Mortgage Foreclosure Question
Date: Mon, 03/29/2010 - 11:12
I live in Michigan. My husband and I bought a home back in 2003. In 2006, he was laid off and our 3 year ARM with HSBC kicked our mortgage payment up by $389. Suffice it to say, we couldn't afford the house, fell behind on the payments and our home was foreclosed. It was a nonjudicial foreclosure; the house was sold back to the bank and they later sold it for $23,000 less than our mortgage. We just had the one loan.
I stressed and worried about deficiency judgments and wrecked credit for months, but I was advised that if the bank pursued a nonjudicial foreclosure, a deficiency judgment was unlikely because in Michigan former homeowners can use the fair market value defense.
We moved to an apartment, my husband got another job in 2008 and we're doing pretty good. I hadn't heard anything from HSBC after the foreclosure. Still, I knew that our credit had suffered and I decided to really take a look at our finances and work to improve our credit for the future.
Well, there's a collection listed on his report for ~$23,000 for a collection agency that bought our debt from HSBC. We never got any 1099 (A or C) forms from HSBC. Outside of the usual foreclosure notifications and notice of the sheriff's sale, we never again heard from HSBC or any collection agency.
I was prepared to go to court and deal with a deficiency judgement, but I'm really not sure how to deal with this. I didn't even know that this was a legal option. I had heard of 2nd mortgage charge-offs that could be sold to a collection agency, but this isn't one.
I guess I need some advice.
Michigan isn't an anti-deficiency judgement state and hence the
Michigan isn't an anti-deficiency judgement state and hence the lender can get a deficiency judgement against you as long as you're able to pay.
Thanks for responding, SC! I understand that Michigan isn't an
Thanks for responding, SC! I understand that Michigan isn't an anti-deficiency judgment state. I knew that when they foreclosed and I understood that I could go to court to defend against any outrageous deficiency by establishing the fair market value of the house when it sold.
But they have not pursued a deficiency judgment against me. It was a non-judicial foreclosure. From what I understood (and maybe I'm wrong?), they would have to take me to court to establish a deficiency. HSBC has charged off the difference between what I owed when they foreclosed and what they sold the house for after they bought it back in the sheriff's sale and sold the debt to a collection agency.
I'm just trying to figure out what my options are or if I'm totally off base here.
Do I just approach this they way I would any collection agency: validate, try to settle, etc. or is it even legal for them to do it this way?
I think the lender has simply charged off the account and has so
I think the lender has simply charged off the account and has sold it to the collection agency. This is not a deficiency judgement against you.
Quote:
Do I just approach this they way I would any collection agency: validate, try to settle, etc. or is it even legal for them to do it this way? |
Yeah, ask for validation.