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Ohio Short Sale - 2nd Mtg deficiency


janOHIO000
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Hello,

I completed a short sale in July 2010, with 1st mtg releasing lien and forgiving the balance. 2nd mtg accepted about 10% of principal from buyer to release lien, but in the letter they stated they expected to receive remaining balance.

It has been a little more than a year since the short sale, and I have not heard anything from the 2nd mtg company. I have no intention of reaching out to them either. The entry still shows on 2 of 3 CR's as a delinquent account.

I have been trying to find some info on Ohio laws for SOL on short sale deficiency balance, but I'm not getting any clear answers. At what point can I be sure I am free and clear of the old balance? I want to try to get it off my CR's, but I don't want to stir up any activity that might cause them to contact me for repayment.

Thanks in advance for your help!

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  • 3 months later...

Bumping due to recent development...

Just received a letter last week from 2nd mtg company. They are demanding payment or else they "may" seek legal action.

What is the SOL for collecting short sale deficiency balance? ORC 2305.04 seems to indicate 21 years. But ORC 2329.08 makes me think it is actually only 2 years. Can anyone provide any clarification?

Also, if it is only 2 years... how can I stall this until July when the 2 years expires??

THANKS!!

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.....In the letter they stated they expected to receive remaining balance.. Big Mistake....
.....possibility you can be sued for a deficiency balance - but it may not happen.

Many times, the lender will want to avoid throwing good money after bad, unless the balance is significant.

..attorney's rarely touch an amount under $10,000. It takes a year to get this to court, you file bankruptcy, they get paid nothing..:evil:....

Bumping due to recent development...

Just received a letter last week from 2nd mtg company. They are demanding payment or else they "may" seek legal action.

What is the SOL for collecting short sale deficiency balance? ORC 2305.04 seems to indicate 21 years. But ORC 2329.08 makes me think it is actually only 2 years. Can anyone provide any clarification?

Also, if it is only 2 years... how can I stall this until July when the 2 years expires??!!

Noting the amount of $2329; them saying they "may" seek legal action. A lot of this is hot air at this point. Considering Ohio is a judicial state - anything they do will have to go through the courts. It can be very expensive for them to pursue.

My advice is to settle it now, because it will be easier and less costlier to take care of it now than the future. It is in your best interest to settle for less (getting a letter stating "Settled As Agreed").

It is all how you negotiate - speak to them crying hardship and poverty. Mention you are considering Bankruptcy (I do not recommend BK - just say you are). Then say a family member is looking to help you to settle for less. ($600 is where I'd start, paying no more then $700).

If you file chapter 7 they get nothing. Saying a family friend is looking to help you, you do not have to furnish any income, banking, or financial statements.

Your other option is to do nothing and hope for the best. Sometime in the future when this grows into a larger amount. It could cost you more to settle, and be harder to settle.

Good Luck....:)

..

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OP, what is the apprx amount they are seeking?

Right now its an unsecured debt because the collateral was sold in the short sale last year. That is good for you because this is an unsecured loan, just like a regular credit card loan. The lender has lost its 'power' to foreclose on you. Some people have negotiated with these types of loans for pennies on the dollar (10% to 30% is common). But, I can't answer your question about the time they have to come after you as I haven't found it yet.

Is it the actual lender that sent the letter or is it a collection agency? Most of the time these lenders send it to collections after one or two letters.

One more question, was this a 2nd orginated by a credit union? They are less likely to be cooperative in any sort of negotiation for pennies on the dollar.

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I agree with posters above with regard to the fact that the lender will most likely never sue you, but they will certainly be a real pain in the neck trying to collect. For that reason, try to negotiate a small payment as consideration in full.

With regards to the question regarding SOL, this was a short sale and not a judicial foreclosure. Only judicial foreclosures give rise to a statutorily defined "deficiency" that time bars any civil action on that deficiency two years following the judicial sale.

2305.04 gives the 21 year SoL for reocvering titkle to property (not applicable). 2329.08 gives a short two year window for deficiency judgment holders to execute on you, starting from the date of judicial foreclosure sale (again, not applicable because there is no deficiency judgment holder and there is no judicial sale).

In my opinion, this is a simple contract in writing. Therefore, your creditor has a 15 year SoL to work with. Better than 21 years, but to my knowledge that is the longest I've seen across the country.

Lawriter - ORC - 2305.06 Contract in writing.

It is a relatively small sum of money in the big picture, and you may be able to negotiate it down 75% or so and "pay for deletion" from your credit reports. That's the route I would take. You may not get sued, but I wouldn't want this thing over my head for the next 15 years collecting interest anyway. 14 years from now, you may be much better off and the collection amount may be three times the size. In that case, an attorney may calculate that it is worth their effort to take you to small claims for $8,000 and potentially snag some assets. Peace of mind is worth $500 now if you can get a settlement. And maybe they'll delete the credit report tradeline as a bonus. Tell the CA or JDB to take it or leave it. My guess is they'll take it because they likely value your claim at less than 10% of face value at this point.

Good luck.

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Thanks everyone for the responses. The amount is north of $70K, and the debt is now with a CA (Real T!me Res). They took it over prior to the short sale, and they were the party we negotiated the short sale with. They collected about $7K to release the lien, but they did not forgive the deficiency.

jq26 - are you certain that the short sale would not be considered a "judicial sale" to comply with ORC 2329.08? I would like to believe the SOL is 2 years on this debt.

In their letter, they say the are willing to work out a solution that includes installment payments or settling for a fraction of the balance. I'm afraid to call them though, because that fraction could be anything from 10%, 50% or 90%.

Any other thoughts on what strategy should be here?

Thanks again...

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I was led to believe that the amount owed was less than $2500 by a previous post. My mistake!

jq26 - are you certain that the short sale would not be considered a "judicial sale" to comply with ORC 2329.08? I would like to believe the SOL is 2 years on this debt.
Judicial sale refers to real property being sold at a foreclosure auction by the sheriff's office (or their agent).

But I do NOT practice law in Ohio, so this is a laymen's opinion. And being that the amount on the line is much more significant than $2500, best to confirm with local consumer attorney before making an assumption.

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