Las Vegas, home of the short sale, the loan default and the overblown real estate bubble, is now also home to a bevy of “surprise” wage garnishments that are changing the way people think of the government, their banks, lenders at large and – surprise – real estate investors.
Real estate investors have not been covered in a flattering light for some time, but generally people who actually manage to sell their homes with the help of a short sale negotiator or other real estate investor tend to end up being grateful to be out of a bad situation. However, in Nevada, which led the pack when it came to the real estate boom and then the subsequent bust, homeowners who negotiated short sales may now find themselves on the hook for the difference – and that hook could include wage garnishments and liens on other assets accumulated or saved by the original short sale. And they’re blaming everyone – including their realtors, their agents, the government, the lenders and real estate investors in general – for the oversight.
Are these delayed collections legal? Yep, sure are. Nevada is a “recourse state,” which means that lenders and collection agencies can continue to pursue deficiency judgments long after a homeowner may believe that the issue has been resolved. In fact, the collection agencies and their litigation teams have been working to give the appearance that all is well with short sales, actually “putting a clock of one or two years on the debt so the person can a new job and back on their feet” (thereby providing something for the collection agency to garnish), reported a bankruptcy attorney to the Las Vegas Review-Journal on March 14, 2010.
Does this mean that there is no reason to do a short sale in Nevada and other recourse states? Absolutely not. But it does mean that you must read the fine print and make sure that your homeowner is protected, and if they are not, make sure that you negotiate that protection as part of the deal or find a lawyer who can write that into the contract in an effective, binding manner. Because you can be sure that when the collection agencies call them that whether it’s fair or not, you are ultimately going to end up with part of the blame and could face legal issues – not to mention you’re going to feel terrible – as a result.
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