NRS 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
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
Seller Being Released From Liability Language in Shortsale
Seller Liability After Short Sale 4.20.2007
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