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Can a lender try and collect on a second mortgage after a year has passed and I had no knowledge of the obligation?
Ypsilanti, MI
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Posted 6 months ago in Debt / Lending Agreements
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I went thru a shortsale 6/2008 for a 1st and 2nd mortgage. I thought all was settled and nothing was owed. I was not aware of two letters that the title company had regarding letters of agreement-looks like one for the 1st and how funds are distributed and the other for the 2nd and how there was a release of lein for $1,000 and they reserve the right to collect on the balance. Looks like the 1st was settled/closed, but the 2nd looks like a collection could take place and it remains open. How can this be done when I was never aware of this and never signed or made any arrangements for payments. I don't understand this. If the property is not worth anymore than went toward the 1st how can more be collected for the 2nd? I just don't understand this at all!
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Answers (2)
Jeffrey Daniel Larkin
This attorney is licensed in California.
Posted 6 months ago.
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Sounds like you are still bound by the terms of the release of lien on the second you signed even if the property is not worth what is owed on it. Since the second cannot get any value out of the property, they are looking to you. This is also one of the biggest pitfalls of short sales. Whoever helped you do the short sale was doing it for the commission. It used to be the case where consumers claimed predatory lending regarding teaser interest rates, prepayment penalties, etc. Now that the real estate market has crashed, many realtors have started doing short sales. What we are seeing in CA is that these realtors are not explaining things properly or even intentionally omitting relevant information just to close the deal and get their commission. You should always read everything before signing. You seem to indicate there were letters you were unaware of. I would contact your agent and ask why you were never provided copies and also consider getting a consultation from a real estate attorney in your state for options.
LEGAL DISCLAIMER Mr. Larkin is licensed to practice law in CA. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case. joesdbay
Posted 6 months ago.
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We basically had the exact same thing happen to us on our home in CA. We just got our letter from the collection agency today. If you'd like to email me to see if we can figure out how to get out of this mess, feel free. joesdbay@yahoo.com
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