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1. Can a lender sue me for defiency? Absolutely. A lender will not close a short sale if there are additional liens encumbering the property. Nevada law allows Home Owners Associations (HOAs) and local governments to lien real property when homeowners fail to pay. A homeowner’s failure to pay dues and taxes will prevent the close of a short sale.
Yes, Without a full release from your lender, your lender can and may come after you for any defiency owed. If you short sell your property, your lender has six (6) years to file a deficiency action against you. Contrarily if your property is foreclosed upon, your lender only has six (6) months from the date of the Trustee's Sale to file a defiency action against you. Additionally, any lenders holding a second mortgage or home equity line of credit have six (6) years in either scenario to file a defiency action against you.
2. How does short sale affect my credit?
A short sale will negatively impact your credit rating. Currently, lenders are refusing all request to assist in maintaining the client's credit rating. A short sale is often a better alternative to a foreclosure because there are federal programs which allow homebuyers to purchase a future residnece in a shorter period of time than if they suffer a foreclosure.
3. How long it the short sale process?
The short sale process will take at least a minimum of 30 days. It is difficult to determine when the short sale process will end. The entire length of the process will depend on whether the homeowner must undergo the Foreclosure Mediation Program or additional litigation. The short sale process can sometimes take as long as six (6) months.
4. Are there tax consequences from a short sale?
Yes. In short sales that involve the forgiveness of a defiency from a lender to a homeowner, the lender may issue the homeowner a 1099-C form for the deficiency amount. This amount may be deemed taxable income to the homeowner. The homeowner must consult with a tax attorney or CPA to determine the exact impact it will have on the homeowner.
5. Should I stop paying my mortgage?
While we would never recommend that a person stop paying because that is encouraging a breach of contract, the decision to stop paying your mortgage must be made by the homeowner. At present, the one common element to all homeowners going through the short sale process, is the lender will not consider a short sale offer unless the homeowner is behind on payments. However, some lenders, such as Wachovia, are now requiring requiring homeowners to stay current on their payments.
6. Should I pay my HOA dues and property taxes?
7. What are my obligations to my tenant in the short sale process?
Nevada Law requires a homeowner to disclose to their tenant if they are failing to stay current in their mortgage payments and undergoing the short sale process. If a homeowner fails to make these disclosures, a tenant could sue them for all incurred expenses of their relocation. Nevada Law also requires a homeowner to disclose that they are putting their house up for sale to allow their tenant sufficient time to relocate.
8. What is the Nevada Foreclosure Mediation Program (“NFMP”)?
The NFMP is a court-annexed mediation program enacted by the Nevada State Legislature on July 1, 2009 to assist Nevada homeowners in foreclosure. A homeowner who has received a Notice of Default has thirty (30) days to elect into the NFMP. The NFMP is designed to provide an opportunity for homeowners to sit at the same table with lenders and a mediator to negotiate a loan modification, short sale or other action in order to avoid a foreclosure of a homeowner’s principal residence. If a homeowner has not been time-barred from entering the NFMP, they should file.
9. How do I know if I’ve sustained a hardship?
The hardships most commonly recognized by lenders to begin the short sale process include loss of employment, bankruptcy filing, medical disability, or death. A bank will recognize the events as a hardship whether sustained by the homeowner, spouse or immediate family member.
10. How do I know if I am in foreclosure?
Under Nevada Law, a foreclosure begins when your lender files a Notice of Default (“NOD”). The lenders filing of the NOD triggers the homeowner’s ability to participate in the NFMP. If the homeowner declines the NFMP and a short sale does not close, the lender may then file a Notice of Trustee’s Sale which schedules the auction date of the home. The entire statutory foreclosure process takes at least four (4) months (one hundred twenty (120) days).
DISCLAIMER: THESE FREQUENTLY ASKED QUESTIONS ARE FOR INFORMATIONAL PURPOSES ONLY AND
SHOULD NOT BE RELIED ON FOR YOUR PARTICULAR SITUATION. YOU SHOULD SEEK PROFESSIONAL
ADVICE IN RELATION TO THE POTENTIAL CONSEQUENCES REGARDING THE DISPOSITION OF YOUR
FINANCIALLY DISTRESSED PROPERTY.
