Am I liable for the transferred secondary mortgage used to purchase a home that foreclosed?

I bought a home with an 80/20 mortgage and it was foreclosed on 2 years ago. The secondary mortgage was transferred to a collector and has since been put on my credit report as a “collection account” scheduled to continue on record for another 2 years. Because my state iis an anti-deficiency state, am I still liable for this even though I foreclosed? The letter I received today from the collector says I have 30 days to dispute the debt or else they will consider it valid.

Asked on October 27, 2011 under Real Estate Law, Arizona

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

From what you have written, it appears that the second loan secured by a second trust deed on the home that was foreclosed upon was a purchase money loan as part of the 80/20 initial purchase. If so, and due to the fact that your state has antideficiency laws regarding purchase money loans, their should be no recourse (obligation) owed to you regarding the second loan.

I would write the third party collection company what I have written and advise it that the pursuit of you further could subject it to unfair debt collection practices.

You should also consult with a real estate attorney about the question that you have written about.

Good luck.


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