AB273 would help homeowners in our state by preventing banks from double-dipping on insurance payments and deficiency judgements when someone goes through foreclosure.
Although this seems to be good, it appears as if this bill will only affect New Mortgages after July 1, 2011.
This bill would change current law to:
*provide that the amount of a deficiency judgement must be reduced by the amount of any insurance proceeds received or payable to the creditor;
*cap the maximum amount that can obtained through civil action is the amount paid to the creditor by a third party to acquire the right to enforce the obligation, plus interest and reasonable costs;
*remove the ability to collect on the deficiency under certain circumstances
Title: AN ACT relating to real property; revising provisions governing the amount which a person holding a junior lien on real property may recover in a civil action under certain circumstances; prohibiting certain persons holding a junior lien on certain residential property from bringing a civil action under certain circumstances; revising provisions governing the amount of a deficiency judgment after the foreclosure of a mortgage or a deed of trust; and providing other matters properly relating thereto.
Under existing law, a judgment creditor or a beneficiary of a deed of trust may obtain, after a hearing, a deficiency judgment after a foreclosure sale or trustee's sale if it appears from the sheriff's return or the recital of consideration in the trustee's deed that there is a deficiency of the proceeds of the sale and a balance remaining due the judgment creditor or beneficiary of the deed of trust.
For an obligation secured by a mortgage or deed of trust on or after October 1, 2009, a court may not award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if: (1) the creditor or beneficiary is a financial institution; (2) the real property is a single-family dwelling and the debtor or grantor was the owner of the property; (3) the debtor or grantor used the loan to purchase the property; (4) the debtor or grantor occupied the property continuously after obtaining the loan; and (5) the debtor or grantor did not refinance the loan. (NRS 40.455)
Section 3 of this bill provides that, if these circumstances exist with respect to a junior lienholder, the creditor may not bring a civil action to recover the debt owed to it after a foreclosure sale, short sale or deed in lieu of a foreclosure sale.
Under existing law, the amount of a deficiency judgment after a foreclosure sale or a trustee's sale may not exceed the lesser of: (1) the amount of the indebtedness minus the fair market value of the foreclosed property at the time of the sale; or (2) the amount of the indebtedness minus the amount for which the foreclosed property actually sold. (NRS 40.459)
Section 5 of this bill provides that, for a deficiency judgment sought by a secured creditor after a foreclosure sale or trustee's sale, the amount of the deficiency judgment must be reduced by the amount of any insurance proceeds received by, or payable to, the creditor. Section 2 of this bill enacts a corresponding provision for money judgments sought against a debtor by a junior lienholder after a foreclosure sale, short sale or deed in lieu of a foreclosure sale. Sections 2 and 5 also limit the recovery of a creditor who acquired the right to obtain payment for an obligation secured by the real property from another person who owned that obligation Section 6 of this bill provides that the amendatory provisions of this bill apply only prospectively to obligations secured by a mortgage, deed of trust or other encumbrance upon real property on or after July 1, 2011
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Dawn Barrier EXP REALTY Las Vegas (702) 812-4550
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