Nebraska homeownership rates fell a little bit after the housing market fluctuations that the whole country dealt with. In fact, in 2015 the state had its lowest rate of ownership since the 1960's but in recent years, the rate has increased and steadied. Today, more home buyers are actively seeking mortgage loans than in recent history. Some will go the traditional route with a large bank or mortgage firm, but others will seek out special options to buy a home or even to renovate a property. One option that is proving helpful to many is called a hard money loan. These are sometimes offered by individual or small group investors and require that the borrower use their home or other owned real estate as collateral for the loan. These arrangements often fund much faster than a traditional loan and they require less paperwork. For Nebraska buyers willing to put their property up as collateral, hard money might be the way to go.
Foreclosure Laws in Nebraska
Any foreclosure process in Nebraska must be finalized by a judge, but not all foreclosures have to go through the court system in order to move forward. Most foreclosures in Nebraska are non-judicial, meaning that they do not go through the court system until the very end when the sale of the property is made official. A judicial process allows for set timeframes, notices and builds in an opportunity for the homeowner to try and make arrangements to keep the home if possible. However, in a non-judicial foreclosure, while some of the notification requirements remain in place, everything generally moves much faster and it is harder for the borrower in default to save their home. In these cases, it is important to know your rights and to seek qualified legal counsel if possible.
Property Redemption after Foreclosure Sale
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. Under Nebraska law, a homeowner foreclosed in a judicial process will have one month from the foreclosure sale to redeem the home. Those foreclosed in a non-judicial foreclosure will not have that option. Neb. Rev. Stat. § 76-1010.
Deficiency Judgments in Nebraska
When a property is sold in foreclosure, it sometimes does not bring in enough money to cover what was owed by the borrower. In that case, the lender can sometimes get what is called a deficiency judgment from the courts, leaving the borrower still responsible for remaining monies owed.
In Nebraska, the lender can get a deficiency judgment by filing a lawsuit within three months after the foreclosure sale. The amount of the deficiency judgment is limited to the lesser of:
- the total indebtedness minus the foreclosure sale price, or
- the total indebtedness minus the fair market value of the home as of the foreclosure sale date. Neb. Rev. Stat. § 76-1013.
Deed in Lieu of Foreclosure
Nebraska does allow for a special agreement between lenders and borrowers in default called a deed in lieu of foreclosure. This is one of many when a homeowner decides that they simply cannot afford the mortgage payments anymore. In this scenario, the borrower agrees to give over possession of the home to the lender and in turn, the lender does not go through a full foreclosure but instead takes possession of the house and can sell it on their own. This option is also sometimes called "cash for keys" because lenders will sometimes offer a small cash settlement to help with the cost of moving out. Apart from selling the property, considering a short sale, filing for bankruptcy, or going through with a foreclosure, Ohio homeowners in default may decide to leave with a deed in lieu of foreclosure. A lender must also approve this action.
Grace Period Notice
Nebraska does not have a set grace period in place for homeowners facing foreclosure. In some states, when a lender decided to seek foreclosure, there is an automatic waiting period that is designed to give the homeowner a chance to make arrangements, get an agreement in place with the lender to catch up on payments or some other remedy to keep the home. All foreclosure proceedings in the state, both judicial and non-judicial, have built in times where the homeowner must be notified, and there are days and weeks in between where a remedy can be sought. But Nebraska does not specifically have a grace period for all people in danger of losing their home to foreclosure.
Protection for Military Service Members
The U.S. has a federal law that helps protect military personnel from foreclosure, especially while on active duty. Some states also have special programs in place to help make sure their military citizens are able to get help if they are facing foreclosure. But Nebraska does not offer any state-run protection programs. Federal protections are extended to federal military personnel but not for state-specific service members.
High Risk Mortgage Protections
In July of 2002, Nebraska enacted a set of anti-predatory lending laws in order to help protect Nebraska homebuyers from foreclosure after securing financing from predatory lenders. Some of the provisions of this new set of laws include the prohibition of a lender charging points and fees in excess of 6% of the total principal financed amount, the prohibition of a mortgage company issuing a loan to a borrower in an amount that the borrower could not reasonably afford to repay, and the prohibition of the financing of single-premium credit insurance, among others.
Additional State Laws
The maximum interest rate allowed by law is 6%. According to Nebraska law, the legal limit for interest rates is 6 percent (16 percent for contracts). However, exceptions include loans by the Department of Banking, corporate loans, open credit accounts, and savings and loans.
Nebraska is a homestead state. The state of Nebraska allows a maximum property value of $60,000 (as of 2015) to be declared a homestead, with a maximum urban acreage of one acre (covering as many as two lots) and a rural limit of 160 acres.
Lender Licensing Requirements
The Nebraska Department of Banking and Finance (NDBF) regulates and supervises the licensing of mortgage bankers. In Nebraska the licensees are referred to as Mortgage Bankers, and anyone who negotiates, acquires, sells, or arranges for mortgage loans is required to be licensed. All Nebraska mortgage licenses are handled through the National Mortgage Licensing System.