How The Foreclosure Process Works In Nevada
A mortgage foreclosure is the legal process that can happen when a person borrows money from a bank or lender to buy a home. In exchange for the loan, the lender holds a lien against the property. If the borrower misses payments, the loan goes into default, and the lender can sell the property to pay off the loan—a “mortgage foreclosure.” Continue reading to learn the basics of a mortgage foreclosure in Nevada and the answers to some frequently asked questions.
***FYI! If you have questions about evictions related to foreclosure–for example, because you are a tenant renting a foreclosed home, or maybe because you are a former homeowner who has lost a home to foreclosure and are being evicted–click to visit our Eviction Issues Related to Foreclosure page. There you can find information about tenants’ rights and landlords’ obligations in foreclosures and about the eviction process for both tenants and former homeowners.
In Nevada, mortgage foreclosures can take place “judicially”—by going to court—or “non-judicially,” by having a third party (the “trustee”) sell the property for the lender. Most mortgage foreclosures in Nevada are non-judicial foreclosures.
The laws governing Nevada foreclosures are in Title 9, Chapter 107 of the Nevada Revised Statutes (“NRS”) and the foreclosure mediation rules are known as the Nevada Foreclosure Mediation Rules (“FMR”). While this page will be helpful to you in understanding the procedure, you might consider consulting with Legal Aid Center of Southern Nevada or hiring a private attorney before making any big decisions in relation to your home. The explanations below are only intended as a simplified, starter guide for homeowners in understanding the mortgage foreclosure process.
Several terms are commonly used during the foreclosure process, and several words are often interchanged depending on who is speaking with you. Here are some terms to know:
How does mortgage foreclosure work?
Most lenders in Nevada use a “non-judicial foreclosure” process (sometimes called “sale under a deed of trust”) under Chapter 107 of the Nevada Revised Statutes. “Non-judicial” means that your lender does not have to go to court to foreclose on your mortgage. Your lender simply has to follow the steps outlined in the statute.
CAUTION!!! Your mortgage lender is not the only entity that might be able to foreclose on your home. Under Nevada law, your homeowners’ association can foreclose on your home for unpaid HOA dues. (NRS 116.31162.) So do not ignore any notices you receive and seek out help as soon as possible! Click to visit Foreclosure and Foreclosure Mediation Resources for links to various organizations that might be able to provide you with assistance.
If you purchased your home in Nevada, your home loan is most likely subject to the terms of a “deed of trust.” Under the terms of the deed of trust (which you signed when you obtained the home loan), the trustee holds a “power of sale” in the event that you default. You are given an opportunity to cure by catching up on the payments and paying the late fees. But once you go into default and stay in default, the lender can foreclose, sell your home, and evict you.
In order to foreclose, the trustee must first:
TIP! The Notice of Default and Election to Sell and the Notice of Trustee’s Sale are public filings that you can view at the county recorder’s office, along with any other documents that have been recorded against your property. Click to visit the Clark County Recorder website.
Once you receive the Notice of Default and Election to Sell and waive mediation, the sale will happen in approximately 111 days (three months plus three weeks). The foreclosure is actually done by the trustee rather than the bank that holds the mortgage; so notices do not come from the bank but from a third party who you may not recognize.
Although not as common, a lender could also file a foreclosure lawsuit with the court (sometimes called a “judicial foreclosure”) rather than use the “non-judicial foreclosure” process. An action for judicial foreclosure is like any other court case in many ways. In a judicial foreclosure case, the lender can ask the court to force the sale of the property and enter a money judgment against you for whatever amount is still owed on your loan after the sale. If your lender is using the judicial foreclosure process, a process server will serve you with a summons and complaint, to which you can then respond.
How does the lender or other new owner take my home from me?
At the foreclosure sale, the lender (or someone else) purchases your home from the trustee and gets the title. If you are still physically in the home after the sale date, the lender or other new owner can serve you with a three-day notice to leave. (NRS 40.255.) If you stay on the property after three days, the lender/owner can serve you with a summons and complaint asking the court to evict you. Click to visit Evicting a Former-Owner After Forclosure for more information.
What can I do if I am facing foreclosure?
Do not wait! If the process has gone too far, it may be too late to stop foreclosure of your home.
Should I hire a lawyer or a “save your home” service?
Maybe, but first be beware of scammers! The Notice of Default is a public record, and anyone can access the information. Be cautious about offers to help you refinance or modify your loan. Many of them are fraudulent.
Click to visit the Legal Aid Center of Southern Nevada website to learn more about free programs and services.
TIP! For short, practical tips and links on topics such as mortgage payments, foreclosure rescue scams, reverse mortgages, and mortgage servicing, click to visit the Homes & Mortgages website maintained by the Federal Trade Commission.
Who can I talk to about modifying my mortgage?
Under Nevada law, when the trustee mails you the Notice of Default and Election to Sell, the trustee must include with the notice the contact information for a person with authority to negotiate a loan modification, along with contact information for at least one local housing counseling agency approved by the U.S. Department of Housing & Urban Development (“HUD”). (NRS 107.086.) The trustee must also post a notice on the property that provides the contact information of the trustee or the person conducting the foreclosure who is authorized to provide information relating to the property’s foreclosure status. (NRS 107.087.)
If you have not received a Notice of Default and Election to Sell, you can speak with your mortgage servicer. The mortgage servicer’s contact information is on your monthly mortgage statement.
How can I obtain more information about foreclosure mediation?
For a step-by-step guide on enrolling in the foreclosure mediation program, visit the Petition for Foreclosure Mediation Assistance page. Otherwise, the Nevada Supreme Court has adopted rules and model forms governing the Nevada Foreclosure Mediation Program, all of which are available online. Click to visit the Legal Aid Center of Southern Nevada website or the Home Means Nevada website for more information regarding foreclosure mediation.
How does foreclosure mediation work?
Mediation is a form of dispute resolution. Two opposing parties meet with a neutral third party (the mediator) who helps them try to reach a voluntary and mutually acceptable solution or agreement.
If you petition for foreclosure mediation assistance within the appropriate time, the lender may not foreclose until mediation has been completed. Once mediation is scheduled, the actual mediation meeting is fairly fast (less than four hours), inexpensive ($500, paid equally by the parties), and more flexible than more formal processes. The goal of the program is to make foreclosure the last resort for the lender.
If you are interested in participating in the foreclosure mediation program, visit the Petition for Foreclosure Mediation Assistance page for a step-by-step guide on how to enroll. In short, you will file a Petition for Foreclosure Mediation Assistance at the district court clerk’s office, pay a $250.00 mediator fee and a $25.00 filing fee, then mail copies of your petition to the lender, trustee, and Home Means Nevada. If you timely file the petition, no further action can be taken to sell your home until completion of the mediation. (NRS 107.086.)
After filing your petition, you will receive a notice appointing a mediator. The mediator will arrange a time and place for the mediation. The mediator will send you a scheduling notice explaining what documents you must produce and how to exchange them with your lender before the mediation.
Three parties will be present at the mediation: you, the lender, and the mediator. Both you and the lender must negotiate in good faith regarding alternatives to foreclosure. Usually, alternatives to foreclosure include (i) loan modification or repayment plan, (ii) short sale or (iii) giving the property up (a “deed-in-lieu”). You will tell them what you want and show them what you can afford. If you reach an agreement, the mediator will help you outline the terms of the agreement.
The mediator will issue a Mediator’s Statement within ten days of conclusion of the mediation. Within ten days of that statement, either side can submit a request or an objection. The District Court judge then enters an Order that reflects the terms of the loan modification if one was reached, and the new terms under the loan modification will begin. If no loan modification or other agreement was reached, the judge will dismiss the case. The order dismissing the case will be served on Home Means Nevada, who will then issue a certificate to the trustee to proceed with the foreclosure.
The banks have been known to drag you long enough to get you past your time of rights. “Time is of the essence” is our favorite term because the banks are fully aware of when your time for your rights expire and will do anything necessary to take possession of your home with little to no fight from you.