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Post foreclosure collection company attemps to collect second loan

Discussion in 'Foreclosure Laws' started by SoCalresident, Aug 20, 2011.

  1. SoCalresident

    SoCalresident LoanSafe Member

    I am in a weird situation. I live in california. My house was foreclosed(non-judiciary) back in november. It was my primary residence, and I had 2 loans

    (80/20). Both the loans were sold to Citi mortgage by the original loan company months after I bought the house.
    Just before the real estate melt down, I paid 10% off the second loan and in the process, refinanced the second loan to a better interest rate with the same bank (citi).

    So now I had 2 loans (80/10) where the second was now a refinanced loan, but both loans still with the same bank.
    I lived in the house for over 5 years, before Citi foreclosed it.
    Citi gave me a letter stating that the second loan was forgiven months before the foreclosure and told me that I do not require a 1099C.

    Just before foreclosing, they sold my first loan to Saxon (which I believe is also a subsidiary of citi), who actually foreclosed the house.

    Recently I got a letter from some collection company who claim to be helping citi mortgage to collect the unpaid debt.

    My few concerns:
    1. Is second loan a re-course or a non recourse loan. If I did not take the money out of the house, but refinanced with the same company, should it not be

    treated as a non-recourse loan.
    2. Can the collection company come after me for the loan deficiency.
    3. Should I contact the collection company. The letter they sent out says that if I do not dispute the validity of the debt, I am assuming that the debt is valid.
    3. Am I not protected under Simon v. Superior Court (Bank of America) (1992) 4 Cal.App.4th 63 law. Citi just before foreclosing selling to loan to Saxon hopefully does not disqualify me from this protection.

    Please advice what do I need to do.
  2. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi SoCalresident,

    If you have not already done so, you may want to ask this question in the following thread as well.


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