Nevada's Foreclosure Procedures
In Nevada, lenders can foreclose on deeds, trusts or mortgages that are in default, using a judicial or nonjudicial foreclosure process. The foreclosure time frame is approximately 120 days from your first missed payment.
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Judicial Foreclosure
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A judicial foreclosure involves filing a lawsuit when there is no power-of-sale clause on the mortgage. A power-of-sale clause is a pre-authorization by the borrower that enables the mortgage company to sell the home in order to pay the balance on the loan in case of default. In a judicial foreclosure in Nevada, you have 12 months to redeem the property.
Nonjudicial Foreclosure
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A nonjudicial foreclosure is used when there is a power of sale on the mortgage, deed, or trust. The power to sell the property can be executed by the lender or its representative, referred to as the trustee, which is usually an attorney or a law office. Power-of-sale guidelines provide that borrowers must be given notice by certified mail with return receipt at his last known address. The notice must be dated on the same day it was recorded at the county clerk's office. In Nevada, the borrower has 15 to 35 days to cure the default by paying the amount due; however, the time due may be different as stipulated in the original deed of trust. In a nonjudicial foreclosure, borrowers have no right of redemption.
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Intent to Cure
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If a Nevada borrower wants to make good on the mortgage, he must file an "Intent to Cure," which stops the foreclosure process. The Intent to Cure must be filed with the public trustee's office no later than 15 days from the date of the foreclosure. The borrower must pay the full amount to bring the loan current, including any late fees and accrued interest, by noon the day prior to the foreclosure sale.
Deficiency Judgment
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A deficiency judgment grants a lender the right to pursue the borrower for the balance on the mortgage after the foreclosure sale. In Nevada, lenders have three months to obtain a deficiency judgment. The higher the balance owed after the foreclosure sale, the greater the chances the lender will seek a deficiency judgment.
Tax Implications
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In a short sale, your home is sold for less than the principal balance on the loan. Your Nevada lender may decide to forgive the remaining balance. This creates a taxable gain to you, which you must report to the IRS. The lender will send you Form 1099-C, which you will use in conjunction with Schedule D to file your tax return. Your lender may also send you Form A along with Form C. Form-A is used for informational purposes, telling you the difference between the fair market value of your home and the mortgage.
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