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Foreclosure & Alternatives Law

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Can a Lender Sue a Borrower for a Deficiency Judgment if the Lender is Still Owed Money After a Foreclosure Sale in Nevada?

Yes, if the foreclosure or trustee sale doesn’t produce enough proceeds to cover the money owed to the lender on the home, then the lender can sue to obtain a “deficiency judgment” to try to cover the money still owed.  The “judgment creditor” or the “beneficiary of the deed of trust” has six months after the date of foreclosure or trustee’s sale to obtain the deficiency judgment against the borrower. (There is one caveat to the 6-month rule:  if there is more than one parcel of property, more than one interest in the property, or more than one mortgage or deed of trust, then the 6-month period begins to run after the date of the foreclosure sale or trustee’s sale of the last parcel or other interest in the real property securing the indebtedness, but in no event may the application be filed more than 2 years after the initial foreclosure sale or trustee’s sale.)
However, the lender will not necessarily be able to get the full balance due.  Nevada law limits the amount of the money judgement in these cases.  The court can not render a deficiency judgment for more than:

      1.  The amount by which the amount of the indebtedness which was secured exceeds the fair market value of the property sold at the time of the sale, with interest from the date of the sale; or

      2.  The amount which is the difference between the amount for which the property was actually sold and the amount of the indebtedness which was secured, with interest from the date of sale,

whichever is the lesser amount.

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