Mother bought house in 03 for 18K refinanced one time. The collection Co claims she owes 38K sent cert letter of dispute and request original docs in Nov have not heard from collection company. Loan sold multiple times and don't know who currently holds the loan. Since they have not provided any docs to verify debt what is her next step. Fair MV is 18-22K for a home in this area.Is she still obligated to pay the loan if they do not provide documentation to verify the ownership of the loan to a collection agency? Who does she make payments to or how does she find out where to make payments? Her credit score is mid 400-low 500 unable to get loan. She is now able to resume payments but is a year behind in payments. She can not find any docs in her files. Collect Co ignorant rude with her.
It's unclear from your description of the situation whether a debt collector or a lender is trying to collect from your mother. Whichever it is makes a big difference. Secured creditors, such as mortgage companies, have the right to take the collateral that secures the debt (such as a house or car). Unsecured creditors can yell and scream, but they don't have the right to take a specific piece of property from you and sell it. If your mother is a year behind on the mortgage, however, it's likely this collector is or is acting on behalf of her mortgage lender. Unless she can work out a deal, the lender is probably going to foreclose. At that point, her best bet may be Chapter 13 bankruptcy, to try to catch up on the past-due payments.
In the meantime, under the Fair Debt Collection Practices Act, if a person disputes a debt, collection efforts must stop until the creditor provides verification of the debt. Thus, for now your mother shouldn't get any requests for payment - at least not until you get some verification in the mail.
You should check with a local real estate agent to see how to obtain the relevant documentation (original loan documents, transfer of mortgages, liens placed on home, etc). Once you have this documentation contact a local debt collection attorney to determine your options. If the Collection company has violated federal law (used hostile tactics in an effort to collect a debt) she maybe entitled to economic compensation. But don't delay-the statute of limitations (deadline for filing) this type of lawsuit against a debt collector expires quickly. Good luck.
It may be worthwhile for your mother to explore a possible foreclosure defense. In situations where a mortgage loan has been sold, it is not uncommon to find problems with the documentation that support a defense to the foreclosure action. For example assignments or other documentation may be missing or improperly executed, calling into question the right of the current creditor to foreclose. (Even in cases where the debtor is dealing with the original creditor, errors are fairly common.) In addition, some of the creditor's actions may be violations of the FDCPA and the Pennsylvania Fair Credit Extension Uniformity Act.
In the alternative, as my colleague noted, Chapter 13 bankruptcy would allow your mother to catch up on the back payments over three to five years. However, she would need sufficient income to make both the Chapter 13 payments and her current house payment.
On the other hand, if the creditor's claims are correct, your mother may want to consider whether it is worthwhile to retain a house that is that far under water. Perhaps surrendering the home in Chapter 7 or simply allowing the foreclosure to go forward is a better option in this situation.
I suggest that you speak to a Pennsylvania attorney who understands both foreclosure defense and bankruptcy.