In the state of Nevada, some homeowners and their lenders may benefit from a deed in lieu foreclosure transaction. The deed in lieu of foreclosure, which helps both lenders and homeowners avoid foreclosure, involves a homeowner voluntarily returning the deed or title to their home to their mortgage or home loan lender. In turn, the lender agrees to cancel any outstanding debt up to the amount of the fair market value of the home. This may leave a deficient amount unpaid by the homeowner, which in the state of Nevada, would be subject to deficiency liens by a lender, unless the deed in lieu agreement contains “no deficiency” provisions negotiated beforehand by the homeowner.
Ability of Homeowners to Obtain Deed in Lieu
Most homeowners facing foreclosure will not know whether their lender will accept a deed in lieu of foreclosure deal until the lender agrees or denies their personal request. The decisions related to each deed in lieu approval or denial are entirely case-specific, and in many cases, lenders are becoming less and less eager to engage in deed in lieu deals with homeowners. However, for a homeowner to find out if their lender is willing, they must first contact the lender directly and then, in most cases, forward a hardship letter noting the voluntary nature of their proposed workout involving deed in lieu of foreclosure.
Concerns for Homeowners Considering Deed in Lieu of Foreclosure Deals
A deed in lieu action will not save one’s home, but rather, turn the title or deed over to one’s lender in exchange for cancellation of debt and debt forgiveness. The process, however, does prevent foreclosure and can put a definitive cap on any future debt obligations secured by the property, assuming the property secures only one home loan and no outstanding tax liens exist. Furthermore, the process can expedite the inevitable for homeowners, which would otherwise be enduring the foreclosure process and auction sale.
There are other concerns for homeowners considering a deed in lieu deal in Nevada. The state does allow deficiency liens, as noted above, unless otherwise specifically prevented in a no-deficiency clause in the deed in lieu agreement. Furthermore, although deed in lieu does prevent foreclosure per se, the credit reporting agencies do treat deed in lieu as similar to foreclosure, and a given homeowner’s credit report will note this.
Getting Legal Help
When considering any foreclosure prevention action, including deed in lieu, homeowners should consult with an attorney before making any decisions regarding their current home loan obligations. An attorney may be able to provide a foreclosure prevention solution for homeowners that allows them to stay in their home, or orchestrate other deals, such as short sale, that pose less serious risks for homeowners regarding denial from lenders, deficiency judgments, and credit blemishes.
