Upcoming Foreclosures

California Lending & Mortgage Law?

I took a line of equity from BofA in Aug 2007 and house foreclosed in Nov 2008. We made payments on the equity line till Oct 2008 but when the foreclose proceeding started BofA started penalizing us by adding $500.00 a month to our initial payments of $300 a month. Their explanation on penalty "due to foreclosure the penalty is being added" (even though we were never late on our equity payments). We called BofA and spoke with an agent and told them that we are willing to pay of they remove the penalty. Per BoA " we have put in a request and they will call us back". No one called us back and we stopped making our monthly payments. BofA never followed up and recently a collection agency out of East Cost called us to collect the debt of 52K. My initial loan on the house was 505k 80/20 and then the equity line of credit of 55k. The house was sold in an auction after the foreclosure in Dec 2008. Here are my questions: A: What can the collection agency do to collect the debt? B: Can they sue us in East Cost and we have to defend ourselves out there? C: Can they put a lien on our current property? We are looking forward to hearing form you.

Public Comments

1. A digression. Going into foreclosure is a breach of the contract, subjecting you to penalties. The fact you were current is irrelevant. A). The collection agency, on behalf of BofA, can recommend filing a lawsuit in superior court (amount owed exceeds $25,000). BofA may or may not sue you. B). They cannot sue you in another state. (You have to be served papers properly, and I don't see how another state will accept proper service has been given, if you live in California.) C). After winning a judgment, they can place liens against everything you own that is not an exempt asset. Exempt assets are assets protected by state law or federal bankrupcty law. California has its own bankrupcty laws, so you'll have to do some research. Playing Dutch Uncle. $55,000 is too much money for BofA to leave on the table. I'd bet my right hand they'll sue you. I would take steps TODAY to convert as much of your non-exempt assets to exempt assets as you possibly can. Work closely with a bankruptcy attorney, and then negotiate with BofA. For example, suppose after converting assets, it's clear to BofA that you have $10,000 of non-exempt assets. Offer $10,000 to settle in full. Be prepared to file for bankruptcy.