Hello, this is my first post. any advice would be greatly appreciated. I had two rental properties that foreclosed in december of 2006. both of these had 2nd mortgages of $20k each from the same lender. the result of the foreclosure for both is that the 1st mortgage holder acquired the property by being the only and highest bidder. as a result, the 2nd mortgages were released from the title, and walked away with nothing. this weekend, i received letters from the 2nd mortgage lender that the servicing rights for my mortgage account has been sold to company XYZ. lo and behold, company XYZ turns out to be a Collections Agency in Texas. I also received letters from company XYZ that the collection rights has been transfered to them. I am a bit confused. can the lender sell a secured mortgage to a CA, even though the original lien on the property was in essence discharged from the title at foreclosure? I am in a situation where I really cannot pay the CA. if i couldn't pay the mortgage when i actually had title before foreclosure, how and why would i do so now to the CA? Thank you in advance!
Yes they can sell the loan off, there is a clause in your contract/agreement that you signed that will elaborate on this. The CA will continue collections upto and including possibly sueing you for the balance that is owed. It would not be a wise idea to ignore them or refuse payment on the balance. Setting up some kind of arrangements on the balance that you owe is certainly better than being sued and them obtaining judgment.
"Collectman" his name tells you all you need to know about following any advice he may pass your way.
yes because my advice is to actually pay a debt that is owed instead of refusing to pay and ignoring all ca's as your advice suggests.
Well, I do have some questions here. First of all, did they foreclose on the mortgage or the note? A mortgage is a lien upon the property and is not a negotiable instrument in and of itself. Plaintiff's often make the mistake of foreclosing on the mortgage but not on the note which is the only negotiable instrument in such an action. They can foreclose mentioning both the note and the mortgage but they have to call the note in order to foreclose on the mortgage. When the note is foreclosed upon and the foreclosure is granted the note no longer exists as a negotiable instrument. If the lender wishes to collect on a deficiency balance after sale of the property he must file a separate motion for judgment on the deficiency balance and many states will not allow that at all and others state that the lender must bring action to collect on the deficiency balance within a certain number of days (often within 90 days) or he loses his right to collect on it at all. If the lender has not brought suit to collect on the deficiency balance and been awarded judgment then he cannot assign or sell the deficiency balance to anyone else because he cannot prove that such a deficiency exists. He can claim a deficiency balance and he can sell or assign his claim to whomever he chooses but how is that other party to prove the debt? Of course, if the borrower isn't aware of all of that and more then they may not even show up for court and default judgment would be granted. There are a lot of ramifications here that need to be looked at in order to formulate a viable defense if indeed one exists.
Well let me try to explain in more detail the facts that i'm aware of. the 1st mortgage holder (lender) filed for the foreclosures of both properties, and granted the deeds over to the trustee(law firm) to carry out the foreclosures. The 1st mortgage holder also was the highest/only bidder at foreclosure auctions, and then the deeds were transfered over from the trustee to the 1st mortgage holder. because the bid was only enough to cover a portion of the first mortgage, the 2nd lien was released from the title as a result of the foreclosure. this all occured in december of 2006. fast forward to feb 16, 2007, and i receive letters from the 2nd mortgage holder saying that the servicing of the loans has been sold to company XYZ. i also receive letters from company XYZ that the servicing of the loan has been transfered to them. i talked briefly on the phone with company XYZ and they said that they haven't even researched the details of my accounts yet, and how this specific lender dumped over a 1000 accounts on them just recently. they also said that my accounts were not sent over to their "collections" department, but to their loan servicing department (they weren't even aware of the foreclosures yet). i told them about the foreclosures, and his response was that in this case, these accounts would be then converted to unsecured debt and forwarded to their unsecured debt collections department. so.... the OC has not filed to pursue a deficiency judgment in the courts. they have simply sold off the debt to this new company. however, the lien (not sure about the "note", or the technicalities of foreclosure) no longer exists on the property, and i also am no longer on the title/deed neither, due to the foreclosure. can they simply convert the debt to an unsecured debt and pursue collection on it? of course the CA is going to tell me a resounding "yes" i am about to mail in a validation of debt letter. would this be a good idea? Thanks
