April 11, 2009

HELOC After Foreclosure

My situation is so complicated.My lender has failed to respond to my qualified written responses on my two home loans.I have recently received a 1099A for the first.I  received a notice from a new lender claiming that I must make payments to them on the second(HELOC).I no longer live on the property and have learned that there maybe a new tenant/owner.Am I required to pay the second if the first was foreclosed on?Do I have a viable claim of vioations of tila/respa since the lender GreenPoint Mortgage has failed to respond to the Qualified written requests on the two loans prior to the foreclosure? should I sue the lender?Any suggestions or advice

Kels

———

Hi Kels,

I’m thankful that you’ve posted on receiving a 1099 after a foreclosure.  Many people are unaware that the 1099 applies to a short sale, deed-in-lieu, and a foreclosure.  My preference of course is the short sale; hence, my picture on the right side of the blog saying ‘Paul Buys Short Sales’.  Ok, enough about the first mortgage and enough about me, onto the second mortgage…

You ask: “Am I required to pay the second if the first was foreclosed on?”

The answer is quite possibly yes.  In general, when a first mortgage forecloses and the property isn’t worth enough to pay off the first, the second mortgage has its lien extinguished but the balance is still owed and the promissory note is still in effect.  A number of consumers have been writing in to the Broken Credit Blog with similar anecdotes.  This is another reason why I feel it can be beneficial to negotiate a short sale.  It can be negotiated for the second mortgage to receive a settlement in full at closing and this can at times be accomplished without a penny from the homeowner/seller.  But you’re writing to me after the fact and it is what it is, so let’s see what can be done.

The second mortgage ‘new lender’ you mentioned is required to abide by the Fair Debt Collection Practices Act (FDCPA).  This means, inter alia, they would have to send you a notice of your validation rights within five days of their initial communication.  I would exercise my rights under the FDCPA by sending a CMRRR letter along the lines of ‘please accept this as formal notice that I dispute the amount of the debt and am requesting verification of the debt per the Fair Debt Collection Practices Act including a written itemized transaction account history and evidence that you have the right to collect on this debt by way of the original promissory note’.  I’d also keep a collection communications log.

Then, if there was something inaccurate about the tradeline, I’d dispute the inaccuracy under the Fair Credit Reporting Act (FCRA).  Each time they falsely verify it’s 1681s-2(b) violations for $1,000 per tradeline per bureau.

Now we’re back to your RESPA Section 6 violations for not responding to your Qualified Written Requests.  Should a lawsuit be filed?  If it were me, I’d wait until I had a half dozen violations for the FDCPA, FCRA, and RESPA and then send a demand letter for a settlement and pay for delete.  But that’s just me and this isn’t legal advice.  You should probably do some more reading.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Comments are closed.

Back to Broken Credit Blog