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cdmosaic

2nd mortgage sells loan to after foreclosure - possible FDCPA?

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My primary residence in California completed a trustee sale in 5/2010.  The 1st wiped out the 2nd and after the foreclosure I never received any documentation from either the 1st or 2nd again.  The issue I now have is with the company that purchased the loan from the 2nd.  Please note the 2nd was a purchase money loan therefore non-recourse in Cal.

 

In May of 2011 I receive a mortgage statement from Specialized Loan Servicing, indicating past due payments on my home loan.  There was no reference to them taking over the loan from the original lender, no mention that the property had gone through a trustee sale 13 months prior, no threat to pay, just a simple loan statement with the same monthly payment I'd had before but now with 3 years of past due payments owing.  I ignored the statement.

 

In July 2014 I receive another mortgage statement, very similar to the one from 5/2011 only now the amount past due is over $49k.  They are charging me for monthly payments every month since the default in 10/2008 despite the fact that the house completed a foreclosure sale in 5/2010.

 

Now this notice is beyond the SOL in California and there is no statement or verbiage in the letter about this being a time-barred debt.  My question - is this a possible FDCPA violation and if so, is it actionable?

 

One complication for me in this situation is that this month I have received a 1099C from this loan servicer stating cancellation of debt effective 9/2014 and the amount they are claiming is the amount of the original loan from the foreclosure plus 72 months of missed payments and penalties.  I'd love to go after this (insert foul language here) people if I can.

 

Any and all help is greatly appreciated.  The knowledge on this board has helped me a bunch in the past few years.

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Maybe there is a violation of the CA non-recourse rules which could lead to a Rosenthal Act violation but that would be it. I would look to California State law rather than Federal law for this. However, because of the amount of money involved, we would suggest that you talk to an attorney. $200 for 30 minutes consult would be money well spent in this case.

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So, I spoke with a tax attorney who only confused me more, unfortunately.  I'm wondering at this point how to clarify if this 2nd is considered non-recourse?

 

House was primary residence purchased in California in 2005 with 2 loans.  1st for $400k and 2nd for $75k (2nd was used as down payment processed as part of the sale transaction with same lender as 1st).

 

The 1st was refi’d in 2007.  The 2nd was never refi’d – so my understanding is the 2nd is a purchase money loan, therefore non-recourse. 

The house foreclosed in Trustee sale in May 2010.  Sold for $245k.  Never received a 1099A or C from either the 1st or 2nd.

In 2011 the 2nd was sold to another loan service company and they have written of the debt effective 9/2014 (after SOL expired) and issued 1099C, stating that I am personally responsible for the debt.

 

Is there a method to clarify whether or not the 2nd is non-recourse?  I took the loan document to an attorney (tax attorney for 1099C issue) and she felt that since there is verbiage in the original 2nd loan Note stating - “each person is fully and personally obligated to keep all promises of this Note” – that this means it is a recourse loan and I am liable for cancelled debt.

 

Does anyone have resources or advice on how to make this determination?  I was also told since it is a recourse loan I do not qualify for the Mortgage Debt Forgiveness Act for Federal or State and will have to pay the taxes on this debt.  One of my worst nightmares…..this situation never ends.

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You may still be liable for the debt...

 

As you posted, you refinanced the first mortgage but not the purchase 2nd. California's anti-deficiency laws apply to purchase money mortgages. By refinancing, you may have lost your protection under the anti-deficiency law.

 

Additionally, if the 2nd mortgage is over $60k, the law may not apply.

 

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A few years ago, several JDBs were purchasing these types 2nds in California and pursuing them. There is still a handful of cases working their way through the courts regarding these debts.

 

 

You will need to speak with a real estate attorney regarding any potential liability.

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