Today they demanded us to get a second mortgage to pay to them

[Maria R]

Hello, thank you!  You are so helpful to so many, I read many of your responses to other posts and learned a lot.

We had a home second mortgage with a credit Union but after three times we filled out their forms asking to reduce or reform the monthly payment and they always "lost it" and  we stopped paying when I got sick and lost my income.  The debt was sold to CU Recovery and they were very strong at the beginning, 8 years ago.  In 2005 Hubby had a cancer so payment was difficult and CU Recovery made an agreement with us,  for $20 a month, based on our nonexistent income.  Today they called and spoke to me as if they were still some kind of representatives of Fairwinds saying things like "Fairwinds now decided they are not going to wait anymore and they decided to do a foreclosure"; "Fairwinds lend you the money altogether now they want it all together back so you need to make a second mortage to pay them because your house has some good equity...".  I even responded:  “tell Fairwinds that we always paid on time and they were too greedy to work with us, when we got sick and couldn’t pay them anymore.  Now we have paid on time based on the last agreement and we always want to pay and comply with our side of the agreement, but tell Fairwinds we cannot afford to get a second mortgage  etc.. I played the game of "Fairwinds" knowing it was them.

My question, besides knowing he is wrong kind of  "impersonating" that he works for the bank directly, is to know if they do have the right to start a foreclosure in our home knowing they are a collection agency?  I read they are a bank too?  Do they obtain this right when they get the debt from Fairwinds? Is this possible or not?. 

Also, can they push us to obtain a mortgage to pay themselves?  (this was really weird ... ),  He insisted our house was valued for a super high amount of money and we had it almost paid off so if we didn't want to get it foreclosed we better get that second mortgage, to the point he offered to get me some banks that could give us that loan.  I told him that if he was able to get a bank that would receive $20 monthly as the payment we might have a conversation with them . 

They have doubled the debt and it has been 8 years, we pay every month no fault the $20 agreed, what else can we do?

Best regards, deeply appreciate any time and information you can provide to us.

 

Maria J. Rodríguez.

 

[WhoCares1000]

Are you sure that the debt was sold or that CU Recovery is simply a collector for the Credit Union? There is a difference. Regardless, even if the debt was sold, that means that the buyer takes on the rights and responsibilities of the credit union, including the right of foreclosure.

I assume you made the agreement for $20/month 8 years ago. This was in the middle of the housing crisis which caused property values to fall up to 50%, especially in Florida. Also, because Florida is a judicial foreclosure state, it takes forever to foreclose on a property and in 2012, banks were holding a ton on inventory in Florida. Hence, the credit union and/or their collector was willing to accept anything on the loan.

Now, 8 years later, property in Florida has recovered and most of the inventory from the housing crisis has been sold off. At this point, the credit union and/or their collector wants to now accelerate the mortgage which is probably their right under the contract. The amount owing has more than doubled because $20/month probably did not cover the interest on the mortgage. Also, you probably have been paying on the first mortgage which has built equity.

Now, can they make you get a 2nd mortgage? No. Can they foreclose, yes but they would have to pay off the first mortgage AND they are not going to get full value for the house because it will be a distressed property and sale. Also, it still takes about 2 years to foreclose on a property in Florida. If you can get a 2nd mortgage from another financial institution, you should try to do that to avoid foreclosure. If you cannot get a 2nd mortgage, then they will foreclose and pay off both mortgages and the fees of foreclosure. If there is any money left after all that, then you would get those funds.

 

[WhoCares1000]

Also, to add, you have a few other options other than a 2nd mortgage or foreclosure. The are:

1. Refinance the first mortgage to pay off the credit union
2. Sell the house on the open market and if you can get enough to pay everyone off, do so
3. Sell the house in a short sale and see if the 2nd will accept that as full payment
4. Deed in lieu of foreclosure with the 1st and 2nd mortgage

[Maria R]

Hello  WhoCares1000

thank you for your words of advise and the prompt response very much needed. But still my question is:  can they do all these even though we were still paying the agreement to CU Recovery?  We never stopped paying and now they decide to just close it and Fairwinds decide to charge in full?   Without being in "default" even though it is just $20 that was the agreement, and was based on our critical economical situation after having cancer and all.

 We found out that CU Recovery was acting as a collector, so it is not the owner of the debt, this because they sent us a letter stating that Fairwinds asked them for our account. Also,  Fairwinds stated that we were in default in 2011 and now in February 202 we have to pay in full. 

I have read your responses but, sorry for repeating myself, if there was an agreement can they break it?

Thank you for your time and help.

Best regards,

 

Maria R,

[WhoCares1000]

Do you have a signed agreement or was it verbal? I am betting it was verbal and they are going to say that the agreement was not forever. Even if you have a signed agreement, have you read the agreement in full. There might be a point where the agreement is no longer valid.

But yes, they can start foreclosure proceedings if you are in default of the original agreement. The truth is, anyone can sue your for anything in court. The real question is, will they win and that will depend on many factors.

Again, I am betting that in 2011, which in Florida was still in the middle of the 2008 housing crisis because of Florida's strict foreclosure laws and the huge drop in property values that happened in Florida, they would rather get the $20 than to foreclose. Now, in 2020, with property values recovered and the housing crisis will behind us, they now want their money.

[Clydesmom]

11 hours ago, Maria R said:

We never stopped paying and now they decide to just close it and Fairwinds decide to charge in full?   Without being in "default" even though it is just $20 that was the agreement, and was based on our critical economical situation after having cancer and all.

For just a moment lets put aside the emotion of the trying circumstances that got you to this point and look at this from strictly a business perspective because that is exactly how the creditor is doing it.

What was the payment on the second before default?  If it was even as low as $300 a month that small $20 a month payment isn't even 10% of that.  From a strictly contract perspective even if they agreed to take the $20 payment to hold off on foreclosure it would not have brought your account current and you would still be in default.  Mortgages have an acceleration clause.  Once you defaulted the entire loan came due.  Unless you brought the second mortgage current and in good standing it remains in default with the acceleration clause in effect.

My educated guess is that during the housing crisis, recession and your personal issues they agreed to this believing that over time you would stabilize and bring this ship upright and get the loan current and paid off.  That token $20 payment was not meant to satisfy the loan forever.  I am thinking you went a lot longer than anyone intended for a variety of circumstances on the creditor's end and now after internal audits etc. they have realized that this has gone on way too long and need to close out the account one way or another.

11 hours ago, Maria R said:

I have read your responses but, sorry for repeating myself, if there was an agreement can they break it?

If this agreement was verbal you are in a world of difficulty.  If it is in writing everything depends on what is in the four corners of the document you signed.

My recommendation is that you get to a good solid real estate attorney ASAP and go over everything with them.  Find out who owns what as to the loan.  What the agreement says and what you can hold them to.  And what your options are as far as settling this loan and getting that monkey off your back without losing the house.  You have put too much in to try and do this alone.  Get some help quickly.  This is way more than strangers on a message board can handle and there is too much at risk.