Nevada Short Sale Strategy

Posted by Paul Francis on Tuesday, August 10th, 2010 at 2:31am.

A Nevada Short Sale Strategy worth Trying

Over the years of doing Las Vegas short sales, I've come across quite a bit of strategies through multiple educational classes, real estate short sale forums, networking with other True Short Sale agents and sitting down with my client's Attorneys. Honestly, I pretty much read at least one case about short sales a day to stay on top of all the changes that are constantly going on. Some of the strategies are completely ridiculous and a waste of time... more often then not strategies that would never fly with Nevada laws or just downright Mortgage Fraud, while some have been worth trying. But nothing really consistent that Any Nevada Home seller upside down on their mortgage can use with any lender.

I've pretty much heard it all... But the newest strategy I'm going to share is one of the best I've heard that any Nevada home seller can use so I'm going to share it with the hope that it's as beneficial for Nevada homeowners as I think it will be. Best of all... it's pretty simple and covers the base that any True Short Sale real estate agent should be concerned about for their clients -- Getting the Lender to waive their Right to a Deficiency Judgment from the get go. BEFORE the property is even listed for sale.

As any True Las Vegas Short Sale Agent should tell you... for loan documents signed before October 1st, 2010.. Lenders in Nevada have up to six years to pursue and file a deficiency judgment after a short sale closes unless the lender specifically puts it in writing that they waive this right or consider the loan paid in full at closing. Some lenders will do it... and some will not do it without a substantial payment. In fact... one of the largest loan servicers in Las Vegas will pretty much NOT DO it without a payoff. Generally a 5% cash payoff on the loss or signing a non-interest bearing promissory note for 10 years for 10% of the loss. (This is for Traditional Short Sales. If the Home Seller qualifies for the new HAFA program and the lender participates in the HAFA program, then the Lender has to waive any future deficiency judgment rights to collect their little spiff from the Treasury Department.)

Regardless... it's time for Nevada home sellers to move on and the last thing you want after moving on is to have a deficiency judgment filed on you a year or two after a Nevada short sale closes. Some of the people I have talked to that have had this happen to (Thank Goodness none of my clients) have told me that the legal complications and hassles are worse then doing the short sale itself. Especially for the ones I've talked to that had NO IDEA that the lenders have this right in Nevada. (If a Nevada real estate agent can't explain this to you, they certainly do not Know Short Sales!)

And trust me, after doing these for over two years... that's saying a lot. Short sales are the most complicated aspect of Residential Real Estate there is... bar none. Nothing comes close so I don't suggest short sales for the average real estate agent. It's twice the work of just selling a property and honestly, half of the real estate agents out there are not very savvy when it comes to selling real estate in the first place.

Why is Nevada #1 in Foreclosures?

I've come across Attorneys that have advised clients(for their Situation)to just let the home go to foreclosure since Nevada Law only allows lenders to pursue a deficiency judgment 6 months for the first mortgage. Second Mortgages have up to six years after a foreclosure. Unfortunately, a lot of Attorneys may not be advising these same clients how long it will be until they can buy another home. It's not really their duty to know what Fannie Mae, Freddie Mac and The Federal Housing Authority (FHA) guidelines are for the future financing ability of Las Vegas Home sellers that get back on their feet in the future. But trust me... your future ability of buying a home and qualifying with the current guidelines is equivalent to Night and Day when you compare a Foreclosure to a Short Sale. In fact.. I short sold a home for a client that bought a home the same year. (A Very rare circumstance available for somebody who had a job relocation and there are guidelines that MUST be followed.)

Currently the above three mentioned are covering 90% of all the loans out there so it's a huge factor in moving forward in life. And honestly... we all need to move forward because right now, we are stuck in a huge mess of mud. So... let's go over this Strategy that I came across from a new client who called me to sell their Las Vegas Home as a short sale... and intrigued me for once. The Attorney involved is certainly an up and comer in Las Vegas. So simple, it's genius if you follow these steps.

For Nevada Home Owners that want to move Forward in Life

Mortgage Payments are dragging you down and have cleaned out your checking/savings account. Your expenses to live in this economy are more then you make... perhaps a cut in hours, cut in pay, whatever. You called your Lender / Loan Servicer for information to do a Loan Modification and supplied all of the information, sat on hold on the phone for hours talking to representatives who transfer you around, etc.. etc.. Supplied a ton of financial paperwork going over your finances and end up with No resolution.

You tried, your lenders representatives dragged you around in circles. You've made the decision to just stop making Mortgage payments so you can move on in life.

What's Next?

Well... Next the Lender / Loan Servicer is going to file their Public Notice of Default. This becomes public record and you will end up with a slew of junk or phone calls from some not so ethical hungry money people with one interest on their minds.. to scare you into thinking that they can save you. I have more then enough references to Las Vegas home owners who have been scared from some not so ethical "saviors" that confused them about the foreclosure process.

Nevada Mediation Services:

This is where it gets REALLY interesting to this whole new strategy for Nevada Short Sales to try. Within 30 days of a lender / loan servicer filing a Notice of Default, a Nevada home owner has the right to file a mediation/arbitration request with their lender. Learn more about it here.

Key, Key Part!!! - You have to file this within 30 days of the Notice of Default being filed. In other words... DO NOT IGNORE your lender/loan servicer sending everything in the mail or calling!!! I suggest to Pay the $200 fee to force Mediation under this scenario that requires the lender to have a representative either in person or on the phone for a documented attempt to come to a solution.

You have to pay a $200 fee to file for this service -- more information here. YOU MUST DO THIS within 30 days of the Notice of Default being filed in Nevada if you want this done.

BRING an ATTORNEY with YOU! - As mentioned and what inspired this whole post, I now know of a Las Vegas Attorney who thought outside of the box and negotiated a deal through this process. It's pretty much genious and the very first time I've come across an Attorney in Las Vegas who thought this through when it was evident a loan modification was not going to work.

Negotiate the Short Sale Deal at Mediation

This is what you want negotiated:

A Waiver of any Future Deficiency Judgment Rights
A Set Price of what the Loan Servicer will accept as a sales price minus normal closing costs.
A time frame for the marketing of the home from a Real Estate professional such as myself.

If you have any questions about doing a Las Vegas Short Sale, please contact me with the information below.

Paul Francis - REALTOR
Prudential Americana Realtors
702.592.3058

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