Foreclosure

Table of Contents

• What is Foreclosure?
• The Process
• Types of Foreclosure
• Preventing Foreclosure
• Impacts
• Foreclosure and Bankruptcy
• Scams

What is Foreclosure in Nevada?

Foreclosure is a legal process that occurs when a homeowner is unable to make their mortgage payments, leading the lender to take possession of the property. This process allows the lender to sell the property to recover the outstanding mortgage balance. In many cases, the borrower still owes a balance on the mortgage loan, even after the auction. This is called a deficiency.

The Process

In general, the process begins when a homeowner fails to make mortgage payments. After a certain period of missed payments, the lender will issue a notice of default. If the homeowner cannot pay the outstanding balance or negotiate a solution with the lender, the property goes into foreclosure. The term “foreclosure” can refer to multiple events, sometimes it refers to the process, which can take months leading up to the actual sale of the property (at auction), or the term “foreclosure” can refer to the actual selling of the property at auction. Both terms are correct, but it is important to understand the context and use of the term.

Types of Foreclosure in Nevada

There are two main types of foreclosure: judicial and non-judicial. Judicial involves court proceedings, while non-judicial is handled outside of the court system. The type of process used typically depends on the state where the property is located, and the type of loan or debt (ie: home equity loan, property tax debt, or mortgage).

Preventing Foreclosure

Several strategies can potentially help homeowners prevent losing their homes. These include loan modification, refinancing, short refinance, mediation, or filing for Chapter 7 or Chapter 13 bankruptcy. Or, if the homeowner doesn’t want to stay in the property, but wants to prevent being liable for a deficiency or having a foreclosure on their record, they may consider a deed-in-lieu of foreclosure, short sale, mediation, chapter 7 or chapter 13. Primary considerations are typically: (1) how much equity the homeowner has in the property that could be lost at foreclosure and (2) the homeowner’s future ability to maintain the mortgage payments.

Impacts

This process can have a significant impact on your credit score and ability to purchase a home in the future. It can also lead to additional financial challenges, such as a deficiency judgment if the sale of the property doesn’t cover the outstanding mortgage balance. Possibly the most significant impact on homeowners is the emotional turmoil of being evicted from their homes.

Foreclosure and Bankruptcy

Filing for bankruptcy can potentially help you avoid foreclosure. Both Chapter 7 and Chapter 13 bankruptcy prevent foreclosure, but they work in different ways. There are many nuances on how a homeowner may benefit from either chapter of bankruptcy, but in general: Chapter 7 is used to wipe out your liability for the mortgage debt, whereas Chapter 13 helps Debtors set up a repayment plan to stay in the home, and to catch up on missed mortgage payments.

Scams

Unfortunately, homeowners facing foreclosure often become targets for scams. These scams often involve promises to save your home or lower your mortgage, for a fee. It’s important to be vigilant and seek advice from a trusted professional when dealing with these issues.

Resources for Homeowners Facing Foreclosure in Nevada

The Nevada Housing Division offers resources and assistance to homeowners dealing with foreclosure. They provide valuable information and support to help you navigate this challenging time.

Visit the Nevada Housing Division’s Foreclosure Information Page for more information and resources.