Wages Garnished and Assets Seized from Previous Short Sale and Foreclosure Homeowners
There’s nothing more relieving than finalizing the paperwork and documents on a short sale or relizing your foreclosure is now over. But is it? Short sales and foreclosures mean that the bank or the lender now has to sell the property for less than what was owed on it. Unfortunately, the banks don’t simply want to eat that money and now debt collectors may be coming after previous homeowners for the difference. Two of the biggest government controlled housing financing companies, Fannie Mae and Freddie Mac are now pressuring homeowners to pay whatever they still owe on mortgages, even those that have been in default for years.
This is called “deficiency judgment” and is a legal tool used by lenders to hunt down borrowers that may have had debts for years and sometimes decades on properties that were sold as foreclosures or short sales. It’s a costly investment that may include legal fees and penalties. These debt collectors have gone as far as freezing bank accounts, seizing assets and garnishing wages.
If a debt collector calls you can request an “validation notice” and it must include the amount of debt they want to collect, who they are and a way to disputed if you feel it is not accurate. While you’re on the phone with them do not make any payments nor give them any personal information at this point. Many debt collectors will even threaten criminal charges but be advised that debt cannot land you in jail in this country. You do have a right by law to tell debt collectors to stop harassing phone calls. It sometimes works better in writing but by law if you tell them to stop calling they legally must, however this does not stop the debt collection. They may be able to contact you via written notice or place liens on your property or assets.
Often times, these debt collectors have a case of misrepresented identity because loans and debts are sold and resold so many times. It can be difficult to track down the original borrower. It’s up to you to verify your identity and make sure that these claims are accurate.
Debt collectors and lenders are going after borrowers at this point even years afterwards because they feel that even though they may not be able to pay off the mortgage they may still have enough money to cover deficiency judgments. One major way to get out of this is by declaring bankruptcy, although it has its drawbacks as well. This can harm your credit report for up to 10 years making it difficult or almost impossible to get credit cards, car loans and especially a new mortgage. Borrowers can go on a repayment plan or simply settle the suit with a lawyer.
For more information, please stay tuned to our website or feel free to call anytime with answers to your questions.