Reno Tahoe Odyssey 2015I have written before on how a short sale can be a good route even if in bankruptcy.  The reason being the finality a short sale brings in contrast to potentially of delayed foreclosures.  The delayed foreclosure can slow the time frame within which a consumer is able to borrow again while with the short sale the title is transferred at close of escrow.  It is possible that in bankruptcy the consumer is relieved of owing the debt but the actual foreclosure transferring the title to the lender or a third party purchaser is delayed for quite some time.

There is a new crinkle to bankruptcy and the attraction of a short sale.  The Second Mortgage can no longer be stripped away in a bankruptcy, even when the home is under water. A common strategy in bankruptcy was to allow the consumer/debtor to wipe out junior lien on their home, that second mortgage.  These were often home equity loans or purchase money loans (80/10/10).  The example looks like this: a homeowner holds a home worth $300,000.  A home they paid $500,000 for. Imagine the first deed of trust is $320,000 and the second mortgage note was $150,000.  So there is $470,000 of debt (the first and second mortgage combined) on a home worth $300,000. The home is underwater $170,000. By filing bankruptcy the debtor would show the Court that the second mortgage of $170,000 was worthless due to the fact that the first mortgage note was higher at $320,000 than the value of the home $300,000. The argument continues that the second note of $170,000 is therefore unsecured or is nothing more than credit card debt and the $170,000 is requested to be erased.  This argument no longer works.

Bank of America recently argued and was victorious at the United States Supreme Court cases Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, U.S. Supreme Court, Nos. 13-1421 and 14-163 that the second mortgage should remain secured and must not be treated like credit card debt (unsecured). So the strategy of erasing debt against a home is no longer. The debtor may still file bankruptcy and gain relief from the second mortgage debt, but retaining the home is no longer an option.

This ruling makes short sales during bankruptcy or just on their own even more attractive. A short sale may not be successful, but if not in bankruptcy the homeowner can request waiver of any deficiency from the lender.  The homeowner would still have potential tax liability due to the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation not being extended past 2014.  If the homeowner is in bankruptcy, the short sale, as above described can allow finality and a timely transfer of title out of the homeowner’s name.

OTHER POSTS ON DEBT

Income Taxes & Foreclosure/Short Sales 2014 Update (12.17.2014)

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales 12.21.2007

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Home Owner’s Bill of Rights (Foreclosure/Short Sale/Judicial Foreclosure)

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale – “Dual Tracking” and the Homeowner’s Bill of Rights in Nevada May 2013

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com


Nv SpringNew Rules and New Forms Effective August 1, 2015.

Loan Estimate.

Combined the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL). The Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application.

Closing Disclosure.

Combined the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) The Closing Disclosure is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. (Replacing the HUD-1 Settlement Statement and final Truth-in-Lending Disclosure).

This form must be provided to consumers at least three business days before consummation of the loan. The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.

Escrow Closing Notice.

Escrow Closing Notice. The Escrow Closing Notice and mortgage servicing transfer and partial payment notices. Provided no later than three business days before the consumer’s escrow account is canceled. This is when the Homeowner elects to pay insurance, for example, directly, and not via an impound.

Special Information Booklet.

The Special Information Booklet (RESPA Settlement Costs Booklet).  Creditors must provide a copy of the special information booklet to consumers who apply for a consumer credit transaction secured by real property, except in certain circumstances. The special information booklet is published by the Bureau to help consumers applying for federally related mortgage loans understand real estate transactions. If the consumer is applying for a HELOC the creditor (or mortgage broker) can provide a copy of the brochure entitled “When Your Home is On the Line: What You Should Know About Home Equity Lines of Creditinstead of the special information booklet. The creditor need not provide the special information booklet if the consumer is applying for a real property-secured consumer credit transaction that does not have the purpose of purchasing a one-to-four family residential property, such as a refinancing, a closed-end loan secured by a subordinate lien, or a reverse mortgage. Creditors must deliver or place in the mail the special information booklet not later than three business days after receiving the consumer’s loan application.

DISCLOSURE REQUIREMENTS

Changes to Party Responsible for Disclosure

Escrow Now to Provide. The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction. The settlement agent may comply with this requirement by providing the seller with a copy of the Closing Disclosure provided to the consumer (buyer) if it also contains information relating to the seller’s transaction. The settlement agent may also provide the seller with a separate disclosure, including only the information applicable to the seller’s transaction from the Closing Disclosure. However, if the seller’s disclosure is provided in a separate document, the settlement agent has to provide the creditor with a copy of the disclosure provided to the seller.

RETENTION

Record Retention.

  1. Five Years. The creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation.
  2. Two Years. The creditor, or servicer if applicable, must retain the Post-Consummation Escrow Cancellation Notice (Escrow Closing Notice) and the Post-Consummation Partial Payment Policy disclosure for two years.
  3. Three Years. For all other evidence of compliance with the Integrated Disclosure provisions of Regulation Z (including the Loan Estimate) creditors must maintain records for three years after consummation of the transaction.

Darren J. Welsh
Office of the General Counsel
Berkshire Hathaway HomeServices
Nevada Properties
Questions? Call me 702 245 1787

IMAG1702NRS 40 Does Not Limit Lenders’ Right to Sue Homeowners Even When the Note was Discounted on the Secondary Market.

In 2011 the Nevada Legislature passed A.B. 273.  One of the hot topics was how much a lender could sue a borrower for; if that lender purchased the note from a previous lender at a discounted price.  The discussion of the day (back in the summer of ’11) was that the current lender (who bought the note from a prior lender), pursuing the borrower was capped at the amount the suing bank paid to take over the loan. This seemed to be a protection for borrowers. There were numerous cases in the Nevada District System (Trial Level) that ruled in this way, in favor of the borrower, enforcing a cap. Basically the borrower was held to only be liable for what the current lender paid to buy the discounted note, which could be pennies on the dollar.

On December 24, 2014 the Nevada Supreme Court ruled that the language, ‘limited to the amount of the consideration paid by the bank,’ does not speak to the amount a bank or investor pays to buy the note, removing the cap. So, if bank 1 lends $400,000 and sells the note for pennies, say for $10,000 to bank 2, bank 2 can recoup the entire value of money lent or $400,000.  Many District Court cases were ruling that the deficiency was capped at the amount bank 2 paid to take over the loan.  No more.

The Supreme Court of Nevada stated:

“We therefore hold that NRS 40.451 does not in and of itself set an assignor-assignee, consideration-based limit on FFB’s recovery against respondents.”  First Fin. Bank v. Lane  339 P.3d 1289, 1294 (Nev.,2014) 

OTHER POSTS ON DEBT

Income Taxes & Foreclosure/Short Sales 2014 Update (12.17.2014)

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales 12.21.2007

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Home Owner’s Bill of Rights (Foreclosure/Short Sale/Judicial Foreclosure)

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale – “Dual Tracking” and the Homeowner’s Bill of Rights in Nevada May 2013

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com

Short Sale Tax Issues 2014Tax Exclusion on Short Sales, extended to end of 2014. As in two weeks!

My original post on this matter is here: Income Taxes & Foreclosures/Shortsales 12.21.2007.

See also January 2013’s, Income Taxes & Foreclosure/Short Sales 2013 Update

As you know the tax code had an “Exclusion from gross income of discharge of qualified principal residence indebtedness (Sec. 108)”

…in other words many home owners were not taxed for 1099C income received as a result of foreclosure/short sale.  This exclusion expired 12.31.2103, well, it has been reinstated and extended to 12.31.2014. Good news for the short sale market.

UPDATE 12.24.2014 – Many questions as to when a real estate transaction must close. It must close in the year of 2014 to take advantage of this tax break.   But see these other posts from the I.R.S. which are helpful for non-owner occupied short sale/foreclosure tax concerns.

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales 12.21.2007

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Home Owner’s Bill of Rights (Foreclosure/Short Sale/Judicial Foreclosure)

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale – “Dual Tracking” and the Homeowner’s Bill of Rights in Nevada May 2013

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com

Help keep a strong focus on REALTOR® Safety throughout the year by sharing these safety tips with others.

Pool Pump 2014

11 Tips for Holding a Safe Open House

  1. If possible, always try to have at least one other person working with you at the open house.
  2. Check your cell phone’s strength and signal prior to the open house. Have emergency numbers programmed on speed dial.
  3. Recommend that colleagues use a covert emergency communications device.
  4. Upon entering a house for the first time, check all rooms and determine several “escape” routes. Make sure all deadbolt locks are unlocked to facilitate a faster escape.
  5. Make sure that if you were to escape by the back door, you could escape from the backyard. Frequently, high fences surround yards that contain swimming pools or hot tubs.
  6. Have all open house visitors sign in. Ask for full name, address, phone number and email.
  7. When showing the house, always walk behind the prospect. Direct them; don’t lead them. Say, for example, “The kitchen is on your left,” and gesture for them to go ahead of you.
  8. Avoid attics, basements, and getting trapped in small rooms.
  9. Notify someone in your office, your answering service, a friend or a relative that you will be calling in every hour on the hour. And if you don’t call, they are to call you.
  10. Inform a neighbor that you will be showing the house and ask if he or she would keep an eye and ear open for anything out of the ordinary.
  11. Don’t assume that everyone has left the premises at the end of an open house. Check all of the rooms and the backyard prior to locking the doors. Be prepared to defend yourself, if necessary.

(Sources: Washington Real Estate Safety Council; City of Mesa, Arizona; Nevada County Board of REALTORS®; Georgia Real Estate Commission; Sponsor)

Stiletto by Secure Couture is a sponsor of Realtor Safety USA and is also partnering with the NCDSV to raise funds to provide consulting, training, and advocacy directed to improving women’s safety. Their work will also provide subsidized Stiletto personal security products and services to women’s shelters, women on campus, K-12 teachers, and others at risk.

Stay Safe,

Realtor Safety USA
—–
All tips are taken from NAR’s REALTOR® Safety Resource Kit. See www.REALTOR.org/Safety for more information on the important topic of REALTOR® safety.

IMAG0516_1_1[1]

There are now Four (4) Elements to Constructive Eviction in Nevada for Commercial Leases.

First, the landlord must either act or fail to act. Yee v. Weiss, 110 Nev. 657, 660, 877 P.2d 510, 512 (1994).
Second, the landlord’s action or inaction must render “the whole or a substantial part of the premises unfit for occupancy for the purpose for which it was leased.” Id.
Third, the tenant must actually vacate the premises within a reasonable time. Schultz v. Provenzano, 69 Nev. 324, 328, 251 P.2d 294, 296 (1952).
Fourth, a commercial tenant alleging that it was constructively evicted must show, in addition to the three elements stated in Yee and Schultz, that it provided the landlord notice of and a reasonable opportunity to cure the defect. See, e.g., Home Rentals Corp., 602 N.E.2d at 863.

Supreme Court of Nevada.

MASON–MCDUFFIE REAL ESTATE, INC., A Nevada Corporation d/b/a Prudential Nevada Realty, Appellant, v. VILLA FIORE DEVELOPMENT, LLC, A Nevada Limited Liability Company, Respondent.

No. 61233.

Decided: October 2, 2014

– See more at: http://caselaw.findlaw.com/nv-supreme-court/1679919.html#sthash.GFdjLDVk.dpuf

IMG_0919

Golfing with my dad on his 75th birthday

The Nevada “Residential Disclosure Guide” is amended.  It can be viewed on line by clicking here. Changes in the current revision of the booklet pertain to the Common-interest Communities and Condominium Hotels disclosures.  Pay  special attention to Statement of Demand. (see below). 

Information regarding the Statement of Demand requirement legislated in 2013 was added and some of the original language explaining about common-interest communities disclosures generally and resale packages drafted back in 2005-06 was reworked.  All other disclosure information remains unchanged.

Major Changes:

SECTION – Common-Interest Communities and Condominium Hotels

OLD Language- When is it due?

The statement must be delivered to the buyer not later than the date the offer becomes binding on the purchaser

NEW  Language.

When is it due?

In a transaction requiring a public offering statement (further detailed below), the information statement is part of the public offering statement and is due no later than the date an offer to purchase becomes binding on the buyer.  If the unit has not been inspected by the buyer, the buyer will have 5 calendar days to cancel the contract from the date of execution.

In a resale transaction, the information statement is part of the resale package.  A buyer has 5 calendar days to cancel the contract after receipt of the resale package.

It is good practice to provide the information statement no later than 5 days before the contract becomes binding on the buyer in any type of transaction.

SECTION – Public Offering Statement

NEW  (additional) Language

If the property is a new unit in a common-interest community or a condominium hotel, or if the community is subject to any developmental rights, or contains converted buildings or contains units which may be in a time share, or is registered with the Securities and Exchange Commission, the buyer must also be provided with a Public Offering Statement disclosing applicable information, including:

  – development rights of contractors

  – construction schedule

  – description of proposed improvements

  – mechanical & electrical installations

  – initial or special fees

  – number & identity of units in timeshare

Unless the buyer has personally inspected the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following the date of execution of the contract.  This provision must be stated in the contract.

SECTION – Resale Package

NEW (additional) Language:

In transactions involving the resale of a unit previously sold by the developer, a resale package must be provided to the buyer at the expense of the seller.  [NOTE – his is clarifying who pays for the package, which was clarified by Nevada law].

NEW Language: [in bold]

 In addition to the information statement, the resale package includes the following:  thedeclarations, bylaws, rules and regulations, monthly assessments, unpaid assessments of any kind, current operating budget, financial statement, reserve summary, unsatisfied judgments, and status of any pending legal actions.

SECTION – Transfer Fees

NEW Language

Do not pertain to Condominium Hotels

The resale package for a home or unit in a common-interest community must also include a statement of any transfer fees, transaction fees or any other fees associated with the resale of a unit.

SECTION -Unpaid Obligations

NEW Language [in bold]

Do not pertain to Condominium Hotels

Please be advised that while the resale package includes this information, changes to the law in 2013 no longer allow a seller or buyer to rely on this statement as accurate.  The seller must obtain a “statement of demand” which is separate from the resale package.  [Remember…the old language stated the statement was valid for 15 days; this is all removed now, a “statement of demand” (see below) is now separate from the Re-Sale Package]

SECTION – Delivery of Resale Package

NEW Language [in bold]:

Association or hotel unit owner has 10 days to provide the resale package after a request.  If the documents are not provided within 10 days the buyer is not liable for any delinquent assessment.  The resale package should be delivered as soon as practicable.  Unless the buyer has accepted conveyance of the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following receipt of the resale package.  This provision must be stated in the contract.

SECTION – Statement of Demand

NEW (additional language)

Does not pertain to Condominium Hotels

The statement of fees and assessments in the resale package my not be relied upon.  It is necessary for any seller to purchase a statement of demand from the association and provide it to the buyer.  The statement of demand may be requested by the unit owner, his or her representative or the holder of a security interest on the unit.   A statement of demand from the association sets forth the current outstanding assessments, fees and unpaid obligations, including foreclosure fees and attorney’s fees due from the seller.  The statement of demand remains effective for the period specified in the demand which must not be less than 15 business days from the date of delivery by the association to the seller.  The association may provide a corrected statement of demand prior to the sale.  Payment of the amount set forth in the statement of demand constitutes full payment of the amount due from the seller.

 

SEE Also the following forms: click to read –

Form:  Before You Purchase Property in a Common-Interest Community Did You Know… or

Form:  Before You Purchase Property in a Condominium Hotel Did You Know

 

Previous Posts on Common Interest Communities in Nevada

What Can Be Included In a CIC Super Priority Lien in NevadaDecember 18, 2012

Nevada CIC Resale Package Costs IMay 21, 2010

Nevada CIC Resale Package Costs II – June 11, 2010

Nevada Condominium Hotel Disclosure – July 31, 2009

CIC Unpaid Delinquent Dues And How They Affect REO ListingsJuly 2, 2009

Changes to the Nevada CIC Resale PackageJune 10, 2009

Non-Receipt of the Resale Package – May 8, 2009

Rental Restrictions within an AssociationMarch 6, 2009

Nevada CIC Charges for Resale Packages – January 30, 2009

Nevada CIC Addendums – June 13,2008

 

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