Sunday, March 1, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Collection company letter says I owe $100k from a 2009 foreclosure

By
From page C3 | February 22, 2014 |

Q:  I need some advice. I lost my house to foreclosure back in 2009. I lost my job and had to walk away. I have since gotten back on my feet and am trying to get in a position to purchase a new home. This week, I got a notice from a collection company that I owe my old mortgage bank more than $100,000 plus interest. So I got online and pulled my credit report and, sure enough, there it is with my old bank reporting the debt. This week’s letter is the first I have heard about the money since I left the house. From your columns, I believed that if your house is foreclosed you don’t owe the bank any money. I’m at a loss to know what to do at this point.

A: There are a number of things going on here, so I’ll try let’s take them one at a time.

To begin, I’ve never said that if your house is foreclosed in California you automatically won’t be liable for any money the bank loses, called a “deficiency” in the business.

What I’ve said is if you only have one mortgage, or multiple loans if they are the original loans and you lived in the house, you won’t have liability in almost all circumstances.

However, and it’s a big “however,” if you had more than one loan on the house, there’s a possibility you’re on the hook.

There’s not enough time here to go back through it, but you can look up some old columns on the subject.

Suffice it to say again that it’s very possible a foreclosed homeowner is liable for a deficiency.

To know for sure, I’d have to have more specific information about the financing on your house, when you bought the house, when you got the loan or loans, and the method the bank used to foreclose.

Let’s assume for the sake of argument that you really are liable for a deficiency, which is far from certain.

There is generally a four-year statute of limitations for suing you for non-payment of the debt. The lawsuit would be based upon a breach of a written contract that carries the four-year limitation.

The problem you’re going to encounter is there’s not much you can do about it at this point.

A statute of limitations only helps you if you actually get sued. It’s a defensive measure.

A credit collection company that makes its living by keeping a percentage of any money it collects can continue to hound you, even reporting it on your credit report.

I can’t even begin to count the number of people I’ve spoken with over the past couple of years who have no liability under California law but continue to be pursued by collection companies.

Fortunately for consumers, a new law went into effect in California on Jan. 1 that could help.

Senate Bill 426 is an attempt by the state to stop the type of thing you’re experiencing, but only if you really don’t owe the money.

The law simply reinforces existing laws that already eliminate deficiency liability in a majority of foreclosures.

What the law says in a nutshell is if the foreclosed homeowner doesn’t owe any money under the law, the foreclosing bank cannot say that they do.

In other words, if you don’t owe the money, the bank can’t hound you. Nor can they turn you over to a collection company or report the deficiency on your credit report.

Of course, a law is only as good as your ability to enforce it, which could get expensive.

Under this scenario, it would likely be up to you to sue the bank for violation of SB 426.

You would first have to show that you had no legal liability under existing law. But if you prevailed you would be entitled to collect your attorney fees and costs from the bank as well as the possibility of punitive damages.

On that note, never count on punitive damages as your retirement plan. Despite what you may read in the news, punitives are rare and far between.

So the first thing you should do is determine for sure that you owe no money. Then figure out step two.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at [email protected].

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

Peace and patience: Quilters gear up for show

By Amy Maginnis-Honey | From Page: C1 | Gallery

 
School bands compete in Pageantry on Parade

By Susan Hiland | From Page: A1, 2 Comments | Gallery

 
Calling someone a ‘smoker’ is hilarious

By Brad Stanhope | From Page: A2

Conservancy plans next Quail Ridge Reserve walk

By Susan Hiland | From Page: A3

 
Police seek suspect in armed robbery

By Bill Hicks | From Page: A3, 3 Comments

 
4-H Presentation Day brings fun, education to Fairfield

By Susan Hiland | From Page: A3 | Gallery

 
The agony of the codling moth, ecstasy of worm-free apples

By Christine Macgenn | From Page: C4

 
What you eat can affect your medications

By Marilyn Ranson | From Page: C4

Tri-City NAACP honors community members at gala event

By Bill Hicks | From Page: A5 | Gallery

 
CAASC 18th Annual Chinese New Year and Scholarship Celebration

By Steve Reczkowski | From Page: A5 | Gallery

 
Rollover in Suisun City

By Aaron Rosenblatt | From Page: A5, 1 Comment | Gallery

State schedules ramp closure at freeway project site

By Kevin W. Green | From Page: A5

 
Appointments on tap for Board of Supervisors meet

By Kevin W. Green | From Page: A5

 
NY, SF town house prices through the roof

By Bud Stevenson | From Page: B7

 
Fairfield police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

 
Suisun City police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

Airmen with local ties finish basic training

By Nick DeCicco | From Page: B10

 
Force draws many from South, middle class

By Tom Philpott | From Page: B10

.

US / World

Christie to Calif. Republicans: No rush to pick 2016 nominee

By The Associated Press | From Page: A1

 
US missionary abducted in Nigeria is courageous, friends say

By The Associated Press | From Page: C3

Dress that ‘greatly resembles’ stolen Nyong’o gown found

By The Associated Press | From Page: A5

 
Weekend storm drops snow, rain, hail in California

By The Associated Press | From Page: A5

Churches, synagogues, mosques bear tough New England winter

By The Associated Press | From Page: A6

 
Hyundai recalls 263,000 cars due to power-steering problem

By The Associated Press | From Page: A10

 
Blind dog rescued after being lost for 2 weeks in the cold

By The Associated Press | From Page: A10

Details about proposed national monuments in California

By The Associated Press | From Page: A10

 
National monument supporters in California get antsy

By The Associated Press | From Page: A10, 1 Comment

US drone strike in Yemen kills 3 suspected al-Qaida fighters

By The Associated Press | From Page: A11

 
Greece will not seek another bailout, prime minister says

By The Associated Press | From Page: A11

Attacks kill 37 people in and north of Iraq’s capital

By The Associated Press | From Page: A11

 
Nemtsov a possible ‘sacrificial victim,’ investigators say

By The Associated Press | From Page: A12

.

Opinion

Sound off for March 1, 2015

By Daily Republic | From Page: A8

 
New school funding plan remains on bumpy path

By Dan Walters | From Page: A8

 
Even Gruber deserves a break sometimes

By Megan Mcardle | From Page: A8, 2 Comments

I might just vote for a Democrat next time around

By Letter to the Editor | From Page: A8, 8 Comments

 
Aging Fairfield housing agency faltering

By Letter to the Editor | From Page: A8

Editorial Cartoon: March 1, 2015

By Daily Republic Syndicated Content | From Page: A8

 
.

Living

Today in History: March 1, 2015

By The Associated Press | From Page: A2

 
Community Calendar: March 1, 2015

By Susan Hiland | From Page: A2

With numbers falling, Houston-area nuns’ future uncertain

By The Associated Press | From Page: C3

 
Horoscopes: March 1, 2015

By Holiday Mathis | From Page: C4

Kidney Walk participation helped give me a positive outlook on life

By Kathy Mitchell and Marcy Sugar | From Page: C4

 
.

Entertainment

Take a look – Dr. Seuss has a new book

By The Associated Press | From Page: C2

 
Publisher launches line of Warhol e-books

By The Associated Press | From Page: C2

Q&A: Opera star Deborah Voigt writes of turbulent life

By The Associated Press | From Page: C2Comments are off for this post

 
PUBLISHERS WEEKLY BEST-SELLERS

By The Associated Press | From Page: C2

Review: ‘The Girl on the Train’ has realistic plot

By The Associated Press | From Page: C2Comments are off for this post

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

A year after meeting Tiger, Indian golfer on the rise

By The Associated Press | From Page: B1

 
Jeff Gordon takes a final spin at track that meant so much

By The Associated Press | From Page: B1

Vikings girls looking for first section title

By Paul Farmer | From Page: B1 | Gallery

 
Local Report: Vaca’s Aquino wins Masters wrestling title

By Daily Republic staff | From Page: B1

Phegley hopes his style will catch on in Oakland

By The Associated Press | From Page: B1

 
Environmental activists disrupt meeting by Olympic officials

By The Associated Press | From Page: B2

Hamilton hones Mercedes with fastest time at F1 testing

By The Associated Press | From Page: B2

 
Thunder’s Russell Westbrook has surgery on cheekbone

By The Associated Press | From Page: B2

Anthony Mason, rugged forward of 1990s Knicks, dies at 48

By The Associated Press | From Page: B2

 
Warriors center Festus Ezeli suspended for a game

By The Associated Press | From Page: B2

Reichelt leads Austrian World Cup downhill sweep

By The Associated Press | From Page: B2

 
Players’ union head: future spring games in Cuba possible

By The Associated Press | From Page: B2

Harrington takes 36-hole lead, then more rain in Florida

By The Associated Press | From Page: B2

 
Defending champ Federer beats Djokovic to retain Dubai title

By The Associated Press | From Page: B2

Safarova beats Azarenka to win the Qatar Open

By The Associated Press | From Page: B2

 
Stolen No. 44 NASCAR race car found in suburban Atlanta

By The Associated Press | From Page: B4

Harvick wins Xfinity race at Atlanta for 3rd year in a row

By The Associated Press | From Page: B4

 
.

Business

For many in US, cash saved at gas pump is staying in pockets

By The Associated Press | From Page: B7

 
Fruits and vegetables get a star-studded marketing push

By The Associated Press | From Page: B7

Historic snows causing headaches for real estate industry

By The Associated Press | From Page: B8

 
Nevada casinos keep $953.7 million in winnings in January

By The Associated Press | From Page: B8

Greek prime minister rules out third bailout

By The Associated Press | From Page: B9

 
Boy, 13, builds Braille printer with Legos, starts company

By The Associated Press | From Page: B9Comments are off for this post

Recalls this week: hand trucks, ceiling fans

By The Associated Press | From Page: B9

 
Review: Freedom! These smartwatches leave the phone behind

By The Associated Press | From Page: B9

AP Exclusive: Fuel-hauling trains could derail at 10 a year

By The Associated Press | From Page: B12 | Gallery

 
.

Obituaries

Thomas Browning

By Nancy Green | From Page: A4, 1 Comment

 
Leah E. Hoffman

By Nancy Green | From Page: A4

John W. Van Wart

By Nancy Green | From Page: A4

 
Virgil Albert Hanson

By Susan Hiland | From Page: A4

.

Comics