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Collection Agencies Buying Up Foreclosure Debt.

From: NewsGeni.us

April 20th, 2010 •

There is a potentially scary and brutal development on the horizon for those that have been through a foreclosure and have 2^nd mortgages or home equity loans they have walked away from.

This debt is being sold to collection agencies by the lenders in instances where those that have been foreclosed upon have not gotten all parties to waive the right to collect in the future.

I have to tell you, this is pretty chilling to me.

Imagine going through the trauma of the a foreclosure. You have gotten your life back together and your feet underneath you. Then the phone starts ringing with collectors threatening you with wage garnishments or repayment plans for tens of thousands of dollars.

While technically this is a valid debt, the reality is that the former homeowner probably had no idea secondary mortgages or home equity loans could come back and get them. They thought that the foreclosure incident was done and the damage to their credit and reputation was over.

Folks, if you are in foreclosure or getting close to it, find a good real estate attorney to walk you through the process. They may be able to get all parties to waive their right to collect in the future or find alternatives for you that could not chase you far into the future. The cost of the attorney will be more than paid back in the pain you can avoid over the long term.

That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales.

If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.

“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center.