Non-Recourse mortage loan in active collection status/ was denied for a VA loan????

[Anonymous]

Hello everyone! new to the forum. Okay, Back in 2009 I lost my house to foreclosure, when I purchased the home, i took out an "80/20" mortgage loan, all of the funds were used to purchase the property. In CA, according to CCP580b; in the event of a short sale or foreclosure regardless of how many loans you had against the property, as long as the funds were used to pay for the property, the loans are considered "non- recource loans, and under this regulation, neither the original lender or third party lenders can come after you or sue you for the money. Basically once the foreclosure sale in final, the borrower is not liable. My situation is as follow, I applied for a VA loan and was denied because the 2nd mortgage (non-recourse/purchase money loan) was been reported in active collection status on my CR. Talked to the collection agency, they admitted that given the CA laws on non-recourse/purchase money loans, they cannot sue me for the money and that I'm not liable for the balance. Yet they refuse to remove the derrogatory entry from my CR. The balance on the account is $61,000, and the SOL expired on July 2012. I've sent debt validation request letters to the collection company, they responded with a copy of the original loan application. and still refuse to stop reporting it even though the SOL has ran out. What should I do? Thanks!!

[cclee]

Did you ever refinance that loan or was it the original that was taken at the same time as the 1st?

[Anonymous]

No, both loans were purchase money loans used to cover the purchase price of the home (primary residence).

[cclee]

You will probably need to get a lawyer to write up a good letter, or you could write it yourself, quoting the statutes, and the consequences of them trying to collect.  The 2nds are a real pain in Cali.  

[Anonymous]

Yes, I already sent the first letter, asking the to valudate, in response to that, they sent me a copy of the original loan application. Not sure if that is good enough to validate this debt. Thanks!!!

[cclee]

You're welcome!  You should send another letter (not a validation letter), keep calling, sending letters until they remove it, it's usually easier when a lawyer writes it up.  Good luck!  I take it you never received the 1099c?  

[DallasLoanGuy]

this is more of a legal question..... and i dont answer those.

but you have the right to sue them in your jurisdiction.

might be worth looking into that if you can get a good handle on th legal stuff.

[Anonymous]

Nope, never got a 1099c.

[cim]

The SOL only applies to being able to obtain a judgement. They can pursue collection activity. There's nothing you can do in court short of proving it wasn't your debt or that you paid it. Once the seven year reporting limit passes, you're then golden. 

[llecs]

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@cim wrote:

The SOL only applies to being able to obtain a judgement. They can pursue collection activity. There's nothing you can do in court short of proving it wasn't your debt or that you paid it. Once the seven year reporting limit passes, you're then golden. 

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Ditto. And to the OP, SOL has nothing to do with reporting. Even if they can't come after the debt, they can still report the negative account for as late as 2016, or at least based on a 2009 foreclosure. Not sure when the DOFD was.