Starting November 1, 2012, if you loan is serviced by Fannie Mac or Freddie Mac, you will not have to receive approval from the mortgager insurer to proceed with a short sale.  Typically, if a homeowner purchases a home and their down payment is less than 20% of the fair market value of the property, the homeowner is required to purchase private mortgage insurance.  The private mortgage insurance provides a safety net to the lender in the case of default.  If a homeowner defaults on a mortgage, the lender could seek  insurance proceeds to cover a portion of this loss from the private mortgage insurance.  As a result of this ability to collect insurance proceeds from the private mortgage insurer in the event of a default, mortgage insurers had the authority to deny a short sale.  However, starting November 1, 2012, under new short sale guidelines for all loans serviced by Fannie Mac and Freddie Mac, mortgage insurers will allow a short sale or deed in lieu without their approval.  What this means is one less step in the short sale process, which hopefully will lead to faster closings.

-Randy M. Creighton

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In a recent news release, The Federal Housing Financing Agency gave word of new short sale guidelines for Fannie Mae and Freddie Mac servicers.  The changes are set to go into affect November 01, 2012 and are meant to clarify and expedite the short sale process.  The announced alterations are as follows:

1)      Homeowners with a Fannie Mae or Freddie Mac mortgage will be permitted to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship, such as death of a borrower or co-borrower, divorce, disability, or relocation for a job, unemployment, business failure, etc., all without special approval from Fannie Mae or Freddie Mac;

2)      Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes, whereby servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale;

3)      Special treatment will be provided to military personnel with Permanent Change of Station (PCS) orders; and

4)      Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.

All of the changes hint to incredible strides forward for borrowers, especially the provision that indicates borrowers will be considered without default and the limit on contributions to second lien holders.  They are claimed to create a single, uniform short sale procedure, with specific rules or timelines when a foreclosure sale is looming. Borrowers that short sell will not be eligible for a Fannie Mae or Freddie Mac loan for two years thereafter.

Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to: or calling 800-7Fannie (8 am to 8 pm ET) or 800-Freddie (8 am to 8 pm ET)

Kristy Black, JD MBA

Attorney at Law Feature

Be sure to pick up the latest edition of Attorney at Law Magazine featuring Tisha and the rest of the Black & LoBello team. In addition to an article feature by our very own Andras Babero, Esq.

Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topicsClick here to listen to the Legal Hour on KDWN AM720 from March 14th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses medical liens on real estate  (2:30), a class action suit affecting military servicemembers suffering from foreclosure (6:45)(19:10), how to check the status of a mortgage (10:00), when banks make different insurance requirements (13:35), refinancing through HARP (21:50)(38:10) and recourse for failed loan modification attempts (31:50).

Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

The big “winners” in the Multi-State Settlement (“MSS”) are Florida and California who have exacted approximately half of all MSS monies between them. Regardless of these two goliath states, Nevada captured a decent amount. On any given day, Nevada ranks number one for bankruptcy filings and percentage of unemployed individuals.  Furthermore, for the last five years Nevada, prior to passing AB284, has ranked number one for foreclosures.

Nevada is the clear devastation front-runner considering 1 in every 17 homeowners are at some stage of delinquency. Moreover, a full one-half of all residential housing stock is considered underwater and one-third of that is at or above 175% LTV. Nevada is said to have conservatively lost more than $10 Billion in real estate value. In this regard, Nevada is clearly the dubious winner. Perhaps, in a perverted sense, we have “won” again with this settlement.

$25 Billion, to be sure, is a large sum. However, it represents approximately one QUARTER of annual profit for the five major lenders (“Banks”). In exchange, not only do the Banks move forward on a far sturdier footing in terms of looming and expensive litigation, they have also seen to it to give themselves, their affiliates and relations a tax credit for the “good deeds” of refinance, principal write downs, cash for keys, etc. Moreover, they are getting these credits for writing down loans which they don’t own any interest in at all. Therefore, the actual stake-holders in those investments will probably be as kindly victimized by the Banks as the main street borrowers.

Why are we not only bailing Banks out but giving them tax breaks to run their business the way THEY SHOULD BE RUN? Why are we giving Banks and their servicers credit for potentially ruining the investments of others? Why do we continue to repeat the same mistakes and hope for different outcomes? These are questions only a silver-tongued politician or banker can answer. Certainly, they will manage to craft an answer, call a photo-shoot and make a speech while the rest of us continue to work, dutifully pay taxes and lose faith in our system.

Thankfully, the private sector has filed a number of law suits on behalf of and against some marquis real estate and finance players such as AIG, Black Rock and the SEC who sued untouchables such as Goldman Sachs, Bank of America and Wells Fargo. Nevada too has had enough and was one of only a handful of states that filed suits against the Banks and the ONLY state that has filed criminal charges until just recently with the state of Missouri filing a criminal action against a foreclosure document processing company in February of 2012.

Of the many issues that dog the litigation process (besides expense, time, and complexity) is the fact that states are dealing with moving targets. The speed with which the Banks buy, sell, merge, re-brand, dissolve entities, hire employees, change management and terminate employees is matched only by the speed with which banks bought, sold, manufactured and manipulated documentation in the last decade. These amoeba-like companies and their guerilla litigation tactics are no recipe for a swift resolution to Nevada’s immediate needs.

In contemplation of this slow bleed, Nevada settled its lawsuit with Bank of America and chose immediate funds and a promise to refinance or reduce borrowers’ principal. As a result, Nevada added more than $200 Million dollars to its settlement coffers. Again, this money is in addition to the $1.3 Billion marked as the amount headed to, or to be granted to, the citizens of the state of Nevada for criminal activities of the Banks.

In exchange for the MSS, Nevada and other participant states have agreed NOT to pursue the released parties from any CIVIL state action. However, that is not and should not be considered the end of the battle. Keep in mind that the states now armed with funds are still able to proceed criminally against the Banks and culpable parties. There is no reason to assume that Nevada will continue in this vein since we already have foreclosure-related civil and criminal suits pending. More important still is the fact that individual borrowers can collect their distribution AND pursue their state and federal claims unfettered by the MSS.

While I do agree that the MSS is working in the right direction it is not THE answer and it is so remarkably unbalanced that it is hard to digest. In reality, the Banks are not paying the touted $26 Billion but $5 Billion. The credits they will receive add up to nearly $20 Billion for principal reductions and refinancing. When this amount is divided amongst those foreclosed upon between September 2008 and December 2011, that leaves approximately $900 to $1,900 per loan depending on the number of persons opting in. There you have it folks! The price of high finance and crime in America is less than $2,000 per loan.

The $5 Billion in hard money that is said to be distributed amongst the states may be used as, when and how each state directs. Ironically, I am placing bets that these funds will be deposited into Bank of America accounts by the majority of recipient states leaving the Banks to gain still more benefit from  the MSS.

As to the remaining $25 Billion, much of this allocation is to be used toward write-downs, refinancing, deficiency releases, cash for keys and other credit oriented “contributions” which will be distributed by the Banks and the MSS on a first come, first serve basis so it will be important for Nevadans to get in quickly lest other states take the loot.

The breakdown of Nevada’s take is as follows:

  1. From the MSS:
  • Nevada will receive $60 Million in funds from the MSS. The state may do what it likes with these funds. I would expect that the state will either set up programs to assist Nevadans with participation in the MSS, direct funds towards legal aid, and, hopefully, use a good portion of the money to fund the criminal pursuit of individuals involved in bad acts concerning real estate finance, servicing, and foreclosures.
  • Nevadans will be allocated $40 Million in payout to those borrowers who are deemed to be proper recipients. In order to be a “proper recipient,” your loan must have been in the portfolio of one of the participating banks. That is to say, it should not have been merely serviced by one of those banks or their affiliates. Borrowers whose loans were foreclosed upon and were owned by a GES, private trusts, or publicly traded securitized trust DO NOT QUALIFY for this payment. Moreover, the payment will only be delivered after the participant opts in. The payment will be based on a sliding scale from $900-$2,000 per wrongfully foreclosed upon borrower. Regardless of the participation, or the amount of the payment, the INDIVIDUAL BORROWER MAY STILL PURSUE ANY PRIVATE CLAIM HE OR SHE HAS RELATING THE LOAN OR FORELCOSURE.
  • Although $1.2 Billion dollars has been allocated to Nevada, depending on the rush from other states, Nevada may not get that much money. Moreover, there is no right accounting that will ensure what amount we will receive at the end of the MSS distribution.  These monies will be used toward principal reductions, refinancing, deficiency releases and cash for keys. Determining who is a qualified participant in this “menu of services,” is difficult. While one can assume that the participating banks have the authority to write down and forgive deficiencies in their own portfolios, it is hard to determine what, if any, authority a bank, or its servicer arm has to do this for a loan which the bank does not own. Indeed, the claim that banks do not have such authority (along with the moral hazard issue – as if the whole system is not rife with it) has been the main excuse for the banks not doing so to date.
  1. From the Bank of America Settlement:
  • Included in the MSS, Nevada will get a guaranteed $750 Million in principal reductions and deficiency releases from Bank of America. This money too is relegated to the bank’s control.
  • Nevada will also receive another $30 Million to use as it wishes (much like the MSS $60 Million mentioned above).
  • Finally, there were modest amounts directed towards remuneration for odds and ends associated with the Bank of America lawsuit that Nevada will receive.
  • Nevada Attorney General Catherine Cortez Masto shall receive a seat on the enforcement committee of the MSS.

Tisha Black Chernine, Esq.

Wall Street knew all of the mortgages were bad when they created or bought and sold them. Furthermore, they knew the warranties of quality they made regarding the caliber of the loans, whether to the certificate purchasers of the Residential Mortgage Backed Securities (“RMBS”) pools or the Government Sponsored Entities (“GSE”), were meaningless when they made them. It did not take hindsight to determine that those pools should not have been rated “AAA.”

Fannie Mae and Freddie Mac knew that the related documentation and the serving records were problematic for over a decade.  The Federal Government has also known of the problems as evidenced by consent orders signed over a year ago by 14 of the major servicers. They promised then to do what should have been done all along: abide by laws and sound business practices.

Congress knows. The Senators know. The Attorneys General are aware. Countless committees, reports, investigations and press releases cite the blasphemous practices and unconscionable conduct of the industries related to real estate and its financing. Each have blustered “something must be done,” “what an outrage,” “vote for me, I will change all of this.”

Borrowers also knew it was too good to be true.  Even if they did not have to produce documents to support stated income on mortgage applications, they knew that the applications were often falsified by originators who would never have any “skin in the game” of the debt roulette they were playing.

Is there anyone left who can claim ignorance that our mortgage market from start to foreclosure is rife with fraud, felons, misfits and idiots? Ironically, everyone claims it is someone else’s fault and that some other party should suffer the finger-pointing and scaffold. Poppykosh!

This dreadlock of mortgage morass, main street malaise and political uselessness has been twisting up for decades. The notion that it can be undone with the stroke of a pen is just that, a notion. You cannot be fit without discipline. You cannot cure lethargy without energy and you cannot fix systemic corruption and the real estate market with the Multi-State Settlement.

The Multi-State Settlement (“MSS”) involves every state, save and except Oklahoma.  The MSS was entered into by the participating states and the following five major lenders (“Banks”):

  1. Bank of America $11.82 Billion (who holds the Countrywide loans that were not sold);
  2. Wells Fargo $5.35 Billion;
  3. Ally Financial $310 Million (formerly GMAC);
  4. JP Morgan Chase $5.29 Billion; and
  5. CitiCorp $2.2 Billion.

However, the Banks are not the only beneficiaries of the MSS for there is a release that includes their subsidiaries, affiliates and related entities, regardless of whether the subsidiaries to these companies are past, present or (presumably) acquired in the future.  The net is cast quite far and wide in terms of Bank releases. The activities covered are similarly endless. However, they are listed as the acts or failures that relate to origination, servicing and foreclosure; the entire mortgage process.

Who, besides Banks and offending entities, were eager to see the settlement executed? None other than the Department of Justice (whom we pay to peruse and convict criminals, not settle with them); the Federal Reserve Board; the Conference of State Bank Supervisors; the Federal Housing Finance Authority (Freddie and Fannie Regulator); and the HUD. Many of these players have filed, pursued or exacted their own settlements with the Banks.

It is also interesting to note which states’ Attorneys General and federal actors were involved in the committee that put the proposed settlement together. It shall be interesting as well to watch these individuals get federal or other coveted appointments in the future.

  1. Pam Bondi, Florida Attorney General
  2. Tom Miller, Iowa Attorney General
  3. Eric Holder, U.S. Attorney General
  4. Sean Donovan, U.S. Secretary of Housing & Urban Development
  5. Lisa Madigan, Illinois Attorney General

It will also be these “civic-minded” individuals that lead the MSS complaint/compliance committee. You should be asking yourself now whether these individuals are the best suited for the continued oversight and enforcement of this program as they were the very soft-heeled ones to come up with it.

Despite being cash-strapped and eager to receive an infusion of capital to cover budget shortfalls (like many other states in the Union) the following states were hold-out states, true hold-out states. They actually worked out a more advantageous deal for their constituents.

  1. Arizona
  2. California
  3. Delaware
  4. Massachusetts
  5. New York
  6. Nevada
  7. Oklahoma (never signed on to MSS, but took the hard money and not the opportunity for write-downs).

The states’ Attorneys General were forced to choke down the MSS much like a goose making pate for bankers. Thankfully, Nevada managed to secure a better settlement than most, and so we should have, as we are the hardest hit state.

Tisha Black Chernine, Esq.

In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration (FHA) Commissioner Carol J. Galante will extend FHA’s temporary waiver of the anti-flipping regulations.

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, FHA temporarily waived this regulation through January 31, 2011, and later extended that waiver through the remainder of 2011. The new extension will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The extension is effective through December 31, 2012, unless otherwise extended or withdrawn by FHA. All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
  • The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Am I Responsible For a Deceased Person’s House?

No.  Even if you are the named Executor, a beneficiary or heir inheriting property from someone, if the deceased person is solely responsible for the mortgage and the sole title holder on to the property, you will have no personal liability for the mortgage.  The mortgage company cannot make a derogatory remark on your credit if you have not applied for and received the mortgage.  That debt belongs only to the person who was approved and received the loan.

Further protection from mortgage companies is provided by NRS 174.150 which provides that:
No holder of a claim against an estate may maintain an action thereon unless the claim is first filed with the clerk and the claim is rejected in whole or in part, except in the following case: An action may be brought by the holder of a mortgage to enforce the mortgage against the property of the estate subject thereto if all recourse against any other property of the estate is expressly waived in the complaint.

In practice, that means that a mortgage company can bring an action to enforce a mortgage against the real property but must waive the right to pursue any deficiency from any other property of the estate. For example, if an estate has two assets, a house worth $100,000 with a mortgage of $250,000 and a bank account containing $200,000, a mortgage company can bring a foreclosure action against the house and can receive the house as full satisfaction of the debt owed. The mortgage company cannot pursue the bank account of $200,000 to try and recover the deficiency. The Personal Representative can then file a petition with the probate court to distribute the entire bank account to the heirs and not have to pay any of the other assets towards the deficiency balance on the mortgage. The mortgage company must waive that right if they seek to foreclose on the real property.

There are other statutes and procedures in effect which require creditors to take specific action to assert their claims against estates. Neither the Administrator, Executor nor the heirs are ever personally responsible for the bills or other creditor claims belonging to the deceased.

Christopher J. Phillips, Esq.

  1. “Pay us $1,000 now, and we’ll save your home.” Fees that are thousands of dollars and are to be paid up front or in partial payments are a sign of potential fraud. Companies cannot collect fees until you have a written, acceptable offer from your lender or servicer and a written description of the key changes to your mortgage.
  2. “We guarantee principal reductions.” Beware of guarantees that a person or company can stop foreclosure, modify your loan, short sell your property or guarantee that you will remain in your house. Any person or provider guaranteeing an outcome is a sign of fraud. Providers must give you realistic evidence for any claims they make. They must also be licensed. Many times you can find signs of trouble by searching the internet and inquiring with the proper licensing division.
  3. “Give us the Deed, and we’ll let you stay in your house.” Never, never, never sign your deed over to anyone. The deed holder can sell the right to evict or sell your house and you will still be liable for your mortgage.
  4. “Stop paying your mortgage.” Not paying your mortgage is a contract breach and will give rise to legal liability. You may lose your home and damage your credit rating. It also creates liability for the one giving you such instruction which is a sign that the person you are dealing with has no idea what they are doing.
  5. “Don’t talk to your lender.” Companies cannot legally tell you to stop communicating with your lender or servicer. You should be concerned if you are told to quit communicating with your lender. It is a good sign of a scam.
  6. “Your lender never had the legal authority to make a loan.” There is no “secret” or “little known” law that will absolve you of your debt obligation. There are very highly technical arguments that may be useful regarding transfers. However, only a well-seasoned and licensed attorney in your state can help you in this area. These arguments, if successful will still not relieve you from the debt owed pursuant to the note.
  7. “Just sign this now; we’ll fill in the blanks later.” Take the time to read and understand anything you sign. Never let anyone else fill out paperwork for you. Don’t let anyone pressure you into signing anything that you don’t agree with or fully understand. Take the document home or to an attorney who can review it for you in a consultation.
  8. “Call 1-800-Fed-Loan.” A lot of fraud is being conducted under the guise of official federal programs. Do not be fooled or persuaded by providers of mortgage relief services claiming that they are affiliated with any government program.
  9. “You should file for bankruptcy to keep your home.” Filing for bankruptcy stops foreclosure temporarily. However, it has serious consequences and may not always enable you to keep your house. You should seek the advice of an attorney licensed in your state if you are considering filing for bankruptcy.
  10. “We can save your home. Call now before you lose your home!” High-pressure tactics are the best sign of fraud.

Tisha Black Chernine, Esq.

Countrywide and Saxon, two home mortgage lenders, settled with the Department of Justice with regards to alleged violations of the Servicemembers Civil Relief Act (SCRA) for wrongfully foreclosing upon active duty servicemembers. The two lenders agreed to pay more than $22 million in monetary relief for the victims of their misconduct. The two lenders were accused of foreclosing on and taking the homes of these active duty members without first obtaining court orders, as required by the SCRA in these cases. The Justice Department wants all servicemembers to know that the agency is on the lookout for instances of mortgage fraud and wrongful foreclosure against military families. Servicemembers who believe they may be victims of this type of misconduct by these lenders may contact their military legal assistance providers and/or the Justice Department at 1-800-896-7743, mailbox 6 for Countrywide or 1-800-896-7743, mailbox 995 for Saxon. If a servicemember or family believes they may have been victimized by another lender or by another type of misconduct relating to your mortgage, you may contact the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers at

Carlos L. McDade, Esq.

The Obama administration released its “white paper” outlining the winding down and replacement of Fannie Mae and Freddie Mac.  The goal of the proposals is to decrease the government’s involvement in the mortgage industry.  The first proposal presented by the administration would create a government backstop under a federal reinsurance model.  In the second proposal the government backstop would only be triggered in event of a crisis.  The last option presented has no government backstop beyond existing federal agencies such as the Federal Housing Administration (FHA).

The paper also proposes reforming the current industry standards. The paper recommends raising the fees that Fannie and Freddie charge to lenders in order to make mortgages that are not government-backed more competitive.  Another proposal includes a gradual increase in minimum down payments so that Fannie and Freddie can buy loans with a minimum 10% down payment.  Lastly, the paper recommends slowly reducing the maximum loan limits Fannie and Freddie can purchase but does not specify to exact loan limits.

As part of the recommended reforms to the current mortgage industry, the paper also recommends reducing the role and financial exposure of the FHA. The administration says it will increase the annual insurance premiums borrowers of FHA backed loans pay later this year.  The administration is concerned with phasing in any reform gradually to prevent increased chaos in the fragile mortgage and housing market.

Joshua D. Carlson, Esq.

HOPE NOW, a group of mortgage servicers, investors, non-profit counselors, and mortgage insurers released its final 2010 numbers showing its members completed about 1.24 million loan modifications last year.  During this same time, servicers also completed 512,712 Home Affordable Modification Program (HAMP) loan modifications.  During December alone, approximately 100,000 loan modifications were completed.  Faith Schwartz, executive director of HOPE NOW, stated that while the group worked hard in 2010, their “top priority in 2011 will be to advance execution and implementation of these options, while focusing on improving the customer experience for homeowners who are going through the foreclosure prevention process.”  HOPE NOW data also revealed that in 2010 2,618,406 foreclosures were started and 1,069,867 foreclosure sales occurred.

Joshua D. Carlson, Esq.

Qualify for a mortgage with bankruptcy

Contrary to popular belief, acquiring a mortgage after filing for bankruptcy is not impossible.  The Federal Housing Administration insures mortgages despite bankruptcy, with seasoning requirements.

Time Frame

  • Per the FHA Guidelines, a debtor must wait at least two years after a Chapter 7 or 13 is discharged before you can qualify for a mortgage.
  • FHA makes an exception to the two-year waiting period for Chapter 7 filings. If you had to file due to extenuating circumstances beyond your control, such as a medical condition or physical disability that kept you out of work, you may qualify after a 12-month waiting period post discharge. FHA requires you to document responsible financial management in the interim.
  • You must obtain court permission to enter into the mortgage transaction after a Chapter 13, according to the FHA Handbook. Chapter 7 filings have no such requirement, although you must have reestablished good credit without incurring new credit obligations.

In closing, while bankruptcy will significantly impact your credit, you are able to obtain a mortgage within two years if the above requirements are met.

Randy M. Creighton, Esq.

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Nevada requires that a deed of trust be used to secure a real estate loan.  Although commonly referred to as a mortgage, a deed of trust has significant differences from a mortgage.  In addition, states using deeds of trust differ among themselves in their requirements.

All mortgages are two-party instruments between the lender and the borrower.  Foreclosure of a mortgage requires the lender to file a complaint with the appropriate court and proceed through the judicial process. Anecdotal reports from mortgage states such as Ohio indicate that borrowers can delay these cases for years. The process is slow and expensive.

Deeds of trust are three-party instruments.  There is a beneficiary who is the lender, a trustee who is a third party responsible for the foreclosure process including filing the Notice of Default and related documents, and the trustor who is the borrower.  A foreclosure of a deed of trust does not require that a court case be filed.  It is fast and inexpensive compared to a mortgage foreclosure.

In Nevada, the foreclosure process begins with the filing of a notice of default by the trustee.  The borrower has 35 days from that date to bring the delinquent payments current together with the lender’s costs and fees.  Starting on the 36th day, to prevent foreclosure the borrower must pay the entire principal balance owing together with interest and any additional amounts owing for fees and costs. 21 days prior to the trustee’s foreclosure sale the trustee must publish a notice of the sale once each week and also post the notice.   At the end of 111 days the property may be sold at the trustee’s sale.  The borrower has no right of redemption after the sale.

Nevada was a full recourse state until October 1, 2009.  This meant that the foreclosing lender had six months to file a complaint against the borrower seeking the recovery of the deficiency after the sale.  After the six month period lapses the lender was barred from filing suit to recover the deficiency.  Full recourse means that the borrower is liable for the deficiency regardless of the purpose of the loan.  There is no exemption for loans used to purchase an owner occupied residence.

Effective October 1, 2009, Nevada became a limited recourse state similar to California.  Loans made after October 1, 2009 by a financial institution to a borrower who continuously occupied the property as a primary residence were nonrecourse.  This means that the lender may not pursue a foreclosed borrower to recover a deficiency.

Nevada recently joined the small number of states that entitle the borrower receiving a notice of default to request mandatory mediation with the lender.  This applies to all primary residences receiving a notice of default starting July 1, 2009.

Tisha Black Chernine, Esq.

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U.S. Homes Set to Lose $1.7 Trillion in Value During 2010

Homes in the United States are expected to lose more than $1.7 trillion in value during 2010, which is 63% more than the $1 trillion lost in 2009, according to recent analysis of the Zillow Real Estate Market Reports. To read the full article, click here.

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The Obama administration is trying to convince Fannie Mae and Freddie Mac to join a program run by the Federal Housing Administration (FHA) that allows banks to hand over mortgages if the bank and investors agree to a write-down on the principal.  The administration hopes that the participation of the mortgage giants would put additional pressure on other lenders to participate in the FHA program.

Currently, Freddie and Fannie rarely reduce principal balances.  According to the Office of the Comptroller of the Currency, only 10 of the 120,000 loans modified during the second quarter of 2010 came with a principal reduction.  It is of note that the FHA program is only available to homeowners who are current on their mortgage.

Joshua D. Carlson, Esq.

Click here to read the open letter. Please contact us if you believe you have have been a victim of misapplied fees or have suffered from your loan servicer’s incompetence or foul play.

Click here to read Katherine Porter’s testimony before the Congressional Oversight Panel at the Hearing on the TARP Foreclosure Mitigation Program in which she describes how the allegations of legal errors in the foreclosure process may impact the housing markets, the soundness of banks, and the overall financial markets.

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