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socrateaser
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 33377
Experience:  Attorney and Real Estate broker -- Retired (mostly)
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Good day/Evening, Quick question regarding an upcoming foreclosure

Resolved Question:

Good day/Evening,

Quick question regarding an upcoming foreclosure trial.

First, a snapshot: without having the exact numbers in hand, lets figure the following... I purchased a home in 2006 (primary residence, Florida) for 300k. A similar home (slightly larger) sold for 160k a year ago. So, lets imagine mine will sell (when/if i lose the case) for 150K.

I have a main mortgage for 220K and a second for 50K. again, this is for figurative purposes. BOTH mortgages are serviced by the same bank (Bank of America), but owned by different parties (first mortgag is owned by Fannie Mae (after many assignments) and the Second is owned by Bank of New York/Mellon).

I strongly believe we have a "strong defense" this time around, but i can imagine its a matter of time.

The "Servicer", Bank of America, is offering not to pursue a deficiency judgement for the remaining amount (the difference between the amount the house is actually sold for and the owed amount).

The question is: Does this offer typically cover the second mortgage (50K) which is also serviced by the same bank? In your opinion, is this a scam or is it legitimate?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  socrateaser replied 1 year ago.
Hello,

The loan servicer can compromise the debt of any lender that has assigned the loan to the servicer. So, if the servicer is agreeing to provide you with a release from further liability for both of the deficiency loan balances, as part of some settlement agreement, then such an agreement would be valid and enforceable.

Hope this helps.
Customer: replied 1 year ago.

Thank you for your prompt reply.

 

Just to clarify, if they service both mortgages (first and second), do they have the right (or ability) to work on both "accounts" at once? What i mean is, can they promise to release alll rights on the second while they are actually still pursuing the first? I hope the question makes sense

Expert:  socrateaser replied 1 year ago.
Your question makes complete sense. A loan servicer is a person or legal entity that has been appointed the agent for the purposes of servicing a real property mortgage. Among the duties of a loan servicer, may be the act of foreclosing a mortgage in default. Such a person is an agent of the original lender or holder in due course of the promissory note.

Regardless of the servicer's actual authority, an agent impliedly warranties by his/her/its representations to third parties that the agent has the authority to do the things represented. This would include the compromise of a debt owed by a borrower.

So, even if it were the case that the servicer did not have authority to compromise the loan, the servicer would be liable for claiming that it had such authority.

You could ask the servicer to provide a copy of its servicing contract with the lender/holder of the note. I suspect, however, that your request would be denied without further discussion. Ultimately, however, it is common for a loan servicer to compromise a debt, and if Bank of America were to grant a liability release to you as part of a settlement agreement, I very much doubt that it would later claim to have done so without authority -- because that would be a fraud, and you would have a very big lawsuit on your hands.

Hope this helps.
Customer: replied 1 year ago.

Thank again for you reply. How often do they attempt to collect on second mortgages after a foreclosure. I am able, at the moment, to qualify for a Chapter 7, so I can do so now (after getting a credit hit for a frecl;osure and all that goes with it, it seems insignificant), it seems beneficial to do so now........ if they can come after me in 5 years and stretch the credit hit for much longer. But if they do so in rare occasions, it may seem like a risk to take....you thoughts?

Expert:  socrateaser replied 1 year ago.
How often do they attempt to collect on second mortgages after a foreclosure. I am able, at the moment, to qualify for a Chapter 7, so I can do so now (after getting a credit hit for a frecl;osure and all that goes with it, it seems insignificant), it seems beneficial to do so now........ if they can come after me in 5 years and stretch the credit hit for much longer. But if they do so in rare occasions, it may seem like a risk to take....you thoughts?

A: The judgment creditor in foreclosure can wait up to five years, unless a party or the court gives 60 days notice of the failure to prosecute after 10 months from the date of the foreclosure judgment -- in which case, if no motion for a deficiency is filed within the 60 day period, then the case is dismissed with prejudice and no deficiency is possible.FL Rule Civ. Proc. 1.420(e).

Re bankruptcy, if you can qualify, then that would end all of the issues permanently, without further negotiation. It's certainly the "final solution" to debt problems.

Hope this helps.
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 33377
Experience: Attorney and Real Estate broker -- Retired (mostly)
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