Keeping the Dogs at Bay

Many of you have emailed us to ask for more information on the Fair Debt Collection Practices Act (FDCPA). A copy of this consumer legislation can be found at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf. You can also use your web browser and get a shorter summary.

One of the main problems with defending yourself against collection agents trying to make you to pay a short sale or a foreclosure deficiency is that there are so many different players involved!

As a former bicycle riding paper boy, let me expose for you some of the Key Players:

Big Dog 1: Your mortgage Company

Pack Dog 2: Governmental Insurer of your loan (VA, FHA, VHDA)

Pack Dog 3: Private Mortgage Insurance Company. (Big Dogs 2 & 3 are jealous of one another and rarely run in the same pack)

Old Fat Dog struggling to keep up with the pack: Private Investor who funded your mortgage originally or perhaps invested in a pool of loans that included your mortgage.

Little Yipping Dog out in front of the pack but not likely to bite you until the big dog gets there: Mortgage Servicer who is doing all the lead work for the other dogs.

Whelp Dogs: Collection Agencies who buy the debt from your lender after they lose interest in you.

Why do I bring up all these dogs? Any single dog can be trusted and domesticated with a little love and a treat. But in a pack, these dogs working together can run you down and make your feel hopelessly surrounded and outnumbered. If you have plenty of time, tenacity, and resources, you can defend yourself. Sometimes you need the help of Animal Control (think an attorney)!

Make your strategic decision on how to defend yourself at the first signs of the dog pack coming after you. If you are careless with your personal information, you can give the collectors enough information to be a road map to your remaining assets. They often use the “good guy, bad guy” strategy to make you let down your guard with such lines as: “You probably qualify for relief from this debt or at least a discount, but we need you to fill out an application (or give us your bank statements and tax returns) so we can make a decision.”

Rarely will your collector want to discuss the legitimacy of the debt. But in fact the first thing you are entitled to is a written verification of the debt, it’s legal basis and how it was calculated. Even less likely is that the collector on the phone might acknowledge any of your defenses, e.g., that your debt originated in an “election of remedies state, like North Carolina”.

Unfortunately for residents of the Old Dominion, Virginia is not such a state. As a general rule, a lender can foreclose and still sue you for a deficiency, the size of which the lender actually controls by their foreclosure technique and strategy! For those who have lost a house in Virginia in foreclosure or sold their home and paid the mortgage company(ies) less than they were owed, the issue of whether there is a legal deficiency to be collected can be complex. Given the number of dogs in the pack, who may each have their own policies on deficiencies, sorting out your legal defenses to a deficiency collection may require an attorney. Only Pack Dog 2, the government, can set a deficiency policy that actually protects you from the deficiency policies of the other dogs. The rest of the pack do not have to show any consistency or integration of their deficiency policies! Confused? Give a call to dog loving attorney, Hunter Hanger, for a consultation on how to keep the pack of dogs in your life at bay! (757)467-7600.

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