Real Estate & Business Law
UPDATED —AB273- Deficiency Judgments Junior Lienholders and Guarantors
UPDATED —SB414- Deficiency Judgments and Short Sale Response
Steven Kitnick, CFAC, CSP, CNE, GRI, RRG
Managing Director, Steven Kitnick Seminars, LLC
Continuing Education Instructor & Author
Nevada Real Estate Broker/Salesman & California Real Estate Broker
1) A distressed homeowner should speak to an attorney before you list their property so the homeowner may review their options, and so you’re not liable for what they choose to do. 2) When you take on a client who is in financial distress you may have a higher standard of care to protect their best interests. 3) An attorney allows clients full protection and representation. 4) An attorney may gain more leverage over lienholders
during the negotiation process. 5) If your clients have assets &/or future or current income, an attorney can offer guidance about exposure to collection attorneys &/or tax authorities. 6) An agent-friendly attorney will aggressively negotiate for your full commission. 7) If you’re negotiating your own short sales you’ll likely limit
the number of transactions you can close per month. By using an attorney you leverage your workload, there’s no limit to the number of deals you can close per month. Call Robert Noggle, Esq. – An Agent Friendly Attorney Today at (702) 450-6300. Steve can be reached at StevenKitnick@StevenKitnickSeminars.com or by calling (702) 326-8722.
On September 16th, 2010, Wells Fargo sent out the following memo: “Due to recent industry changes, we at Wells Fargo will no longer be granting any extensions for short sale close dates or postponing foreclosure/trustee sale dates. If you were issued an extension letter dated 9/14 or earlier, those extensions will be honored, but no further extensions will be granted. Files must close by the expiration date on the original approval letter or they will be removed.” This new policy change is another reason why your eligible homeowners need to Elect to Mediate, and use the Nevada Foreclosure Mediation Program to get short sales approved! By electing to mediate, they can postpone foreclose! They can not be foreclosed until the trustee receives a certificate from the mediator stating that the borrower has had their day in mediation. For more info about the Nevada Foreclosure Mediation Program contact Attorney Robert B. Noggle at (702) 450-6300.
Nevada Revised Statutes Chapter 21 sets forth the state law governing ENFORCEMENT OF JUDGMENTS – assets that can be executed upon and those assets that are exempt from execution. You need a knowledgeable attorney on your team of “trusted advisors” who “really” understands debtor-creditor law (“Asset Protection”) in the State of Nevada. Beware of charlatans! For general information see: Nevada Revised Statutes Chapter 21. Contact Attorney Robert B. Noggle for a referral! Call (702) 450-6300 today!
One of the most FAQ’s I receive is “How soon will I be able to get a home loan if I file for bankruptcy, let my house go to foreclosure, execute a deed-in-lieu of foreclosure, or agree to a short sale? The following may assist you in understanding general guidelines used by many underwriting departments:
Conventional Loans
Bankruptcy
Chapter 7 (“A type of bankruptcy in which a person’s assets are liquidated – collected and sold- and the proceeds are distributed to the creditors”). 4 years from either the discharge or dismissal date. Chapter 13 (“A type of bankruptcy in which a person keeps his assets and pays creditors according to an approved plan”). 2 years from discharge date or 4 years from dismissal date. If multiple bankruptcies within a 7-year period, it is 5 years from the most recent dismissal date.
Foreclosure is 5 years from completion date. Deed-in-Lieu of Foreclosure is 4 years. Pre-Foreclosure is 2 years from date house closed. If house was a short sale and borrower was not in pre-foreclosure (no 60, 90, 120, or 150 day “lates” in last 12 months), lender can sell the loan to Fannie Mae. The lender/servicer that completed the short sale must NOT have entered into any agreements that obligate the borrower to repay any amounts resulting from the short sale, including a deficiency judgment.
FHA/VA
Bankruptcy Chapter 7 – 2 years. Chapter 13 – 12 months after release. Foreclosure or Deed-in-Lieu of is 4 years from completion date. Pre-Foreclosure is 2 years. Same exception as conventional (above) if not delinquent.
*Exception - If borrower is in a Chapter 13 BK for at least 12 months, has no “lates” to the trustee and the lender can get a letter from the trustee that it is okay for them to buy a house, the lender can waive the required time from BK.
Source: Dan Means, Branch Manager, imortgage – Las Vegas, NV
This information is deemed to be reliable. Article dated August 11th, 2010.
Steven Kitnick, CFAC, CNE, CSP, GRI, RRG
is a Nevada Real Estate Broker-Salesman, California Real Estate Broker, & Managing Director of Steven Kitnick Seminars, LLC – a real estate continuing education provider.
On December 15th, 2009, In the Court of Appeals ~ State of Arizona ~ Division one ~ Amtrust Bank v. Fossett ~
The Court held “that while issuance of a Form 1099-C may be prima facie evidence of cancellation of a debt, the lender may rebut that evidence by showing that when it issued the form it did not intend to forgive the obligation.” The Court went on to say that, “generally accepted accounting principles require that when a [retail] loan is past due for a specific period of time, the lender must reclassify the debt as a loss and write it off.” See Kelly v. Wolpoff & Abramson, L.L.P. “In that circumstance a lender may or may not decide to cease trying to collect on the debt.” See, In re Zilka, 407 B.R. 684, 689 (Bankr. W.D. Pa, 2009). Amtrust Bank successfully argued that it issued the form not because they intended to cancel the debt but because it was required to after the debtor made no payments on the loan during a “testing period” pursuant to federal regulations. Read the entire Opinion.
Steven Kitnick, CFAC, CNE, CSP, GRI, RRG
is a Nevada Real Estate Broker-Salesman, California Real Estate Broker, & Managing Director of Steven Kitnick Seminars, LLC – a real estate continuing education provider.
The Nevada Supreme Court has made significant changes to the mediation rules concerning mediation time frames, lender document requirements, and loan modifications.
The amended rules require that a mediation must now take place within 135 days of the mediation program Administrator’s receipt of the trustee’s one-half of the mediation fee which is $200. The former rule required that mediation take place within 90 days of the filing of the notice of default.
Because the borrower must elect mediation within 30 days of the service of the notice of default the practical effect of this change could mean that a mediation will be scheduled more than 165 days from the notice of default date. Of course whatever time period the trustee takes to process and send a check to the Administrator only extends the scheduling of the mediation date.
The court has also amended the former rule requiring that the lender provide an appraisal made within 60 days of the mediation date. The amended rule states that “The mediator may, in his or her discretion, accept a broker’s price opinion letter (BPO) in addition to or in lieu of the appraisal described in this rule.”
Providing a BPO rather than an appraisal will save a lender a significant expense. In short sales the BPO is a standard requirement by a lender and obtained at their expense.
Although discretionary with the mediator it appears likely that a BPO will be accepted in lieu of an appraisal except in extraordinary circumstances.
A borrower seeking a loan modification is generally offered a 90-day trial period at the expiration of which the lender offers a permanent modification. For a variety of reasons the transition from trial to permanent can result in the borrower being denied a permanent modification. The mediation rules did not allow for a mediation to be continued pending the successful completion of the trial modification. This meant that a borrower denied a permanent modification after the trial had no recourse under the mediation program.
A new rules provides that when there is a trial modification a borrower may file a petition for judicial review in the event a permanent loan modification is denied by the lender. The petition must be filed within 15 days of the expiration date of the trial modification.
The Nevada Foreclosure Mediation program has been evolving since July 1, 2009, the date the law creating the program went into effect. These new amendments will most likely not be the last. However, they do show that the Supreme Court continues to monitor the effectiveness of the program to determine what steps can be taken to furthur enhance it.
