Sunday, June 16, 2013

Debt collectors (hired by banks) go after deficiency balances from foreclosures from 2008 crisis

Banks and mortgage companies (and guaranty “companies” like Freddie Mac) are mounting an effort to pursue some persons who lost homes to foreclosure during the 2007-2009 housing crash for “deficiency balances”, particularly when they believe particular homeowners have “walked” from homes where they could have continued paying, or when they believe former homeowners may have the means to pay.
The story by Kimbriell Kelly appears on the front page of the Washington Post Sunday June 16, 2013, here.
Usually the financial institutions hire debt collectors to pursue borrowers, and sometimes sue.  Dent collection companies can form units specializing in these kinds of collections, just as with medical. 

But this was a problem in earlier crises, such as when real estate in Texas crashed in the late 1980's after oil prices went down, helping to precipitate the savings and loan crisis.  In those days, people sometimes could be responsible for deficiencies after unqualified “simple assumption” sales that are no longer allowed under FHA rules. 
James Wiedemer had covered all this in his 1992 book “A Homeowner’s Guide to Foreclosure: How to Protect  your Home and your Rights” (Dearborn Financial Press in Michigan). 

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