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deed in lieu of foreclosure initial loaner asking for documents

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adymax
Contributor

deed in lieu of foreclosure initial loaner asking for documents

Hi,

 
We had a refinancing loan in 2007 and the loan was bought by another bank and we did a deed in lieu of foreclosure  in 2010. 
 
Yesterday we received a letter from a law firm representing the bank who gave us the loan initially that the bank who bought the loan from them  is seeing compensation for the loan they got frrom them and they want us to provide income tax returns for 2006-2007 to defend themselves and they mention there that if they have to buy the loan back they may come after us for compensetion. We did the reficing in spring 2007.
 
Have you ever heard of anything like this?
 
Thank You
Message 1 of 13
12 REPLIES 12
ezdriver
Senior Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents

Seek an attorney's advice before responding to the initial mortgagor. Seems to me that your deed-in-lieu agreement would spell out the degree of finality of your obligations after executing the agreement. Also, you need to know if yours is a non-recourse state. I live in Florida, a non-recourse state, so lenders cannot pursue borrowers for deficits.

Message 2 of 13
adymax
Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents

I'm in Illinois:

 

Short Sales and Deeds in Lieu of Foreclosure
Illinois law prohibits a deficiency judgment following a deed in lieu of foreclosure unless the deed in lieu of foreclosure agreement or a contemporaneous agreement states otherwise. 735 Ill. Comp. Stat. 5/15-1401. The agreement would need to specifically state that the borrower agrees to be responsible for a deficiency in a certain amount.

 

What I dont undertsand on what base the inial loaner can come after us when the did the deed in lieu of foreclosure with the bank who had the loan. The bank who had the loan doesnt want come after us but after the originator.

Message 3 of 13
ezdriver
Senior Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents


@adymax wrote:

I'm in Illinois:

 

Short Sales and Deeds in Lieu of Foreclosure
Illinois law prohibits a deficiency judgment following a deed in lieu of foreclosure unless the deed in lieu of foreclosure agreement or a contemporaneous agreement states otherwise. 735 Ill. Comp. Stat. 5/15-1401. The agreement would need to specifically state that the borrower agrees to be responsible for a deficiency in a certain amount.

 

What I dont undertsand on what base the inial loaner can come after us when the did the deed in lieu of foreclosure with the bank who had the loan. The bank who had the loan doesnt want come after us but after the originator.


The lender rights will be transferred back to the original lender in a buyback. Personally, I would not respond to their request ... but I'm not easily scared with legal threats.

 

Message 4 of 13
adymax
Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents

Thank You for your advice. 

Message 5 of 13
Walt_K
Senior Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents


@ezdriver wrote:

@adymax wrote:

I'm in Illinois:

 

Short Sales and Deeds in Lieu of Foreclosure
Illinois law prohibits a deficiency judgment following a deed in lieu of foreclosure unless the deed in lieu of foreclosure agreement or a contemporaneous agreement states otherwise. 735 Ill. Comp. Stat. 5/15-1401. The agreement would need to specifically state that the borrower agrees to be responsible for a deficiency in a certain amount.

 

What I dont undertsand on what base the inial loaner can come after us when the did the deed in lieu of foreclosure with the bank who had the loan. The bank who had the loan doesnt want come after us but after the originator.


The lender rights will be transferred back to the original lender in a buyback. Personally, I would not respond to their request ... but I'm not easily scared with legal threats.

 


Not responding to legal matters is not a good idea.  They don't necessarily just go away.  This is how people end up with default judgments and a whole host of headaches when they actually have valid defenses.  Yes, there is a difference between this request and an official complaint/summons, but I would take this seriously.  Consult your agreement to see if it provided for deficiency, consult with an attorney.


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Message 6 of 13
ezdriver
Senior Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents


@Walt_K wrote:

@ezdriver wrote:

@adymax wrote:

I'm in Illinois:

 

Short Sales and Deeds in Lieu of Foreclosure
Illinois law prohibits a deficiency judgment following a deed in lieu of foreclosure unless the deed in lieu of foreclosure agreement or a contemporaneous agreement states otherwise. 735 Ill. Comp. Stat. 5/15-1401. The agreement would need to specifically state that the borrower agrees to be responsible for a deficiency in a certain amount.

 

What I dont undertsand on what base the inial loaner can come after us when the did the deed in lieu of foreclosure with the bank who had the loan. The bank who had the loan doesnt want come after us but after the originator.


The lender rights will be transferred back to the original lender in a buyback. Personally, I would not respond to their request ... but I'm not easily scared with legal threats.

 


Not responding to legal matters is not a good idea.  They don't necessarily just go away.  This is how people end up with default judgments and a whole host of headaches when they actually have valid defenses.  Yes, there is a difference between this request and an official complaint/summons, but I would take this seriously.  Consult your agreement to see if it provided for deficiency, consult with an attorney.


Like I said, I am very comfortable choosing what gets a response from me and what doesn't. You did notice that I gave the same recommendation to the OP that you have right? My opinion is that the mortgagee has an obligation, as defined in the mortgage, to the entity currently owning the mortgage ... not to any entity that may have owned it at some point prior. I don't pay attorneys to do everything for me but others are free to do so. To your point, it, or may not, be a good idea to respond to every written one received from an entity.

 

Message 7 of 13
adymax
Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents

We are in cotact with a lawyer. Thank you again.

Message 8 of 13
IOBA
Senior Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents

Since you refinanced with the bank (original lender who is now requesting tax returns), wouldn't the bank have copies of at least the 2006 tax returns?

 

I am curious how this plays out.  Please keep updating!

Message 9 of 13
ShanetheMortgageMan
Super Contributor

Re: deed in lieu of foreclosure initial loaner asking for documents


@IOBA wrote:

Since you refinanced with the bank (original lender who is now requesting tax returns), wouldn't the bank have copies of at least the 2006 tax returns?

 

I am curious how this plays out.  Please keep updating!


If it was a stated income/no income verification loan, then definitely not.  Back then, even with full doc loans, lenders rarely asked for tax returns unless you were self-employed.

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Message 10 of 13
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