UNDERSTANDING FORECLOSURES
If you are facing foreclosure, it is vital that you understand the process. In the state of Nevada, lenders can foreclose in two ways, non-judicial and judicial.
Homeowner Association (HOA) and other Liens:
It is not only the bank or lender who can initiate a foreclosure. The HOA can initiate foreclosure if you do not pay your associations dues, assessments, or fines.
When you buy a home that’s part of a planned community you will normally be required to pay assessments to a homeowners’ association (HOA). Based on the Covenants, Conditions, and Restrictions (CC&Rs) and state law, an HOA can place liens on the properties that are part of its community if homeowners become delinquent in paying the assessments or if you fail to comply with terms other CC&Rs.
An HOA lien usually attaches to the property, typically when the assessments are past due. Once the HOA has a lien, it might decide to foreclose it to force the sale of the home to a new owner if the lien remain unpaid.
While not as common as the HOA Lien, Lien holders may also initiate foreclosure.
NON-JUDICIAL FORECLOSURE
Non-judicial foreclosure does not have to involve court action and is the principal method of foreclosure in Nevada. The non-judicial foreclosure process typically begins when the borrower has missed three or more mortgage payments. The lender gives the borrower notice that they are in danger of losing the property and records Notice of Default.
If the borrower cannot pay the delinquent amount specified, the lender may continue with the foreclosure process. Many times it is in the homeowners best interest to request mediation, apply for a loan modification, short sale, forbearance or another alternative to foreclosure. If the lender and homeowner are able to reach an agreement for one of these alternatives, then the foreclosure will not proceed.
JUDICIAL FORECLOSURE
Judicial foreclosures occurs when a lender files a civil lawsuit against a homeowner who is behind on their mortgage payments. If the lender receives a successful judgment or order from the court, then the lender is allowed to sell the property at auction.
With a judicial foreclosure the homeowner is able to assert legal defenses and may be able to redeem the property even after the foreclosure sale occurs.
Judicial foreclosure also allows the homeowner the ability to request a mediation, apply for a loan modification, short sale or another alternative to foreclosure.
DEED IN LIEU OF FORECLOSURE
If a homeowner wants to avoid foreclosure but does not want to keep or sell the property, a deed in lieu of foreclosure may provide a better alternative. A deed in lieu of foreclosure is a legal agreement between the lender and the homeowner. In place of having the lender foreclose on the property, the homeowner transfers a property’s title back to the lender. While, this action is generally less harmful to your credit than foreclosure, it can still be a lengthy process and before accepting a deed in lieu, lenders commonly require that the house have no liens on title.
FORECLOSURE MEDIATION IN NEVADA
When a Notice of Default is recorded by the lender, the homeowner residing in the home is eligible for mediation. Meditation is a confidential process overseen by a neutral party called a mediator. The mediator’s role is to ensure compliance and make certain that both parties negotiate in good faith. While the mediator cannot give legal advice, they do have the power to find the either party in bad faith if they do not comply with the rules or for failing to provide necessary documentation.
THE MEDIATION PROCESS
The mediation process begins with imminent default or a Notice of Default which includes instructions for the mediation. The mediation enrollment form must be completed by the homeowner and timely returned to the Nevada Foreclosure Mediation Program. If a homeowner fails to enroll, the lender is allowed to proceed with foreclosure without the mediation.
Once the mediation is scheduled the parties must exchange and review documents.
During mediation, the homeowner and the lender discuss the loan and foreclosure alternatives. Foreclosure alternatives may include modification, repayment or liquidation options such as a short sale or deed in lieu. The lender is prohibited from proceeding with the foreclosure if they fail to comply with the Nevada Foreclosure Mediation Program’s requirements.
Should either party disagree with the results of mediation, they can file a Petition for Judicial Review.
GET LEGAL HELP FOR FORECLOSURE
If you are facing foreclosure, we can guide you through the process and assist you in choosing the best method to stop the foreclosure, whether it be bankruptcy, mediation, modification or other possible retention options. We also explore liquidation options including a short sale, deed-in-lieu of foreclosure or possibly allowing the foreclosure to proceed. Jacovino Law provides personalized and compassionate legal expertise to ensure the best legal outcome for every client’s unique situation.
If you have questions or would like more information about foreclosure or mediation in Nevada, contact us at (702) 776-7179 or schedule a consultation.
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