can a mortgage company make a loan that was secured, to a loan that is unsecured?
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can a mortgage company make a loan that was secured, to a loan that is unsecured?
I had a 1st & 2nd mortgage with Ocwen Mortgage. My home went into foreclosure in 2007. Ocwen put my first mortgage into foreclosure but not my 2nd. They said since it went into foreclosure it now becomes a unsecured loan & that I still owe the $40k, but they will take $3k. They have been reporting me 120 days late with a $40k balance on my credit reports since 2007. Is this legal?
Asked on June 22, 2009 under Real Estate Law, Michigan
Answers:
J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
I am a lawyer in CT and practice in this area of the law. unfortunately, the short answer is yes. However, i suggest giving them 3K as satisfaction in full. Yes, this will report negatively on your credit, but you will not be exposed to this debt any more. If you dont pay the 3K, the bank can come after you for the 40K and take your money out of your bank account and garnish your wages at work. the judgment they will get will be enforceable for 20 years. I would speak to a lawyer about doing a short sale to avoid foreclosure. dont waste time here.
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