A. The short legal answer is, if you signed the documents, you probably owe the debt.1 However, in this economic environment, several avenues for negotiations are evolving. At this time, basically resolving these loans fall into five basic options. Some of these options may run concurrently.
OPTION A: SHORT SALE/DEED IN LIEU/FORECLOSURE:
In the event you are facing a potential short sale or foreclosure regarding property located in the State of Nevada, and would like to understand the rights, remedies and consequences of such action, Judith A. Otto handles consultations by phone or in person, generally lasting a little over an hour by appointment.
The flat fee for such consultation is $200.00. During this consultation the following is discussed:
1. Want to keep the home?
- Continue to make the payments.
- Rent the property
- Look for other ways to keep property
2. Need to Modify the loan?
- Is it your primary residence?
- What is HAMP?
- Do you qualify for HAMP?
- Is it your primary residence?
- Is the monthly principal, interest, taxes and insurance (PITI) on the 1st priority loan > 32% of gross monthly income?
3. How about a short sale? -- Golden opportunity to negotiate with the lenders.
- What is HAFA?
- Do you qualify for HAFA? (did you qualify for HAMP, but were unable to complete modification?)
- What benefit is there for qualifying for HAFA?
- Lender will advise you of their opinion of value; you will be provided a limited period of time to sell the
home for the value established by the lender; balance of debt will be forgiven.
- Can I short sale the property if I do not qualify for HAFA?
- Listing and counter-offers:
- Subject to Lender Approval
- Subject to your approval of the lender’s terms.
- Reasonable listing price.
- Receive Offer (compile short-sale package including letter of hardship).
- Forward accepted Offer to all lenders and mortgage insurance (including VA if applicable).
- Review response carefully.
- Is lender accepting the short sale?
- Is lender allowing any sale proceeds to go to 2nd priority loan?
- Is lender allowing any sale proceeds to go to homeowner for relocation expenses?
- IS LENDER FORGIVING THE BALANCE OF THE DEBT?
- Is lender requiring additional funds or a note from borrower?
- Is the demanded note or funds negotiable?
- What can the homeowner expect in negotiations?
- Who handles the negotiations?
- Are the demands different between the 1st priority lender and the 2nd? What can the property owner expect?
- What are the legal rights of the lender in the 1st priority position following a short sale?
- What are the legal rights of the lender in the 2nd priority position following a short sale?
- What if the borrower has other assets?
- Should I make payments during the process?
4. Will the lender accept a Deed In Lieu? Deed in Lieu involves deeding the property back to the bank as full satisfaction of the debt.
- What are the current bank policies on Deed in Lieu’s?
- List property for short sale without an offer for a minimum of 90 days.
- No junior liens, or all junior liens are negotiated and released.
5. Wouldn't it be easier to just let it go into foreclosure?
- What is the foreclosure process?
- When can I expect a Notice of Default?
- How will I receive it?
- What does it mean?
- Can I, should I, go to mediation?
- When will I receive a Notice of Sale?
- What happens at the sale?
- What are the lender’s rights after a foreclosure sale?
- What is a deficiency?
- Fair Market Value on date of sale less amount of total debt, or amount bid at sale whichever is greater.
- New cases regarding consideration paid for loan.
- When do I have to move?
- What if I am collecting rents?
- What happens to the 2nd after the foreclosure?
6. What about my credit????
7. What about tax consequences?
- Will I receive a 1099?
- What are the 2007 Deb Relief Act exemptions?
- Primary Residence - loan proceeds used to purchase, refinance or improve the home.
- Insolvency Exemption - Exemption for amount total debt exceeds total (all including pensions) assets.
- When does the Act expire? December, 2012.
OPTION B: BANKRUPTCY:
1. Should I consider bankruptcy?
2. How does bankruptcy work?
- Chapter 13 - 3 year plan with payments.
- Chapter 7 - liquidation.
3. How long will it take?
1The lender may not be able to locate or trace their
documents, the loan may not have been fully funded, or there could be other
technical lender violations or enforcement issues with the loan, but that is
beyond the scope of this discussion.
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A. In Nevada, pursuant to Nevada Revised Statute Chapter 111.105, “[c]onveyances of lands, or of any estate or interest therein, may be made by deed, signed by the person from whom the estate or interest is intended to pass, being of lawful age, or by his lawful agent or attorney, and acknowledged or proved, and recorded. Typical vesting of real or personal property within the State of Nevada involving two or more grantees include; Tenants in Common, Joint Tenancy, Community Property and Community Property with Right of Survivorship. Any individual can acquire real or personal property with other individuals as tenants in common or in joint tenancy. Legal entities can acquire title individually or as tenants in common with other entities or persons, but can not acquire title as a joint tenant as that would defeat the “right of survivorship” inherent in the joint tenancy, nor as community property. Community property, with or without survivorship, is reserved for married couples. Legal entities can include corporations, limited liability companies, partnerships, joint ventures, and trusts, however vesting in partnerships, joint ventures, and trusts have a few special considerations.
Tenants in Common. Pursuant to NRS 111.060, “Every interest in real property granted or devised to two or more persons, other than executors and trustees, as such, shall be a tenancy in common, unless expressly declared in the grant or devise to be a joint tenancy.” Tenancy in Common does not create a right of survivorship. Each tenant holds an undivided interest in the whole, to the extent of his, her, or it’s interest. It is preferable to specify the interest of each tenant in common. If the percentage of interest is not specified in the document, it would be a question of fact as to what investments were made in the property (which could require tracing principals) and if either party intended to make a gift of any portion of the interest to the other. Typical examples of vesting for tenants in common are: “Peter Pan, an unmarried man as to an undivided 60% interest and Jane Doe, an unmarried woman, as to an undivided 40% interest, as tenants in common”, or, “ Peter Pan, an unmarried man, and Jane Doe, an unmarried woman, each as to an undivided one-half (½) interest, as tenant in common”. Upon the death of a tenant in common, the decedents interest in the property becomes part of their estate and will be subject to their will and probate.
In addition, as mentioned above, entities can also hold tenant in common interests, as can other vested parties. An example of such vesting would include: “ABC Corporation, a Nevada corporation as to an undivided 90%, and Peter Pan and Jane Pan, husband and wife, as joint tenants with right of survivorship, as to an undivided 10% interest.” Such vesting would result in ABC Corporation owning 90% of the property and Mr. and Mrs. Pan holding a 10% interest in such property as joint tenants as between themselves.
Joint Tenants. Joint tenancy includes the right of survivorship. Each tenant holds an undivided interest in the whole. Any two people can hold real or personal property as joint tenants. Typical vesting for joint tenancy is, “Peter Pan and Jane Pan, husband and wife as joint tenants with right of survivorship”. Joint Tenancy is terminated by the transfer or encumbrance by one of the joint tenant’s interest in the property, or by the death of one of the joint tenants. In the event of a death of a joint tenant, a person with knowledge of the death may file an Affidavit of Surviving Joint Tenant and the property will vest in the remaining joint tenant without a probate or any other legal action. See NRS 111.365.
Community Property. Community Property estates are reserved for married
couples and may be with or without the right of survivorship. NRS 111.064 (2) provides “A right of survivorship does not arise when an estate in community property is created in a husband and wife, as such, unless the instrument creating the estate expressly declares that the husband and wife take the property as community property with a right of survivorship. This right of survivorship is extinguished whenever either spouse, during the marriage, transfers his/her interest in the community property.” In the event of a death of a husband or wife who holds title as community property without the right of survivorship, the decedents interest would be subject to their will or probate, and the surviving spouse would not necessarily be entitled to such interest if they are not the heir by will or statute.
Community Property with Right of Survivorship. Community Property with the right of survivorship is similar to joint tenancy with right of survivorship, in that in the event of the death of one interest holder, a person with knowledge of the death can record an Affidavit of Surviving Spouse Regarding Community Property with Right of Survivorship in the official records of the county where the property is located and the property will vest in the survivor without being subject to the decedent’s will or probate. See, NRS 111.365. It may be prudent to check with your tax advisor it may be possible that upon the death of a spouse who held property as community property with right of survivorship the entire property is given a step up in basis, whereas only one-half the value of the property is given a step up in basis upon the death of a joint tenant.
Sole and Separate Property: Nevada is a "community property" state. Pursuant to NRS 123.230, (3) . . . “neither spouse may sell, convey or encumber the community real property unless both join in the execution of the deed or other instrument by which the real property is sold, conveyed or encumbered, and the deed or other instrument must be acknowledged by both.” Further, paragraph 4 of NRS 123.234 provides: “4. Neither spouse may purchase or contract to purchase community real property unless both join in the transaction of purchase or in the execution of the contract to purchase.”
All property acquired during marriage is presumed community property, and exceptions are a question of fact and not subject to being of record. In the event one spouse desires to acquire title to real property as their sole and separate property, the remaining spouse must release their potential current or future interest. This is generally done by a grant, bargain sale deed executed by the non-acquiring spouse to the spouse acquiring an interest in real property. A grant, bargain, sale deed from the other spouse to the spouse acquiring title is preferred over a quit claim deed as it releases all potential existing and future interest of that spouse in the property. Sole and separate property can be willed and may require a probate in case of death.
Revocable and Irrevocable Living Trusts: Property that is to be transferred into a trust must be vested in the Trustee of the Trust. A typical vesting of a Trust is “Peter Pan and Jane Pan as Trustees of the Peter and Jane Pan Family Trust dated May 22, 1942.” Depending on the intent and language of the trust it may be appropriate to designate the Trustees’ interest in the property; such as “Peter Pan and Jane Pan as Trustees of the Peter and Jane Pan Trust dated May 22, 1942, to be held within the Trust as the community property of Peter Pan and Jane Pan. In the event one of the trustees dies and the trust provides the remaining trustee to become the sole trustee, the vesting would be “Jane Pan Successor Trustee of the Peter and Jane Pan Family Trust dated May 22, 1042". In the event Jane then passes away and her daughter, Hilda Flyalot, becomes the trustee pursuant to the terms of the trust, the title company may request an Affidavit of Surviving Trustee supporting the successor trustee’s authority.
Life Estates: It was once believed that a Life Estate could be terminated by an Affidavit evidencing the death of the person whose life the estate was vested. However, pursuant to NRS 40.525, the termination of a life estate requires a court proceeding, including the filing of a petition and notice, setting a hearing, to terminate the life estate by court order.
Deed Upon Death. It is not uncommon in the State of Nevada for parents, grandparents and others, to add their adult child, grandchild or intended heir to the title of their property as a joint tenant with them, as an inexpensive method of estate planning. By adding such person as a joint tenant, they are assured the intended heir will gain title to the property upon their death, without the time and expense of probate or even the necessity of preparing a will. However, adding the intended heir on their title can expose the property to judgments and liens against the intended heir. Further, they could lose their homestead protection as to such liens up to the value of the interest they transferred to the other person, as it is probably not the other person’s primary residence. In addition, they expose their property to a potential partition action if the parties fall into dispute.
In 2003, Nevada adopted NRS 111.109 which provides that a person can record a Deed to another person, which deed become effective upon the death of the Grantor, subject to the terms and conditions set forth therein. This allows the automatic transfer of property to an intended heir upon the death of the Grantor without a probate. Such deed is not effective until the death of the Grantor and is therefore rendered of no force or effect should the Grantor sell or transfer the property before their death.
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Q: What are some differences between California laws and Nevada laws regarding real estate?
A: There are some significant differences between Nevada and California laws relating to real property, a few of such differences include the following:
Deficiency: In Nevada, within six (6) months following a non-judicial foreclosure (any non-judicial foreclosure), a beneficiary may bring a deficiency action against the maker of the note, for an amount equal to the total obligation to the beneficiary (not including cost to resell the property) less the fair market value of the property on the date of the sale, or the amount bid at the foreclosure sale, whichever is greater. (NRS 40.455 et seq). California limits deficiency rights.
Right to Cure: In Nevada, upon a default under a Note or Deed of Trust, and the recording and mailing of a Notice of Default, the payor under the note only has thirty-five (35) days to cure the default. Following the 35-day cure period, the Beneficiary may require the payor to pay the obligation in full during the remaining approximately 85 days of the foreclosure process. (NRS 107.080). California has a much longer “cure period”.
Notice of Balloon Payments: Nevada statutes do not have a requirement to give notice of a balloon payment, as required by Ca Civil Code 2966.
Business Sales: Nevada repealed its Business sales statutes in 1991 (NRS 104.6101). No affidavit of creditors, mailing or publishing is currently required for a sale of a business. However, several taxing authorities, including the Department of Taxation for Sales and Use Taxes and for Business Tax, and the Nevada Employment Security Division for Unemployment Tax, do have certain rights against the buyer if the seller’s taxes are not paid in full, which results in potential flow-through liability to the buyer of a business. (NRS 360.525 and 612.695). California has a
Business sales act that requires publication and other notices related to the sale of a business.
Document Preparation: Nevada case law provides that the preparation of most real estate documents is the practice of law and must be performed by an attorney. Parties can prepare documents in which they are a party, such as lenders preparing their own loan documents and title companies preparing their own escrow instructions and Real Estate agents are permitted to prepare Offers and Acceptances for their buyers and sellers. Pioneer Title vs. State Bar, 74 Nev. 186 (1958). In our years of experience, we believe it is always advisable to have your documents prepared or reviewed by an attorney.
Usury: There are no usury laws, per se, in Nevada. Further, there are no statutory restrictions on late charges, pre-payment penalties or points, provided however, that compounding of interest must be specifically agreed to in writing (NRS 99.050). However, in 2003 Nevada adopted a “Predatory Lending Statute” which requires additional disclosures and restricts certain charges and fees on certain loans. See NRS 598D. Basically NRS 598D applies to any loan, which is a “mortgage under Section 152 of the Home Ownership and Equity Protection Act” (NRS 598D.040), otherwise known as “HOEPA”. HOEPA loans also fall under “Section 32" of the Federal Truth and Lending requirements (“TILA”). Basically HOEPA and TILA are disclosure statutes, however, failure to give the appropriate disclosures can have severe penalties including, eliminating all interest provided in the loan, applying all payments made by the borrower (even those not made to the lenders, like appraisal fees and other costs of escrow) to the principal of the loan, and reconveyance of the Deed of Trust, leaving any balance of principal unsecured. In keeping with the disclosure nature of such loans, NRS 598D.130 requires that the instrument securing a HOEPA loan in Nevada “expressly indicate in writing in the mortgage, deed of trust, or other instrument that the loan is a home loan as defined in NRS 589D.040.
Further, NRS 107.085 was modified to require an additional notice providing various names and contact information to be personally served on the Grantor during the foreclosure process of a loan that is a home loan under NRS 598D.130. For additional information regarding the Predatory Lending Laws see the FAQ, “What do I need to know about TILA and HOEPA.”
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Q. What do I need to know about TILA and HOEPA regulations?
A. TRUTH AND LENDING ACT (TILA). TILA was created to guarantee the accurate and meaningful disclosure of the costs of consumer credit. TILA applies to lenders that offer or extend credit when three conditions are met:
- Consumer Credit. The credit is offered or extended to consumers primarily for personal, family, or household purposes. A consumer is a natural person (ie. not a corporate borrower). Consumer credit does not include business loans. There are limited exceptions to “consumer credit”, such as certain student loans and home fuel budget plans (if no finance charge is imposed).
- TILA Lenders. The offering or extension of credit is done regularly. In cases of real estate secured loans, “regularly” means 6 or more loans in any 12 month period (looking forward and back from the loan in question). For HOEPA purposes, “regularly” means 2 or more HOEPA loans, or 1 Hoepa loan through a mortgage broker during any 12 month period.
- Finance Charges. The credit is subject to a finance charge or is payable pursuant to a written agreement in more than 4 installments. Finance charges include any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or condition of making the loan. The foremost examples are interest, service charges, and points or origination fees. However, many additional fees and costs paid by or on behalf of the borrower may also be included, such as appraisal fees, broker fees, attorney fees and closing costs. The rules for determining what is a TILA Finance Charge are in 15 U.S.C. Section 1605, Reg Z Section 226.4.
- TILA is primarily a disclosure statue. With few exceptions, such as HOEPA, discussed below, it does not regulate the substance of the contract terms. The disclosures required for closed-end real estate loans secured by real property include the following:
- Total Finance Charges (see finance charges above)
- Amount Financed – generally the principal amount of the loan minus all Finance Charges
- Annual Percentage Rate (APR) – The APR must be accurate within certain tolerances. The APR is the cost of the credit at a yearly rate. The APR is often higher than the interest rate expressed in a promissory note as it includes the interest rate and Finance Charges calculated over the term of the loan based on the Amount Financed.
- Payment schedule
- Total payments
- Security Interest
- Special formatting rules
- Disclosures must be clear and conspicuous and reflect the legal obligations of the parties;
- Segregated from other information, and
- In a form the consumer may keep
- The disclosure must be provided in a timely manner, ie before loan consummation. A proper disclosure will trigger the consumer’s three-day right to rescind more fully discussed below.
- WHY DO WE CARE ABOUT TILA?
- In addition to actual damages, and other statutory damages, for non-purchase money home–secured loans, TILA gives a right to rescind the transaction for up to three (3) years in some cases, for “material” violations. Rescission voids the security interest in the home and eliminates the obligation to pay interest or other finances charges or closing costs. In secured real estate loans, the impact of a successful TILA rescission can be quite dramatic, because rescission:
- Voids the security agreement;
- Can be complete defense to foreclosure;
- Voids all finance charges and closing cost; and
- Allows the court to award statutory damages of $2,000 to $4,000 in the case of a closed end, real estate secured loan, if the creditor fails to respond to a proper rescission notice.
- A rescission action may apply if the loan is a TILA loan for a non-purchase money security interest in the consumer’s primary residence. The right of rescission must be exercised within three business days from the latest of:
- Consummation of the transaction;
- Delivery of proper notice of right to rescind; or
- Delivery of all material disclosures correctly made
Three days begin to run only when all material disclosures and proper notice of the right to rescind is received. There is a continuing right to rescind for up to three (3) years from consummation if those notices are not done correctly. Subject to limited potential arguments, generally all defenses related to TILA expire three years from the consummation of the transaction; provided however, the right to rescind may be shortened if the interest of the borrower in the property is voluntarily or involuntarily transferred (ie. sale or foreclosure).
HOME OWNERSHIP AND EQUITY PROTECTION ACT (HOEPA). In 1994, Congress passed federal ‘high cost’ home equity loan restrictions referred to as HOEPA. The provisions of this legislation are designed to protect consumers and prevent certain predatory lending practices. HOEPA creates a special class of regulated closed-end’ loans made at high interest rates or with excessive costs and fees. These loans are subject to special disclosure requirements and, more critically, to restrictions on substantive terms as well as severe damage penalties and remedies. HOEPA laws are powerful tool because they expand to liability to any assignees of the beneficial interest of a Deed of Trust and destroy any “holder in due course” shields, subject to limited exceptions. Compliance became mandatory on October 1, 2002. Further, in 2003 Nevada adopted NRS 589.040 which further requires disclosure of such loans in Deeds of Trust recorded in Nevada. TILA loans are further subject to HOEPA compliance if either one of the two triggers are met:
- Points and Fees Test – the loan points and fees (including Premium Credit Insurance) exceed the greater amount of 8% of the total loan and $510.00 for the year 2005 (this reflects a 2.29% increase in the CPI-U from June 2003 to June 2004 rounded to the nearest dollars and is subject to annual adjustments).
- Annual Percentage Rate (APR) Test - the APR interest exceeds by more then 8% or 10% (for loans made after October 1, 2002) the yield of Treasure securities of comparable maturity. Calculating this trigger is a three step process:
- First, find the relevant maturity rate by going to the Federal Reserve Board (FRB) website www.federalreserve.gov/Releases/H15/data.htm. Scroll down to “treasury constant maturity”, click on “business”, next to the term of the mortgage loan at issue. The next screen will show the daily rates.
- Second, select the relevant date to use by referencing the 15th day of the month before the loan application was received. (i.e. if the application was submitted in September, use the rate on August 15th). If the rate for the 15th is not shown then it was a non-business day, so substitute the rate listed for the 14th. The rate for the 30 year maturity bonds no longer exists, for a 30 year loan, consult the constant maturity schedule for the 20 year maturity.
- Third, add the trigger spreads. For loans consummated before October 1, 2002 the trigger spread is 10%. Following October 1, 2002, the trigger spread is 8% for a Note secured by a Deed of Trust in a first priority position, and 10% for junior lien priority positions. Add the 8% or 10%, whichever applies, to the maturity rate determined in steps 1 and 2.
- If the APR for the loan in question exceeds that percentage, the loan is also subject to HOEPA compliance. Remember the APR rate is usually higher than the interest rate expressed in a promissory note, as it includes the interest rate and Finance Charges calculated over the term of the loan based on the Amount Financed. See above discussion of Finance Charges and Amount Financed. See also HOEPA worksheet below.
- WHY DO WE CARE ABOUT HOEPA?
- Violations of HOEPA are subject to three remedies. Since HOEPA is part of TILA, violations under HOEPA trigger the usual TILA monetary damages, and where “material” (under a common law standard, not the TIL standard), enhanced damages of the sum of all finance charges and fees paid by the consumer. Damage claims are subject to a one-year statue of limitations for affirmative suits, but can be raised at any time defensively.
- More importantly, violations of HOEPA’s disclosure provisions are deemed “material” for purpose of TILA rescission. The inclusion of a prohibited term (whether invoked or not) is also deemed a material violation for purposed of TILA rescission. However, Engaging in the prohibited practices may not trigger rescission.
- HOEPA PROHIBITED TERMS
- Prepayment penalties (exception possible)
- Interest Rate increases upon default
- Negative Amortization
- Balloon Payments within 5 years of loan consummation
- Prepaid Payment escrows for more than 2 months
- Due-On Demand clause in notes after 10/1/02 (unless acts of fraud or failure of payment)
- PROHIBITED ACTS OR PRACTICES
- Payment from proceeds to home improvement contractor only
- Making a loan without regard to ability to repay
- Failing to include notice to assignee
- Refinancing by the same credit or assignee within one year (for loans after 10/01/02
- Making an open-end loan to evade HOEPA
- DISCLOSURE REQUIREMENT
- Homeowners must receive a special advance warning at least three (3) business days before the loan consummation. This warning must include:
- Notice that the loan need not be consummated
- Home and equity in it might be lost in the event of nonpayment
- If fixed rate – the APR and amount of monthly payment must be disclosed
- If variable rate – both regular and maximum possible monthly payments must be listed with APR
- Any balloon payment must be listed
- The notice must be in “conspicuous type size”
- As of 10/1/02 the notice must include total amount borrowed, including premiums for optional credit insurance to debt cancellation coverage.
SAMPLE HOEPA NOTICE
YOU ARE NOT REQUIRED TO COMPLETE THIS AGREEMENT MERELY BECAUSE YOU RECEIVED THESE DISCLOSURES OR HAVE SIGNED A LOAN APPLICATION.
IF YOU OBTAIN THIS LOAN, THE LENDER WILL HAVE A MORTGAGE ON
YOUR HOME, YOU COULD LOSE YOUR HOME, AND ANY MONEY YOU HAVE PUT INTO IT IF YOU DO NOT MEET YOUR OBLIGATIONS UNDER THE LOAN.
You are borrowing $_______ (optional credit insurance is/is not included in this amount)
The annual percentage rate on your loan will be _____%
[At the end of the loan, you will still owe us __________[balloon amount}]
[If the loan is variable rate loan, the notice must state the following additional information:
“the interest rate and monthly payments may increase. Maximum possible monthly payment $_____”]
The expanded assignee liability mandates that the HOEPA warning is given three (3) business days before consummation of the loan. This expansion of liability covers claims and defenses that can be raised against the original lender under common law, statutes, or other theories. Assignees of covered HOEPA loans are liable for all claims and defenses with respect to the assigned loan and deed of trust that the consumer could assert against the originator. In limited circumstances, an assignee may defeat liability if it legitimately could not have known the assigned loan and deed of trust was a covered loan.
NEVADA PREDATORY LENDING LAWS
In 2003, Nevada adopted a “Predatory Lending Statute” which requires additional disclosures and restricts certain charges and fees on certain loans made in Nevada. See NRS 598D100 set forth below. Basically NRS 598D applies to any loan which is a HOEPA loan (NRS 598D.040). In keeping with the disclosure nature of such loans, NRS 598D.130 requires that the instrument securing a HOEPA loan in Nevada “expressly indicate in writing in the mortgage, deed of trust, or other instrument that the loan is a home loan as defined in NRS 589D.040”. Violations of NRS 598D are subject to civil and criminal penalties.
Further, NRS 107.085 was modified to require an additional notice providing various names and contact information to be personally served on the Grantor during the foreclosure process of a loan that is a home loan under NRS 598D.130.
NRS 589D.100 provides as follows:
Unfair Lending Practices.
1. It is an unfair lending practice for a lender to:
(a) Require a borrower, as a condition of obtaining or maintaining a home loan secured by home property, to provide property insurance on improvements to home property in an amount that exceeds the reasonable replacement value of the improvements.
(b) Knowingly or intentionally make a home loan to a borrower based solely upon the equity of the borrower in the home property and without determining that the borrower has the ability to repay the home loan from other assets, including, without limitation, income.
(c) Finance a prepayment fee or penalty in connection with the refinancing by the original borrower of a home loan owned by the lender or an affiliate of the lender.
(d) Finance, directly or indirectly in connection with a home loan, any credit insurance.
2. As used in this section:
(a) “Credit insurance” has the meaning ascribed to it in NRS 690A.015.
(b) “Prepayment fee or penalty” means any fee or penalty imposed by a lender if a borrower repays the balance of a loan or otherwise makes a payment on a loan before the regularly scheduled time for repayment.
NRS 598D.110 Criminal and civil penalties; borrower’s defense against unpaid obligation.
1. A lender who willfully engages in an unfair lending practice described in this chapter is guilty of a misdemeanor.
2. If a lender willfully engages in any unfair lending practice described in this chapter in connection with a home loan, the lender is liable to the borrower in an amount equal to the sum of:
(a) Three times the amount of any actual damages sustained by the borrower; and
(b) If the borrower brings an action and is successful in enforcing the liability imposed by paragraph (a) in the action, the costs of bringing the action and reasonable attorney’s fees as determined by the court.
3. The borrower has a defense against the unpaid obligation of the home loan to the extent of any amount awarded by a court pursuant to paragraph (a) of subsection 2, and the court, in addition to any other legal or equitable remedy, may cure any existing default of the home loan and cancel any pending foreclosure sale, trustee’s sale or other sale to enforce the home loan.
NRS 598D.120 Repurchase of home loan by lender who sold home loan.
1. If an action has been filed in a court of competent jurisdiction claiming an unfair lending practice in connection with a home loan, the lender who holds the home loan may sell the home loan and recover damages and costs as provided in this section if the lender did not:
(a) Originate the home loan; and
(b) Willfully engage in any unfair lending practice described in this chapter in connection with the home loan.
2. The lender described in subsection 1 may require the person from whom the lender purchased the home loan described in subsection 1 to:
(a) Repurchase the home loan for the amount the lender paid for the home loan; and
(b) Pay to the lender all damages and reasonable costs incurred by the lender that are related to:
(1) The purchase of the home loan by the lender from the person;
(2) Any damages awarded in the action described in subsection 1;
(3) Any costs related to the action described in subsection 1;
(4) The repurchase of the home loan by the lender if the lender was required to repurchase the home loan from another lender pursuant to this section; and
(5) The repurchase of the home loan from the lender by the person pursuant to this section.
3. The person described in subsection 2:
(a) Shall repurchase the home loan and pay the damages and costs as described in subsection 2; and
(b) After repurchasing the home loan, may sell the home loan and recover damages and costs as provided in this section if he is a lender described in subsection 1.
NRS 598D.130. Required provision in instrument that secures home loan. A mortgage, deed of trust or other instrument that encumbers home property as security for repayment of a home loan must expressly indicate in writing in the mortgage, deed of trust or other instrument that the home loan is a home loan as defined in NRS 598D.040.
NRS 598D.150. Enforcement by Attorney General; local regulation prohibited.
1. The Attorney General has primary jurisdiction to investigate and prosecute violations of this chapter.
2. When acting pursuant to this section, the Attorney General may commence his investigation and file a criminal action without leave of court, and he has exclusive charge of the conduct of the prosecution.
- A local government shall not regulate any activity to which the provisions of this chapter apply.
SECTION 32 TRUTH IN LENDING WORKSHEET
1. Is this a purchase money loan?
Yes: _______ No:________
2. Is this a loan on a rental property, vacation home or other non-owner occupied property, or loan proceeds used for business purposes?
If the answer to either question 1 or 2 is YES, this loan is not subject to Section 32. You do not need to complete the following questions. If the answer to both questions 1 and 2 is NO proceed to questions 3 and 4.
3. (a) What is the APR* of the loan? (i) __________%
(b) What was rate of the comparable (ii) __________%
Treasury Note as of 15th day of the month preceding the application date?
( c) What is the sum of (ii) plus 8%, if a 1st lien? (iii) _________%
(d) What is the sum of (ii) plus 10% if a 2nd lien? (iv) _________%
- Is (i) greater than (iii) or (iv), whichever is applicable?
Yes: ___________ No: ____________
4. (a) What are the total Prepaid Finance Charges**? (v) _________%
(b) What is the amount of the Prepaid Interest? (vi) _________%
( c) What broker compensation not included in (vi) _________%
Prepaid Finance Charges will/may be paid?
(d) What is the total of (v) – (vi) + (vii)? (vii)_________%
(e) What is the Amount Financed? (viii)________%
(f) What is (vii) divided by (viii)? (ix)_________%
- Is (x) equal to or greater than .08?
Yes: ___________ No: _________
5. Did the lender extend credit on a dwelling 5 or more times in the last calendar
year? Yes: _________ No:___________
If the answer to either question 3(e) or 4(g) and 5 is YES, the loan is subject to Section 32.
- APR includes the interest rate and other fees and charges required by the Lenders. To determine the APR computer programs and various formulas are available.
** Please see above discussion regarding Prepaid Finance Charges.
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A. A Commercial Transaction is a transaction that generally consists of a transfer of real property with an on-going business enterprise. A
Business Sale is generally the transfer of a business operation on leasehold premises. Generally speaking, the transfer of the business assets includes Tangible Personal Property (furniture, fixtures, equipment, inventory, vendor lists, menus, etc.) and Intangible Personal Property (trade name, goodwill, phone number, etc.). The biggest distinction between a Commercial Transaction and a
Business Sale is that the Business Sale generally involves a lease and not transfer of the real property. Beyond that, all of the issues of a
Business Sale may be present and should be considered in a Commercial Transaction.
Some key issues to consider when considering a Business Sale are: First, it should be determined if the transaction is really an asset sale or a stock transfer. If it is an asset sale, the parties should consider such other issues as sales taxes, business taxes, unemployment taxes, personal property taxes (each of which may be subject to flow-through liability to the buyer). Other considerations include: Has the business license been issued? If there is gaming involved, has the gaming commission approved this transaction? Are there vehicles? Is there work in process? Accounts Receivable? Is there a Web site? What is the status of employees' vacation, sick leave or accrued earnings, health insurance? Will there be a Covenant Not to Compete? Who will handle the transfer of any lease agreements?
Frequently a portion of the purchase price or a business asset sale is paid over time pursuant to a Promissory Note to the Seller, which is secured by the assets of the business by a Security Agreement and UCC-1 Financing Statements. When the negotiation for a Promissory Note is involved, additional issues to be considered are: the interest rate, payment terms, late charges, a "due on sale" clause, the right to prepay the Promissory Note with or without a penalty, and the right to offset the payments under the Promissory Note if the seller defaults under any other term of the purchase agreement.
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A. Oggie the Froggie is our adopted Toad who guards our front door and brings us good fortune every day.
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