I am facing foreclosure on my condo in Huntington Beach, CA. I attempted to short sale the property 2 1/2 years ago but ran into processing problems with BofA. Of course I had stopped payment of the loan, otherwise they would not approve a short sale. After so long without paying the mortgage, there is no feasible way for me to bring my account current to stop the foreclosure. I have accepted that I will lose the property and the impact that will have on my credit, but I am now being contacted by another debt collector for the second mortgage of nearly $85,000. I had refinanced once to stop the monthly rate from increasing and all of the money went to that purpose. Then BofA bought both loans from Countrywide. My understanding is that if BofA holds both loans and forcloses on the first, they cannot pursue a deficiency judgement for the second (Simon v. Superior Court). Is that still correct?
Is this your primary residence?
Was all of the money from both loans used to pay off the existing loans for the property (was any money used for anything else like remodeling or repairs)?
Has there been a foreclosure yet of the first mortgage?
***** Please do not push any buttons to rate this Question and Answer at this time -- I am having tech difficulties and I can only use the answer box on my end. I expect that you will respond to this inquiry in a response box and I will give you an answer after that (I am familiar with Simon, and am also making these inquiries to you in order to see if you meet the overall criteria to possibly wipe out a second mortgage).
Hi Mary, Thanks for your help.
The property was my primary residence but I have since moved on and live out of the country. It was never rental property.
The entire loan was used to pay off the first except for enough to cover the loan payments during escrow and fees. I may be able to find that with some research, but I'm guessing $10K. I did do some upgrades to the property also nearing $10K and have those receipts.
BofA has not completed the forclosure to my knowledge, but they have started the process. I was told that my file was reviewed and forwarded to theire foreclosure department, but I can't get any confirmation from them on the status.
Hello again Danny --
I apologize for the delay but we have gone to a new system that queues our customers in the order of their responses -- so I tried to get back to you immediately and found that I had 4 prior customers waiting for me and had to respond to them first. So, here is your answer --
I did take a good look at the Simon case because I wanted to be sure that nothing has worked to overturn it in CA over the past decade and to the contrary I have found that CA is actually working to strengthen anti deficiency statutes. You are very correct here and they cannot pursue you in court for a deficiency payment so long as you can claim that this was your primary residence and the funds were pretty much used for the mortgage (you may not even get to that second question once a court finds that the Simon case applies). There have been a few cases where the lender tries to transfer or even make it look like they have sold the second mortgage to a collection agency PRIOR to the foreclosure and then the lender claims that they are not the holders of both mortgages (or were not the holders of both mortgages at the time of the default/foreclosure) -- from what I could tell at this point, none of the lenders have won on this point in court -- however, there does not seem to be any case law that has gone above the superior court for an appeals court to rule on to take that point and make it into valid law as part of the SIMON doctrine (as it is called in CA). So, I will tell you straight up that what you have here is this -- your lender is playing dumb and cute and the lenders do things like this quite frequently because they want to see if you are knowledgeable and if you will beat them back on these points or will you simply cough up the money to get them to go away. As far as BofA is concerned, if they can get 1 out of 10 consumers in these situations to pay up, then they have made some money (does that make sense?). They are schoolyard bullies, Danny, and they will steal your lunch money unless you tell the teacher and get them to stop. There is also nothing in the law that states that they cannot try to sue you on the second mortgage for the deficiency and try to use these points -- that they "sold" the second mortgage prior to foreclosure -- which is a joke because another lender will not buy a non performing mortgage -- but they could try it if they want to try to make your case a test case or they know you are out of the country and might just pay them money to make them go away. It's how they operate. It should be illegal but it is not.
You can do one of two things with this at this point -- you can sit down and write them a strongly worded letter based upon the SIMON doctrine yourself and tell them that you are aware of what they are trying to do (collect on the second mortgage prior to foreclosing on the first so that they do not run into the SIMON doctrine after foreclosure and be barred from collecting on the second mortgage because they are one lender holding both loans). Or, you can contact a lawyer in the county where the condo is located and ask the lawyer to write them a "cease and desist" letter using the same legal theories ( a lawyer will probably charge you a few hundred dollars for the letter but the lender and the collection agency will most likely back off quicker if you hire a lawyer to do this for you because they will then realize that you have sought legal counsel and have been told of the SIMON by a lawyer). If you decide to write the letter yourself I am giving you a link to the blog of a CA RE broker who seems to have put this whole thing in really good layman's terms -- better than any lawyer's blog I have seen yet -- you have to scroll down about halfway through the page and then you will see where it starts discussing the CA deficiency statutes and the Simon case. Here is that link: http://www.trulia.com/blog/asg/filter/category/Property_Q&A/53 -- You can find a local attorney in that county by contacting the county bar association and asking for a referral to a real estate foreclosure specialist and they should be able to give you several names and there should not be a problem to hire someone to write a letter for you for a few hundred dollars (you may have to talk to a few lawyers to get one but they should give you several names).
I hope that all of this helps. Please let me know if you have any questions.
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THANK YOU !!
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