Expert: Regan Shinski - 2/14/2011

Question
I have a home that has a main mortgage which is FHA insured and a home equity loan which is not insured.  The property is in New Jersey.  I lost my job, spent every penny trying to keep the bills paid until the house sold but it just didn't happen.  I did get a job in another state for significantly less pay and finally came to realize foreclosure was inevitable.
I was under the impression that the home equity holder cannot pursue me until the foreclosure sale happens.  It has been postponed several times and is now about 2 months out.
But today I was contacted by a collection agency about the balance due to the home equity loan holder.  They verbally told me there was a short sale on the property and this was my balance still due.  I disagreed and they said they would mail me a copy of all of their paperwork.  That should be arriving any day now.
- can they actually be coming after me now, before the foreclosure sale?
- could a short sale have happened without my knowledge?  There is a judgement against me ordering the foreclosure sale, but the attorneys for the bank holding the mortgage are keeping me posted on the foreclosure sale date changes.
- what kind of attorney could assist me in straightening this out so I do not accidentally make a mistake that could cost me in the long run?
Thank you,

Answer
Hi Rachel:

I really feel I must preface this answer with the facts that I don't live in New Jersey and am not a foreclose attorney.  However, I will try and answer your specific questions as best I can.  I do suggest further legal advice.

Q.) Can they actually be coming after me now, before the foreclosure sale?

A.)  I believe they can, but it depends on the contract you have with them.  They could be coming after only the late or defaulted amount.  There also may be an accelerator clause which makes the full balance due after certain conditions are met.  The fact that they are in second position on the home actually means they are LESS tied to the home itself and may not be as dependent on the sale of home.  So it really depends on what they are trying to collect and under what provision in your contract.

Q.) Could a short sale have happened without my knowledge?  There is a judgment against me ordering the foreclosure sale, but the attorneys for the bank holding the mortgage are keeping me posted on the foreclosure sale date changes.

A.) They sale could have happened without your knowledge.  Especially if you have moved out of state or no longer have legal access to the property (depending on the legal state of the property.)  In many states, once you have abandoned or been adjudicated to no longer have rights to the property, you will not be on the notification list.  The county should have formal records telling you the status and all briefings that have been filed.  Many counties are automated with these public records online.

Q.) What kind of attorney could assist me in straightening this out so I do not accidentally make a mistake that could cost me in the long run?

A.) In today's market, there are attorneys that specialize strictly in the foreclosure market and that is type of attorney I would recommend.

Good luck, I hope this helps,
Regan

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