Attorney.We are happy to recommend someone to you if you do not have anyone you are looking for legal advice.
It is also important to know that most Home Equity Lines of Credit (HELOC) are not just secured to your home, they are also personally “backed” by you. What this means is that even though your HELOC bank may agree to do a Short Sale or Foreclose on your home, they still may attempt to collect on your account – even after the Short Sale or Foreclosure is complete.