MH,
I'm very interested in hearing more details on this! It's the first time I've heard of a lender pursuing anything. Don't suppose there's any way you could attach the paperwork they sent, covering up/blacking out private details of course, so we could see? My guess is they're playing chicken with you. How long since your Notice of Default was filed? Has the sheriff sale already happened? I should be receiving my NoD in a couple weeks on a recourse refi'd loan in CA., will continue to document everything that happens with mine in a thread a created about a month ago that hasn't been updated because nothing's happened yet
Good luck, and I hope they're just playing hardball. I'd hardball them back that you need to work something out or you'll simply be forced to file bankruptcy - not cheap or timely for them.