Re: Ocwen bought my second mortgage after the foreclosur
12-26-2012 03:51 PM
Long story short, my ex-husband went out for milk one day in 2008 and never came home. He's not dead, he just left, with all the money from the bank accounts and the escrow account and of course none of the bills. The house was foreclosed on 1/2010 (After I fought the good fight for two years trying desperately to save it). It was an 80/20 loan through Saxon on an arm. My credit report says that the first mortgage is settled for less than owed. However, about 6 months after the foreclosure, OCWEN loan servicing showed up on my credit report. They are reporting the second mortgage as a real estate loan, that I owe $30,168 (The total of the second mortgage) and that I am $16,000 behind. They are reporting the account as open and active and 120 days late. They report this once every three months. So basically I'm 120 days late x 3 years. And they do not have the date of last activity noted on the account which would have been July/2008 (I started the loan modification process). Can they do this? Don't they have to charge off this account at some point? They don't call me, they don't send me letters, they don't do anything except report this account as 120 past due on my credit report once a quarter. Should I just dispute this? I wonder if they have any proof of this account because of what appears to be an incorrect and kind of shady way of reporting it. This is the only thing holding up my credit score. Before my ex-husband came along my credit was outstanding and the only scar on there is this foreclosure. My scores are - TU: 557 EX: 643 and has pretty much been in that same place for over 2 years. I 've heard OCWEN can be very difficult to deal with.
There is quite a bit of debate about the legality of them reporting it as open. A lot of it depends on whether you are in a non-recourse state or not. What state are you in, and is this the original purchase money loan?
If you are in California, and it is purchase money, then they can not sue you for deficiency. In California, case precedent states "for a purchase money mortgage or deed of trust the security alone can be looked to for recovery of the debt." That means that if the primary lender foreclosed on the security (the house), then the secondary lender is SOL as far as collecting goes. They can't sue you, as long as it is a non-recourse purchase money loan.
But here's where it gets sticky; Ocwen recently settled a class action in California in which they were accused of misleading billing practices because they were still sending bills to people who had been foreclosed upon, and allegedly threatening legal action even though they would not be allowed to under the law. It stands to reason that if the security is removed, the debt is extinguished, and that is the argument being used by those suing to stop the reporting.
However, another superior court judge recently dismissed a case in which Ocwen was being sued for reporting the account as open, even though it had been foreclosed. Ocwen's position was that they may not have the right to sue, but an agreed to debt had not been paid and they were not reporting incorrectly. The judge agreed with them. The last time I looked at this, the second case was being re-filed a little differently. I'm not sure if or how that panned out... but if precedent is set (instead of the case settling) it will have implications on your future ability to get this removed through legal action.
In California it appears that a foreclosure of a purchase money loan on a home means that any further payment is voluntary. Voluntary, meaning they can't make you pay. By extension, any attempt to collect a debt is an attempt to make you pay. But, the debate is still open as far as whether reporting you delinquent is a collection activity, or an atempt to make you pay. We both know why they are doing it - they want to ruin your credit and make you pay. But they will claim they are just reporting the facts of an open account.
If you are in a non-recourse state, your first course of action would be to dispute this with all 3 CB's, in writing by mail, stating that the home had been foreclosed and the account is closed. If possible, go to your local county clerk and get a copy of the papers showing the foreclosure and the lender's loss of security. Include that in your letter to each of the CB's, and ask that the account be deleted, or updated to show closed as of the date of foreclosure. Ocwen should not verify it as open.
If that doesn't work, your best bet is likely to seek legal assistance. You might be able to find an attorney to take it on contingency. But be warned; the final word on this has not yet been set down by the court. The security is gone, and by extension the debt is gone, but Ocwen has a justifiable argument for reporting, if not one for collecting. Your attorney will have to know their business.
If you are in a state that does not have non-recourse protections, don't poke the bear. Ocwen could decide to pursue a judgement against you.
Remember, I am not a lawyer. I don't even play one on TV.. so you should do some homework about the details of your loan and your state laws before following any of my amateur advice. I only know some of what is going on in California, and other state's courts might see it completely differently.