How Long Do Lenders Have to Sue You for a Default on a Second Mortgage in Nevada?
The state of Nevada is just one of several recourse states in which homeowners may be sued by their lender for the balance owed on the mortgage if proceeds from the foreclosure sale are insufficient.
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The Facts
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In Nevada, non-foreclosing lenders have the option to obtain a judgment for the balance owed on a second mortgage by filing suit against the former homeowner for breach of contract. After a homeowner defaults on his second mortgage, lenders have up to six years to file suit against him.
Considerations
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Second mortgage lenders become the sold-out junior lien holders and lose their security interest in the property when the foreclosing lender sells the property. There may also be some limitations included in the contract as to what a lender can recover from the homeowner in a breach of contract suit.
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Prevention/Solution
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Former homeowners may be able to eliminate (strip) the balance on their second mortgage through chapter 13 bankruptcy. In order to do this, the property must appraise for less than what is owed on the first mortgage.
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References
- Photo Credit final judgment image by Keith Frith from Fotolia.com
