Posts Tagged ‘statute of limitations mortgage’

Collection Calls by Second Mortgage Lender After Foreclosure by First Mortgage

Monday, October 11th, 2010

Question:
My home was foreclosed two years ago and the second mortgage lender calls every day.  What should we do?  We don’t want to become two-time losers in declaring bankruptcy a second time.

My response:
Bankruptcy is often the last option a consumer should try, after all other options have been unsuccessful or will clearly not work under the circumstances.  I discuss the options to people with a debt collection lawsuit on the first video at: www.stopcollectionlawsuits.com.

If no payments have been made in over two years, there is a chance that the mortgage lender or loan servicer may determine that you are truly unable to pay.  Thus, they might not bother suing you in a debt collection lawsuit or retain a debt collection lawyer based in California. Once the statute of limitations expires on those mortgage debts (four years from the date of your last payment under California law), you don’t owe it and they may not get a judgment against you on the debt. See my blog entitled, “Bankruptcy Alternative: The Don’t Pay a Dime Strategy.”

I have had one call from a consumer who was being told the debt collector of their second mortgage for $50,000 was willing to settle for $5,000. Once the second or third mortgage is unsecured by foreclosure of the first mortgage, the consumer is likely to be a good candidate for bankruptcy or have a sound defense to the lawsuit, which makes the lender willing to accept a fraction of the total balance owed in many cases.

Also, be sure to keep track of the calls and what is said.  If the calls or their frequency are harassing or abusive, that may violate the Fair Debt Collection Practices Act. The Act provides an award for your damages and attorney’s fees.

No one in these challenging economic times is a loser, if they learn their rights and know what options are available and the pros and cons of each.