Nevada’s foreclosure rate was the highest in the nation in the early months of 2013 and many homeowners face the scary prospect of losing their home. Don’t be caught off guard if you are facing a potential foreclosure. Read on to find out each step in a Nevada foreclosure (from missing your first payment all the way to eviction) and learn about your rights during the process.
(For more articles on foreclosure in Nevada, including the state program to assist struggling homeowners, visit our Nevada Foreclosure Law Center.)
Nevada Mortgage Loans
When you take out a loan to purchase residential property in Nevada, you typically sign a promissory note and a deed of trust. A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment. The deed of trust provides security for the loan that is evidenced by a promissory note.
Find out more in our article What’s the Difference Between a Mortgage and a Promissory Note?
To learn more about mortgage terminology, see our Glossary of Foreclosure Terms.
What Happens When You Miss a Payment
If you miss a payment, most loans include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee. (Loan servicers collect and process payments from homeowners, as well as handle loss mitigation applications and foreclosures for defaulted loans.)
The late fee is generally 5% of the overdue payment of principal and interest based on the terms of the note. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement.
Learn more about fees that the lender can charge if you’re late on mortgage payments.
What Happens When You Fall Behind in a Few Payments
If you miss a few mortgage payments, your mortgage servicer will probably send a letter or two reminding you to get caught up, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss loss mitigation options and attempt to work out an agreement (such as a loan modification, forbearance, or payment plan) so you can avoid foreclosure.
Learn the difference between a loan modification, forbearance agreement, and payment plan.
To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.
Pre-Foreclosure Loss Mitigation Review Period
Under the federal Consumer Financial Protection Bureau servicing rules that went into effect January 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on payments before making the first official notice or filing for any nonjudicial or judicial foreclosure. This is to give you sufficient time to explore loss mitigation opportunities. (If a servicer's sole purpose of providing a notice is to inform you that you are late on your payments and/or explain what your loss mitigation options are, the servicer can deliver the notice within this pre-foreclosure period.)
Deeds of Trust Often Require a Breach Letter
Nevada deeds of trust often contain a clause that requires the lender to send a notice, commonly called a breach letter or demand letter, informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure. (The acceleration clause in the mortgage permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan.)
The letter must specify:
- the default
- the action required to cure the default
- a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and
- that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.
In Nevada, most residential foreclosures are nonjudicial. This means the lender can foreclose without going to court as long as the deed of trust contains a power of sale clause. (Learn more about power of sale clauses.)
For more information about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?
Notice of Default and Election to Sell
The Nevada nonjudicial foreclosure process formally begins when the trustee, a third-party, records a Notice of Default and Election to Sell (NOD) in the office of the recorder in the county where the property is located, providing three months to cure the default.
A copy of the NOD must be sent to each person who has a recorded request for a copy and each person with an interest or claimed interest in the property by registered or certified mail within ten days after the NOD is recorded recordation.
NOD Posting Requirements
If a residential foreclosure, a copy of the NOD must be posted in a conspicuous place on the property 100 days before the date of sale.
The trustee or beneficiary (lender) must record a notarized affidavit along with the NOD that states, based on a review of business records, including all of the following information.
- The full name and business address of the current trustee or the current trustee’s personal representative or assignee, the current holder of the note secured by the deed of trust, the current beneficiary of record and the current servicer of the obligation or debt secured by the deed of trust.
- That the beneficiary under the deed of trust, the successor in interest of the beneficiary or the trustee is in actual or constructive possession of the note secured by the deed of trust; or that the beneficiary or its successor in interest or the trustee is entitled to enforce the obligation or debt secured by the deed of trust.
- That the beneficiary or its successor in interest, the servicer of the obligation or debt secured by the deed of trust or the trustee, or an attorney representing any of those persons, has sent to the borrower a written statement including the amount needed to cure the default, the principal amount of the debt, the accrued interest and late charges, a good faith estimate of all fees, contact information for obtaining the most current amounts due, and each assignee of the deed of trust
Nevada law requires that borrowers who are in foreclosure be given the option to participate in mediation if the property is owner-occupied.
The trustee must mail to the borrower (by registered or certified mail, return receipt requested) an Election to Mediate Form no later than ten days after recording the NOD. If the borrower wants to elect mediation, the form must be completed and returned within 30 days.
To learn more, see our article Nevada Foreclosure Mediation Program.
At least 60 days prior to the date of the sale, the trustee must provide the borrower(s) with a separate “Danger Notice” stating that they are in danger of losing their home to foreclosure, along with a copy of the original promissory note.
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.
Notice of Sale
After expiration of the three-month period following the recording of the NOD, the trustee must give notice of the time and place of the sale by recording the notice of sale and by:
- Providing the notice of sale to each required party by personal service or by mailing the notice by registered or certified mail to the last known address 20 days before sale.
- Posting the notice of sale on the property 15 days before the sale.
- Posting the notice of sale for 20 days successively in a public place in the county where the property is situated and on the property 15 days before sale.
- Publishing a copy of the notice of sale three times, once each week for three consecutive weeks, in a newspaper of general circulation in the county where the property is situated.
Notice to Tenants
If the property is tenant occupied, a separate notice must be posted in a conspicuous place on the property and mailed to the tenant no later than three business days after the notice of sale is given.
Reinstatement Before Sale
Iin the case of owner-occupied housing, the borrower gets until 5 days prior to the date of the foreclosure sale to reinstate by paying the arrearage, costs, and fees.
Learn more about reinstating a loan to avoid foreclosure.
The Foreclosure Sale
The foreclosure sale must be between the hours of 9:00 a.m. and 5:00 p.m. All sales of real property must be made:
- at the courthouse in the county in which the property or some part thereof is situated (in counties with a population of less than 100,000), or
- at the public location in the county designated by the governing body of the county for that purpose (in counties with a population of 100,000 or more).
The property will be:
- sold to the highest third-party bidder or
- revert to the foreclosing lender and become REO.
Deficiency Judgment Following Sale
When a lender forecloses on a mortgage, the total debt owed by the borrower to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.
Learn about methods that creditors can use to collect judgments.
In Nevada, a lender may obtain a deficiency judgment following foreclosure, 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 difference between the total debt and foreclosure sale price.
For loans taken out after October 1, 2009, deficiencies are prohibited for purchase money loans (that have not been refinanced) held by a bank or other financial institution for single-family residences occupied continuously by the borrowers.
Find out more about Deficiency Judgments After Foreclosure in Nevada.
A redemption period is the legal right of any mortgage borrower in foreclosure to pay off the total debt, including the principal balance, plus certain additional costs and interest, in order to reclaim the property. In Nevada, there is no redemption period following a nonjudicial foreclosure sale.
Learn more about redemption periods.
Eviction Following Foreclosure
If you don’t vacate the property following the foreclosure sale, the new owner will likely:
- offer you a cash-for-keys deal (where the new owner offers you money in exchange for you agreeing to move out), or
- give you a three-day notice to quit (leave) before filing an eviction lawsuit.
To learn more about foreclosure in general, ways to defend against foreclosure, and programs to help struggling homeowners avoid foreclosure, visit our Foreclosure Law Center.