Foreclosure Prevention
Foreclosure Prevention is a comprehensive set of strategies, programs, and legal protections designed to help homeowners in the Silver State who are struggling with their mortgage payments. This includes services like housing counseling, financial assistance programs, and mediation initiatives that provide an avenue for dialogue between lenders and borrowers. Nevada law also provides certain rights to homeowners, including the right to a foreclosure mediation program. Additionally, the state has established assistance funds to help homeowners get back on track, alongside enforcing stringent notice requirements and process timelines for lenders. The overarching goal is to prevent foreclosure, keeping Nevadans in their homes and preserving the health of local communities and the state’s real estate market.
Stop Foreclosure Brochure
Are you facing foreclosure in Nevada and feel lost amidst the tangle of legalese and financial jargon? Our “Stop Foreclosure Brochure” is a vital resource designed specifically for homeowners like you. This comprehensive guide demystifies the foreclosure process, providing clear, actionable steps to defend your home. It presents an overview of Nevada’s unique foreclosure laws, along with strategies to stop foreclosure, including loan modifications, short sales, and government assistance programs. It also offers guidance on consulting with foreclosure defense lawyers, and resources for emotional and financial support during this challenging period. With success stories and practical advice, this brochure is your roadmap to navigate the complexities of foreclosure, empowering you with the knowledge to regain control and secure your homeownership.
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Homeowners Associations and Foreclosure
Homeowners Associations (HOAs) in Nevada are governing bodies that enforce rules and regulations within residential communities, providing a structure for maintaining communal areas, ensuring aesthetic uniformity, and resolving disputes. Governed by the Nevada Revised Statutes (NRS), particularly Chapter 116, the HOAs have the authority to levy assessments (dues) on property owners within their jurisdiction.
When homeowners fail to pay these dues, Nevada law allows the HOAs to place a lien on the property, leading to foreclosure if left unresolved. This process, known as a non-judicial foreclosure, can commence as early as 60 days after the missed payment. The HOA must provide the homeowner with written notice of the delinquency and an opportunity to pay the debt or propose a payment plan before proceeding with foreclosure.
Importantly, Nevada’s “super-priority lien” rule permits the HOA to recover nine months’ worth of unpaid dues or 1% of the home’s value, whichever is less, even before the first mortgage lender. However, after a landmark case (SFR Investments v. U.S. Bank) in 2014, mortgage lenders now typically pay the super-priority portion of the lien to prevent the HOA from foreclosing and wiping out the first deed of trust.
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HOA Foreclosure Brochure
The Understanding HOA Foreclosure brochure is designed to educate homeowners about the potential consequences of failing to pay Homeowners Association (HOA) fees in the state of Nevada. It aims to provide essential information, rights, remedies, and resources to homeowners, to better navigate through the complex process of HOA foreclosure.
The brochure starts with the definition of HOA foreclosure, where a homeowner’s association can foreclose on a property if the owner falls behind on HOA dues or assessments. It emphasizes the legal basis of this action in Nevada, referring to the Nevada Revised Statutes (NRS), primarily NRS 116.3116 to 116.31168, which govern HOA foreclosures.
Next, it outlines the typical HOA foreclosure process in Nevada, detailing the various steps from the initial default notice to the eventual sale of the property. It also emphasizes the ‘super-priority lien’ concept, where an HOA can sometimes get priority over even first-mortgage lenders for up to nine months of unpaid HOA dues.
The brochure provides a detailed explanation of homeowners’ rights during the foreclosure process. It underscores the right to a mediation or a meet-and-confer session with the HOA, the right to receive detailed statements of the outstanding debt, and the right to pay off the debt and halt the foreclosure process at any point before the auction.
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Deficiency Judgments
Deficiency judgments occur when the money from a foreclosure sale doesn’t cover the full defaulted loan. Lenders must apply for deficiency judgments within six months of the foreclosure sale and are subject to several limitations to protect homeowners, especially for single-family homes occupied by their owners.
Nevada allows judicial foreclosure, which may result in a deficiency judgment, unlike nonjudicial foreclosure. Sometimes, lenders may waive the right to a deficiency judgment during a short sale or deed in lieu of foreclosure. However, exceptions exist where Nevada’s anti-deficiency laws may not apply, such as when the loan was not used for home purchase, or if the borrower is a corporation. Due to this complexity, legal counsel is advised for individuals facing potential foreclosure.
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Tax Liability of Forgiven Mortgage Debt
Forgiven or canceled mortgage debt can typically be treated as taxable income by the Internal Revenue Service (IRS). This principle applies when a lender forgives, cancels or discharges a borrower’s mortgage debt for less than the amount they owe, creating what is known as a “debt cancellation income” or “discharge of indebtedness income.”
In the past, the Mortgage Forgiveness Debt Relief Act of 2007 allowed taxpayers to exclude income from the discharge of debt on their principal residence. The Act covered debt reduced through mortgage restructuring as well as mortgage debt forgiven in connection with a foreclosure. However, the Act expired at the end of 2020 and has not been renewed.
For Nevada, it’s important to note that it’s one of the nine states in the U.S. that doesn’t have a personal income tax. Therefore, while you may have a federal tax liability for forgiven mortgage debt, you won’t have a corresponding state tax liability. This situation can alleviate some of the financial burden for Nevada residents dealing with forgiven mortgage debt.
If you find yourself in this situation, you will typically receive a Form 1099-C (Cancellation of Debt) from your lender, which shows the amount of debt forgiven and the fair market value of any property given up through foreclosure. This form is used to report the amount of cancelled debt to the IRS and to the debtor.