Author Topic: Mortgage and foreclosure  (Read 3526 times)

mozar

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Mortgage and foreclosure
« on: March 08, 2016, 04:07:13 PM »
My dad's house was foreclosed on last year. Now a collection agency is saying that they bought the debt from the mortgage company and he owes them 170k. They said they would settle for 7 to 10k, I can't remember. I told him that the collection agency needs to provide proof that they bought the debt. So he told them that and now they are threatening to sue him. His bank says that they cannot provide proof they sold the debt.
First of all, has anyone heard of a mortgage debt being sold to collections? I thought they just wrote it off?
I told him to go to court in the off chance that the collection agency wouldn't show up or has no documents? Is that good advice? He had a lawyer for awhile but can't afford it at the moment, even with a discount through his employer. He has talked with the consumer protection bureau and they basically said good luck with that.

mozar

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Re: Mortgage and foreclosure
« Reply #1 on: March 08, 2016, 04:10:28 PM »
Also the house was sold at auction and his credit is already trashed.

onlykelsey

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Re: Mortgage and foreclosure
« Reply #2 on: March 08, 2016, 04:17:45 PM »
could you check property records for the address (online and free in most places in the US, as far as I can tell) to see if you can see what's going on there?  I wouldn't rely on that alone, but it might be a good place to start.


SailorGirl

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Re: Mortgage and foreclosure
« Reply #4 on: March 08, 2016, 04:26:00 PM »
Also, does he have anything to pay them if they do sue?  If he has nothing to collect then they wouldn't have any reason to sue.  Look up the laws of your state to see what is protected from debt collectors.

Another Reader

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Re: Mortgage and foreclosure
« Reply #5 on: March 08, 2016, 04:45:51 PM »
In this situation, the lender forecloses and sells the property.  If they don't recover the amount owed from the sale, there is what is called a deficiency.  That's the difference between the total amount owed and what was recovered from the foreclosure sale.  In some states, the lender is allowed to pursue the deficiency.  In others, the lender only gets the property.  If your father's house was in one of these states that allows deficiency collection, what likely happened is the lender sold the right to collect the deficiency to a collection agency.

You or your father need to track down exactly what happened.  The amount owed should be close to what the bank sent him in the foreclosure notice.  The auction price should have been recorded.  If either the lender or the collection agency went to court and got a deficiency judgement, a record of the case exists.

The collection agency must provide him with proof that the debt exists, that it is his, and that they have a right to collect it.  The debt is not secured by property so the collection procedure is similar to any other unsecured loan.  A judgement must be obtained and enforced.  If the debt has been sold, the collection agency provides proof, and they threaten to sue, then action should be taken.  In his shoes, I would consider retaining a bankruptcy attorney.  The idea is not to file, but to have the attorney tell the collectors that he will file immediately if they obtain a judgement.  That generally removes the motivation to pursue the case, and often it's dropped (or sold off to another collector).  It also stops all discussion.  When the collector calls, the answer is I have retained a bankruptcy attorney and his number is...

Fireball

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Re: Mortgage and foreclosure
« Reply #6 on: March 08, 2016, 04:56:15 PM »
In this situation, the lender forecloses and sells the property.  If they don't recover the amount owed from the sale, there is what is called a deficiency.  That's the difference between the total amount owed and what was recovered from the foreclosure sale.  In some states, the lender is allowed to pursue the deficiency.  In others, the lender only gets the property.  If your father's house was in one of these states that allows deficiency collection, what likely happened is the lender sold the right to collect the deficiency to a collection agency.

You or your father need to track down exactly what happened.  The amount owed should be close to what the bank sent him in the foreclosure notice.  The auction price should have been recorded.  If either the lender or the collection agency went to court and got a deficiency judgement, a record of the case exists.

The collection agency must provide him with proof that the debt exists, that it is his, and that they have a right to collect it.  The debt is not secured by property so the collection procedure is similar to any other unsecured loan.  A judgement must be obtained and enforced.  If the debt has been sold, the collection agency provides proof, and they threaten to sue, then action should be taken.  In his shoes, I would consider retaining a bankruptcy attorney.  The idea is not to file, but to have the attorney tell the collectors that he will file immediately if they obtain a judgement.  That generally removes the motivation to pursue the case, and often it's dropped (or sold off to another collector).  It also stops all discussion.  When the collector calls, the answer is I have retained a bankruptcy attorney and his number is...

This is good advice.

VAR

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Re: Mortgage and foreclosure
« Reply #7 on: March 08, 2016, 06:12:30 PM »
I had a friend whose house got foreclosed on. Then later a debt collection came for her for basically the price of her mortgage.
She had to file bankruptcy. She had no house and no $$ to pay the debt collection either.

mozar

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Re: Mortgage and foreclosure
« Reply #8 on: March 08, 2016, 06:17:43 PM »
The house was in Maryland. I think he has about 10k in life savings. I did ask him if he still had the paperwork from the foreclosure and I think he said he lost it. I will get him the info from Another reader. Thanks!

onlykelsey

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Re: Mortgage and foreclosure
« Reply #9 on: March 08, 2016, 06:18:57 PM »
Maryland is a deficiency judgment state, last time I checked.  That's not good.  Hopefully you can find out some more info.

 

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