6 Months after foreclosure sale

[313]

What is the name of your state? MI

I thought I had finally put this behind me and began the rebuilding process then BAM!

The Story:

In Late 2005 I had an opportunity in Washington State that I decided to take. Due to many factors in Detroit/MI, the housing market started tanking about the same time. I was able to get a buyer to buy the house short and countrywide refused to approve the short sale. It was only short 5K or so with consessions and realtor fees. Anyway after a 6 month battle to try and get them to apporve the short sale the buyer finally walked away. Countrywide forclosed on it and it sold on OCT 25th 2006. Worst and most stressful experience of my life. 6 months later (April 2007) I start getting new statements for the heloc loan.

98,000 - First Mortgage (Foreclosed and sold on OCT 25th, 2006)
30,000 - Second Mortgage(HELOC)

Had sold for 129,500 (would be short after commisions and consessions.)

I do not believe there was a deficiency judgement at the forclosure hearing. Some one from countrywide said there was no deficiency judement. Not sure how I can verify this. 3 months ago countrywide stated that it was just a computer error that I was getting the bills.

Today when I called after the 3rd month of going through this with them they said it looks like a good loan. Of course I protested and they said that I would have to talk to some one in asset recovery. Said they would call me in the morning after they got answers

So I have the opportunity to buy a new house on contract, but do not want to move forward if I am going to get sued and have my wages garnished then potentially loose again. We learn from our mistakes...lol My credit is already trashed, I do not want to loose again.

Just for info I had a 800+ credit score prior to this and I made payments for several months after I moved while I was trying to sell short. Just some character info.

Questions.

1. If there was not a deficiency judgment can they come after me?

2. How can a loan still be in good standing if the property has been foreclosed and sold 9 months ago?

3. If they come after me for a large amount greater than the amount I had the property sold for do I have a case to minimize the loss?

4. What is going to happen with the HELOC now.

5. If they just made a computer error and started reporting this again against my credit, do I have a unfair credit reporting case against them.

Thanks for any help you can provide.

313

[lcannister]

You will have to find out if the HELOC was satisfied or not. If not then you need to find out where the difference in the first and sale price went.

I suspect there may not have been enough to pay the HELOC after they took 98000 for the loan balance + several thousand in legal fees for the foreclosure and then the commissions on the sell.

You just have to do some research here and be diligent.

that I would have to talk to some one in asset recovery. Said they would call me in the morning after they got answers

Call daily!

[313]

Thanks,

I still have alot of questions, I also keep getting the "eternal runaround of death" talking to the folks at countrywide.

[LindaP777]

"eternal runaround of death" = Countrywide (Sad to say, I have never heard anyone talk of great customer service from Countrywide. They are fine as long as you keep sending them the money, but are hell to deal with if you do not.)

I think you would be better served going to the courthouse and looking at the actual foreclosure case. Give the clerk the case number and she will give you the file to look at. Open it up and the judgement will probably be on top. It will list the creditors in order of who gets paid and how much (the guys at the bottom of the list are usually screwed). It would look something like this (but not as simplified);

1) $XX.xx to (your county) for property taxes (they get paid first)
2) $XX.xx goes to (first mortgage holder) for unpaid balance and interest, insurance, plus attorney fees and other expenses
3) $XX.xx to (second mortgage holder) for unpaid balance and interest, plus attorney fees and other expenses
4) liens (if any, these will all be listed individually)

Add them up. It's my understanding that if the mortgage holders (1st, 2nd, 3rd, etc.) do not get enough to satisfy the balance owed to them, they can still come after you for the difference.

[FlyingRon]

The deficiency action wouldn't take place until after the sale. The foreclosure hearing is just to verify: the lender has a secured interest and that the loan really is in default and there isn't any regulatory reason to stay the sale.

I agree with Lancaster. I suspect it's only the HELOC that you need to be concerned with.

[313]

Ok I have done some more research.

I have requested copies of all the documents reltated to the property forclosure, etc. from the county clerk.

I also have found out that Countrywide did not include the Heloc in the foreclosure.

They sold the house based on the value of the first mortgage not including the HELOC.

The heloc is still a valid loan in countrywides Eyes. I am not sure how this is possible as it is secured by the property.

They started the biding on the house for $30k less than was owed. I know for sure it is going to be way short. This seems very unfair as they should have started the bidding substancially higher not to mention the fact I had it sold for $129,500.

This is going to turn into a real nightmare I have a feeling.

[FlyingRon]

Originally Posted by 313

The heloc is still a valid loan in countrywides Eyes. I am not sure how this is possible as it is secured by the property.

Just because the security interest was wiped out in the foreclosure doesn't mean that the debt doesn't continue to be valid.

[lcannister]

Does Countrywide hold the Heloc loan as well as having held the 1st Mortgage?

How much was made from the sell, how much were the total dues after the foreclosure on the FIRST mortgage? If there was not enough to pay the HELOC loan as well then you are still on the hook for that loan.

3. If they come after me for a large amount greater than the amount I had the property sold for do I have a case to minimize the loss?

NOPE the mortgage company did NOT have to accept your short sale thus it is a non issue except ONLY PERHAPS if this goes before a Judge who makes a final decision on what is owed and what is not.

How much money are we talking here and then compare that to the cost of an Atty to try and fix this and then decide what you need to do.

If they decide to pursue this they can sue and get a Judgment against you then go about whatever means, your state has, to satisfy the judgment.

[LindaP777]

Originally Posted by 313

They started the biding on the house for $30k less than was owed. I know for sure it is going to be way short. This seems very unfair as they should have started the bidding substancially higher not to mention the fact I had it sold for $129,500.

The bidding starts at 2/3 the appraised value (at least her in Ohio) and has nothing to do with the amount owed.

Originally Posted by 313

This is going to turn into a real nightmare I have a feeling.

Yes, I'm sure it will be. Often times, 2nd mortgage companies expect to take a loss. They play the Numbers game, knowing the majority will pay their debt, and at a high interest rate. Even the the house has been sold, and it was not enough to satisfy both mortgages, the second mortgage company may still look to you for their money. I hope you won't need any kind of loan for years to come.

[313]

Both loans wereheldby countrywide. 20k of the heloc was used to purchase the home on an 80/15 + 5% down.

[lcannister]

Originally Posted by 313

Both loans wereheldby countrywide. 20k of the heloc was used to purchase the home on an 80/15 + 5% down.

Unless you can get CC to drop that loan you are still on the hook for it. IF you can prove there were, doesn't sound like it, funds left over after the sale and pay off of the 1st plus expenses you might get the amount they are asking reduced.

It is worth a consultation with an Atty versed in Real Estate to make sure they followed proper procedure in all the paperwork and perhaps work out a repayment play with them on the balance. He or she will even determine if CC can come after you for the balance in your State etc.

I am afraid you can work with CC until you are blue in the face and their reputation is not very good when working on ones own without letterhead or lots of time.

Also if they feel this is a valid debt yet do not want to fool with it they can sell it or turn it over to a collection agency that will make you life miserable. Not telling you anything you do not already know but you need to get this resolved and soon. Even if you get someone on the phone who tells you it has been dropped GET IT IN WRITING OR FAXED TO YOU IMMEDIATELY. Not shouting with those caps just want you to know how important that is!

Good luck, please keep us posted!