The Foreclosure Process and Laws in Nevada

If you default on your home loan payments in Nevada, the servicer (on behalf of the loan owner, called the "lender" in this article) will eventually begin the foreclosure process. The method will most likely be nonjudicial, although judicial foreclosures are also allowed.

Nevada law specifies how nonjudicial procedures work, and both federal and state laws give you rights and protections throughout the foreclosure.

Mortgage Loans in Nevada

When you get a loan to buy residential real estate in Nevada, you'll likely sign two documents: a promissory note and a deed of trust, which is similar to a mortgage. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The deed of trust is the document that gives the lender a security interest in the property and will probably include a power of sale clause.

If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.

What Happens if You Miss a Mortgage Payment

If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you'll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.

If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. Federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives—called "loss mitigation" options—no later than 36 days after a missed payment and again within 36 days after each following missed payment. (12 C.F.R. § 1024.39).

No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39).

What Is a Breach Letter?

Many deeds of trust in Nevada have a provision that requires the lender to send a breach letter if you fall behind in payments. This notice tells you that the loan is in default. If you don't cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.

When Does Foreclosure Start?

Federal law generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. However, in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).

State Foreclosure Laws in Nevada

Again, most Nevada foreclosures are nonjudicial.

Preforeclosure Notice in Nevada Foreclosures

At least 30 calendar days before a Nevada nonjudicial foreclosure officially starts, the servicer or the loan owner has to mail you (the borrower) a statement that has information about your loan account, including the total amount needed to get caught up on the loan, information about foreclosure prevention alternatives, and other loan information. (Nev. Rev. Stat. § 107.500).

Notice of the Foreclosure

Nevada law requires three foreclosure notices (in addition to the preforeclosure notice): a notice of default, a danger notice, and a notice of sale.

Notice of Default and Election to Sell

To start a nonjudicial foreclosure, the trustee records a notice of default and election to sell in the county records. The trustee then sends a copy to each person who has a recorded request for a copy and each person with an interest or claimed interest in the property, within ten days following recordation. (Nev. Rev. Stat. §§ 107.080(3), 107.090).

For owner-occupied properties, the notice must include information about foreclosure mediation. (Nev. Rev. Stat. § 107.086). The notice of default and election to sell must also be posted on the property. (Nev. Rev. Stat. § 107.087).

Danger Notice

At least 60 days prior to the date of the sale, the trustee must serve the borrower with a "danger notice" stating that you're in danger of losing the home to foreclosure, along with a copy of the original promissory note. (Nev. Rev. Stat § 107.085). The notice must be:

• personally served to the borrower
• left with a person of suitable age and discretion (if the borrower is not available) and a copy mailed, or
• if a person of suitable age and discretion is not available, then the notice may be posted in a conspicuous place on the property, left with a person residing in the property, and then mailed to the borrower. (Nev. Rev. Stat § 107.085).

Notice of Sale

Three months after recording the notice of default (or after 60 days if the home is abandoned), the trustee records another notice, a notice of sale, and mails a copy to you 20 days before the sale. (Nev. Rev. Stat §§ 107.080, 107.090). The notice of sale must also be:

• posted on the property 15 days before the sale
• posted in several public places for 20 days, and
• published in a newspaper. (Nev. Rev. Stat. §§ 107.080, 107.087).

The Foreclosure Sale

The sale is a public sale, open to all bidders. The lender usually makes a bid on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower's debt. The highest bidder at the sale becomes the new owner of the property.

Right to Reinstate Before a Foreclosure Sale in Nevada

"Reinstating" is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. In Nevada, the right to reinstate expires five days before the sale date. (Nev. Rev. Stat. § 107.0805).

Deficiency Judgments Following the Sale in Nevada

Sometimes, a foreclosure sale doesn't bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a "deficiency balance." Many states allow the lender to get a personal judgment, called a "deficiency judgment," for this amount against the borrower.

In Nevada, the lender generally has the right to sue the borrower for a deficiency judgment after the foreclosure if it files the lawsuit within six months. But the amount of the judgment is limited to the lesser of the difference between the total debt and fair market value of the home, or the total debt and foreclosure sale price (plus interest). If the party seeking the deficiency judgment acquired the right to obtain the judgment from a party that previously held that right, the judgment is limited to the difference between the amount the party paid to acquire the loan and the larger of the property's fair market value or the amount paid for the property at the foreclosure sale, plus interest and reasonable costs. (Nev. Rev. Stat. § 40.459).

Also, a deficiency judgment isn't allowed if all of the following conditions are met.

• The lender is 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). (For a summary of the anti-deficiency law in Nevada, see Deficiency Judgments After Foreclosure in Nevada.)

Redemption Period After a Foreclosure Sale in Nevada

Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. In Nevada, however, foreclosed homeowners can't redeem the home following a nonjudicial foreclosure. (Nev. Rev. Stat. § 107.080).

Eviction After a Nevada Foreclosure

After the foreclosure sale, the home's new owner has to give you a notice to quit (move out) before starting an eviction action in court. (Nev. Rev. Stat. § 40.255).

Getting Help from a Nevada Foreclosure Lawyer

Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure or you might have leverage to work out an alternative.

Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure.

Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.