Nevada allows both judicial in court or non judicial out of court foreclosures. As with all states in which both methods may be followed, the determining factor as to which method will be used is the existence of power of sale. If the deed of trust or mortgage contains a power of sale clause, this allows the bank to pursue foreclosure without petitioning the court to do so. Most deeds of trust or mortgages do contain a power of sale clause. This benefits the bank. This also means that most foreclosures are done non judicially or out of court. This is because it saves the bank both time and money to proceed this way.
If a power of sale clause is not written into the deed of trust or the mortgage of the home in question, then judicial or in court foreclosure must be followed. This process begins with the bank filing a lawsuit against the home owner who is having difficulty paying his mortgage. The bank does this to obtain a court order to foreclose. Once this court order to foreclose is obtained, the process of moving toward the sale of the home is the same as in non judicial foreclosure. The homeowner does receive a twelve month right of redemption when the judicial method of foreclosure is used. In this type of foreclosure, for the twelve months following the sale of the home at auction the person that lost their home at the sale can regain ownership of the house.
When a power of sale clause contains specific instructions as to when, where, and how the sale of the home is to take place, then those specifications must be followed. Most of the time, power of sale clauses are not so detailed, and the usual method of moving toward the sale date is followed.
The first step of that process is that a copy of the notice of default and election to sell the property is sent to the homeowner. This letter must be sent by certified return requested mail, to the last known address of the homeowner. This letter is to be mailed the same day it is recorded with the county in which the property is located.
The time line from the notice of sale to the actual auction of the house is usually one hundred and twenty days in Nevada. The scheduled sale date cannot be sooner than three months after the date the notice of default and election to sell is recorded with the county and mailed to the homeowner. The notice of default itself, specifies the time, date, and place the sale is to be held.
The process of curing the default, should the homeowner desire to do so, must be taken care of during the first thirty five days following the issuance of the notice of default and election to sell. This is a way to stop foreclosure. If the homeowner wants to do this, they must file a notice of intent to cure, no later than fifteen days prior to the scheduled sale date. The money required to cure the fault and stop the foreclosure sale will be the amount needed to bring the loan current. This dollar amount must be paid before noon the day before the scheduled auction of the home. If the homeowner does not come up with that money by that time, the sale will proceed as scheduled. The notice of default and election to sell will contain all the information about the sale; where and when it will occur. Most often, the beginning bid or the amount required to participate as a bidder on the home will be the amount of the first mortgage plus the fees and costs and interest the bank has incurred.
Being that most homes going to auction these days have very little if any equity in them, this opening virtually always too high for investors to take any interest in the home. This means that at most sales the property is taken back by the bank. This causes a lot of problems for the lender.
If the home is sold at auction for less than is owed on the loan, the bank has the right to seek the difference between what the sale generated and what they were owed from the former home owner. The bank can exercise this option for three months following the sale. After this amount of time, they can no longer seek that money. This is called a deficiency judgment. Most people who lose their home to a foreclosure sale do not have any other assets worth pursuing by the bank. The banks realize that it is a waste of time to try and get blood from a stone in these cases. So, unless the bank has reason to believe that the former homeowner has other properties worth equity or other assets they could take they will most likely not seek a deficiency judgment. To do so would just be flushing money and time down the drain.