Homeowners In Las Vegas May Choose to Walk Away From Their Under WaterHomes

Las Vegas, NV – June 13, 2011 – (RealEstateRama) — As more and more homeowners are underwater in Las Vegas and Henderson, many homeowners are choosing to walk away from their homes. Zillow, an internet real estate provider, states that 85% of homeowners are underwater while Corelogic an insight analytics firm estimates the number to be 66%.
The Las Vegas homeowner has many options and two of the options will be discussed as follows:
Short sales can be done when the homeowner is current on their mortgage, but not every mortgage company is cooperative. It is generally a misnomer that a person cannot short sale their home without being delinquent on their mortgage, this is incorrect. In fact Nevada Attorney General Catherine Cortez Masto is suing Bank of America for alleged deceptive trade practices against Nevada homeowners. One of the claims in the lawsuit alleges that Bank of America deceived Nevada homeowners into becoming delinquent on their mortgages.
Sometimes whether or not a bank will allow a short sale to go through when the homeowner is current on their mortgage depends on the specific mortgage company or type of loan the homeowner has. But if the homeowner is not delinquent it does not affect their credit as adversely. Usually the credit affect is worse depending on how many months delinquent the homeowner is on their mortgage.
An added benefit to short selling a home when the homeowner is current on their mortgage is that in some cases the homeowner may be able to turn around and purchase a home with a lower mortgage so long as the mortgage lender does not believe that the homeowner is taking advantage of the market.
The Van Group real estate company at Realty Executives of Nevada recently completed a short sale where the homeowner had a first and second with Bank of America and the homeowner was not delinquent. We got the homeowner into another lower mortgage when her house was short sold. The homeowner originally bought her home for $506,000.00 and short sold it for $227,000 and since she was current on her mortgage she was able to turn around and purchase another house for $306,000. The homeowner relieved herself of about $279,000 in negative equity. About a month after her short sale, she pulled her credit and she still had a 755 credit score, the first and second mortgage loans with Bank of America were reported as paid on her credit report. She is ecstatic that she can start over with her family without the pain of a depreciated and under water home and now has a new house that she can build equity in.
A homeowner can also short sale a property if they are delinquent. One benefit to short selling a home rather than foreclosing is that the homeowner will have the ability to obtain financing sooner for the future purchase of a home. Loan servicers usually have a more stringent waiting period for people who have foreclosures on their credit records rather than those who have short sold a home.
Sometimes the bank may request a promissory note or request a lump sum at closing to waive the right to a future deficiency. In our experience at the Van Group, most banks are requesting a small settlement amount to no money in the form of a promissory note or an amount at closing to waive the deficiency against the homeowner and absolve the homeowner from future liability.
Another option is to foreclose on the property, which we at the Van Group strongly advise against. This should be the homeowner’s last resort. Although we are in unchartered waters, and there is no case law on point regarding foreclosures because homes have generally risen in value in Las Vegas and Henderson, under current foreclosure laws, the mortgage company may come after the homeowner for the deficiency balance (difference in what the homeowner owes plus legal fees on the date of foreclosure or fair market value on date of foreclosure. See NV foreclosure laws http://www.leg.state.nv.us/nrs/NRS-040.html#NRS040Sec455.
The bank or a debt collector that the bank sells the deficiency to may decide to sue the homeowner and obtain a Deficiency Judgment, settle with the homeowner, or may decide to do nothing and write off the loss. If the bank or debt collector decides to sue and they obtain a Deficiency Judgment from the court, which is similar to a renewable fishing license, the bank or debt collector can go after the homeowner’s bank accounts, wages, and lien any other property the homeowner may have. With the court ordered Deficiency Judgment, they may also go after the spouse, since NV is a community property state. As the Deficiency Judgment is renewable, the homeowner may have their wages and bank accounts garnished indefinitely or property encumbered by liens indefinitely. This is no way to continue living one’s life when they are in constant fear of being collected upon.
A foreclosure is also a bad option because credit reports also disclose the damaging information. Loan applications generally ask if the applicant has ever been foreclosed upon, not if the applicant has ever short sold their house. Furthermore, a homeowner who forecloses rather than short sales their home will have a longer wait time to obtain a loan for a home purchase in the future.
Sandy Van of The Van Group, a broker-salesman and realtor with Realty Executives of Nevada and an attorney at Kung Brown Law Firm states that “Short sales have helped many individuals start over with their lives. Many of our clients were losing sleep, destroying their marriages, and basically struggling to keep their homes. I have seen our clients borrow money from family members, work several jobs, so they can keep their mortgages current, and borrow from their retirement accounts. The homes in Las Vegas and Henderson will probably take 20-30 years to break even, depending on the mortgage amount. With short sales our clients do not have to wait decades to break even and they can start enjoying their lives. Our clients are less stressed out, they can start start saving for their retirement and kids college fund. Nobody should be ashamed of their housing predicament, most of the people on Wall Street who are a lot smarter then you and I did not predict what would have happened. It is time to take action, be proactive, and make a sound business and life decision. If corporate America can restructure their businesses consider short sales a personal restructuring.”
Visit our website at www.vangrouprealestate.com
https://twitter.com/#!/TheVanGroup
http://www.facebook.com/pages/The-Van-Group-at-Realty-Executives-of-Nevada/178760438805630