Nevada has one of the lowest rates of homeownership in the country, steadily lower than the average for the past decade and things are not turning around just yet. However, the Silver State has plenty of citizens looking to buy their own piece of the American dream and many of them are turning to special financing options instead of traditional big bank mortgage loans. One popular option, offered by small investment groups and some individual investors is called a hard money loan. The buyer must put up their home or a piece of real estate as collateral against the loan, but those able and willing to do that can usually fund their home loan much faster than a traditional loan, and with less paperwork as well.
Foreclosure Laws in Nevada
For homeowners facing foreclosure in Nevada, most will deal with a process that is managed outside of the state court system. These are called non-judicial foreclosures and they can move much faster than those that are managed through the courts, called judicial foreclosures.
Property Redemption after Foreclosure Sale
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. In Nevada, foreclosed homeowners cannot redeem the home following foreclosure. The sale is final and homeowners cannot repurchase the home.
Deficiency Judgments in Nevada
When a home is sold in foreclosure, if it does not bring in enough money to cover the homeowner's debt, then it is possible for the lender to get what is called a deficiency judgment against the borrower, forcing them to pay the difference. However, in Nevada, there are some rules around getting this kind of judgment.
- The lender must be a financial institution.
- The property securing the loan is a single-family dwelling.
- The borrower was the owner of the property at the time of the foreclosure sale.
- The borrower used the proceeds of the loan to purchase the property.
- The borrower took out the loan on or after October 1, 2009.
- The property was the borrower's primary residence continuously after the borrower took out the loan.
- The borrower did not refinance the loan. Nev. Rev. Stat. § 40.455.
Deed in Lieu of Foreclosure
In Nevada, there is the option for a special arrangement called Deed in Lieu of Foreclosure to help homeowners in jeopardy to avoid court proceedings. Sometimes a lender and borrower can work out an agreement called a Deed in Lieu of Foreclosure where a homeowner can simply turn over possession of the property to the lender and the two part ways or "call it even". The lender must also agree to the terms but this kind of arrangement can save both parties the time and cost of a full foreclosure process and in some cases, it is possible to negotiate a "cash for keys" settlement where the lender provides a small cash payment to help offset the cost of moving out in return for the easier, less costly process.
Grace Period Notice
Prior to initiating a foreclosure the lender must serve a notice of default where a borrower has 35 days to cure any default. This must be sent by certified mail and the defaulting borrower has 15 days prior to the sale and after receiving this notice to cure any default. The foreclosure will stop if an intent to cure is filed with the Public Trustees office within this time frame. A notice of foreclosure sale must be made within 21 days of the date of the sale and at a time, place and manner as stated in the notice of default. Sale must take place in the same manner as an execution sale would occur in a judicial foreclosure.
Protection for Military Personnel
Nevada recently passed a bill establishing special protections for military service members facing foreclosure. Under the bill, a lender or servicer may not initiate a foreclosure against a service member during that person's period of active duty or deployment, or within the 1 year period following the service member's period of active duty or deployment, unless the foreclosure sale is conducted pursuant to a court order. The bill also extends the foreclosure protection to a dependent of the service member (upon court approval), if the dependent's ability to make payments under the mortgage loan is materially affected by the service member's active duty or deployment. The bill went into effect May 29, 2017.
High Risk Mortgage Protections
For a mortgage loan made after October 1, 2003, that is subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA), Nevada law requires the lender to serve the borrower a notice at least 60 days prior to the foreclosure. Nev. Rev. Stat. § 107.085. Violations of high-cost home loan statutes support a defense to foreclosure. Nev. Rev. Stat. § 598D.110.
Additional State Laws
There is no maximum interest rate in Nevada. State interest rate laws can vary depending on the type of credit, loan, or legal judgment involved. These statutes are designed to help consumers avoid crippling debt and deter predatory lenders by restricting the amount of interest a creditor can charge. Consumers should be aware that Nevada allows parties to contract for any interest rate, ands sets the default at the prime rate of the state's largest bank, plus 2%.
Nevada is a homestead state. When you record a Declaration of Homestead, Nevada law protects the equity in your home up to $550,000 from general creditor claims (unpaid medical bills, bankruptcy, charge card debts, business/personal loans, accidents) but would not preclude a seizure or forced sale of your residence from general creditors if your equity exceeds the $550,000.
A creditor may file suit and can record a judgment lien against any real property you own. Recording a Declaration of Homestead protects your principal residence up to the statutory maximum. For example, if the value of your home is $645,000 and you have a first mortgage of $485,000 plus a second mortgage of $10,000, the equity is $150,000.
Lender Licensing Requirements
The Nevada Division of Mortgage Lending (MLD) enforces the statutes and regulations that pertain to Mortgage Brokers. Offices are located in Las Vegas and Carson City. Anyone who conducts the business of a Mortgage Broker must maintain at least one office within the state. Licensed Mortgage Brokers may hold a Mortgage Banker's License, and a Licensed Mortgage Banker may hold a Mortgage Broker's License in Nevada.