Deficiency Negotiation AFTER Short-Sale

ILdeficiency

LoanSafe Member
Feb 5, 2013
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I've read some great posts on this site the last few months--wish I had found this website before my short sale.

Unfortunately I did not and am now being pursued for a $130,000 deficiency by my first mortgage lender New York Community Bank.

The process started with me trying to refinance my loan with Amtrust Bank, before they filed bankruptcy. At the time, I was approved for a refinance through their vendor, Quicken Loans, supposedly days before closing. But the approval was rescinded due to the the bank going belly up. NYCB took over the assets for Amtrust, and over the next 12 months, they denied me for a loan modifcation 3 times--claiming that my income was insufficient to qualify. I was told by NYCB that my only option was to short sell.

We found a buyer and NYCB agreed to sell. The short sale approval letter stated: NYCB/PMI must receive the original signed Promissory Note in the amount of $0.00 the day closing takes place. If the amount specified on this line item is $0, only then is a Promissory Note not required.

Unfortunately, we understood this to mean that the future liablity would be $0. However, in the two years since we have closed on the sale, NYCB has continued to report me to the credit bureaus as delinquent on my mortgage (which seems odd to me since at best they now have an unsecured loan, not a mortgage), sent me collection notices and demand letters. However, they have never sent what would be a reasonable payment plan to pay off the balance. They didn't feel that I could afford the $2500 a month in payments (or less since the modified payment shoud have been reduced) but now feel that I can cough up $140,000 to satisfy them. My attorney had contacted them about 6 months ago to see if they would negotiate, but the were unwilling to take anything less than the full balance.

My initial thought was to let this drag on and see if they actually try and obtain a judgment or just eventually settle. However, I can't start to recover in any meaningful way since they are continuing to report me delinquent to the credit agencies. After the short sale, I moved into an apartment building that I had owned prior to purchasing the doomed condo. This building is also underwater with a mortgage at 7.25% that qualifies for HARP. However, due to the delinquency with NYCB I have not been able to get any relief on this property either.

My goal now is to try and settle this with NYCB so that I can move on and start the long road to recovery. I just don't know where to start given NYCB's past indifference. Any recommendations or insights would be greatly appreciated.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
My attorney had contacted them about 6 months ago to see if they would negotiate, but the were unwilling to take anything less than the full balance.

My initial thought was to let this drag on and see if they actually try and obtain a judgment or just eventually settle. However, I can't start to recover in any meaningful way since they are continuing to report me delinquent to the credit agencies. After the short sale, I moved into an apartment building that I had owned prior to purchasing the doomed condo. This building is also underwater with a mortgage at 7.25% that qualifies for HARP. However, due to the delinquency with NYCB I have not been able to get any relief on this property either.

My goal now is to try and settle this with NYCB so that I can move on and start the long road to recovery. I just don't know where to start given NYCB's past indifference. Any recommendations or insights would be greatly appreciated.
Welcome to the forum.

That is very strange they continue to report your first mortgage as being delinquent if the short sale was completed two years ago. It almost seems as if they never officially completed the short sale because it should be reported as "settled for less than full amount." In New York the foreclosure process can take 2-3 years to complete or sometimes more so I would check the county recorder's office asap to ensure the property is no longer in your name.
 

ILdeficiency

LoanSafe Member
Feb 5, 2013
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Thanks, Evan.

I agree it is odd--but I do have a HUD settlement statement and a copy of the deed from the short sale. And county records do list the purchaser as the owner of record. Do I have any options to dispute the fact that they are reporting me late for a mortgage that they have already released the lien for?

I should have been more clear--the property is a condo in Cook County, Illinois (not New York).
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
I agree it is odd--but I do have a HUD settlement statement and a copy of the deed from the short sale. And county records do list the purchaser as the owner of record. Do I have any options to dispute the fact that they are reporting me late for a mortgage that they have already released the lien for?
Yes if the short sale is complete and you only have a single mortgage it should have been reported as "settled for less than full amount" when the sale was closed two years ago. Personally I would definitely dispute this with all three credit bureaus and NYCB to close out this account so you can move on and begin rebuilding your credit score.

Online Dispute Form for Experian:

https://www.experian.com/consumer/ca...E&channel=8342

You must have a current copy of your Experian personal credit report in order to use this service. If you have a copy, please enter the report number listed at the top of the report. If you do not have a report number that you received within the last 90 days, order a current copy of your personal credit report.

Transunion Credit Disputes:

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000
Obtain a free, annual TransUnion Credit Report Online
Phone number: (800) 888-4213

Equifax:

Equifax Information Services, LLC
P.O. Box 740256
Atlanta,GA 30374
For disputes by telephone, a telephone number is provided to initiate disputes on your credit report.

You can find CREDIT DISPUTE SAMPLE LETTERS HERE
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
This is from the FTC:

Correcting Errors

Under the Fair Credit Reporting Act (FCRA), both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

Step One

Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one below. Send your letter by certified mail, “return receipt requested,†so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must
give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you ask, the consumer reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Step Two

Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
 

ILdeficiency

LoanSafe Member
Feb 5, 2013
4
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0
I wanted to give an update and some feedback I haven't seen discussed very much. I made a complaint about the misreporting through the CFPB (consumerfinance.gov). Not only did the lender agree that they were misreporting the short sold loan as delinquent, they confirmed that they were not pursuing the deficiency. That was a huge relief that I was not expecting, especially given that I had received recent collection notices. My credit report was updated within a few weeks and now I know longer have to worry about how I was going to negotiate the deficiency. I recommend exploring the CFPB's process for those people who are receiving unfair treatment by lenders.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Not only did the lender agree that they were misreporting the short sold loan as delinquent, they confirmed that they were not pursuing the deficiency. That was a huge relief that I was not expecting, especially given that I had received recent collection notices. My credit report was updated within a few weeks and now I know longer have to worry about how I was going to negotiate the deficiency. I recommend exploring the CFPB's process for those people who are receiving unfair treatment by lenders.
That is awesome news the Consumer Financial Protection Bureau was able to step in and help you get this matter resolved! Thanks for the update and great job being proactive!
 

rk in IL

LoanSafe Member
Jun 17, 2013
8
0
1
IL Deficiency - Congrats to you! This site is extremely helpful in getting advice on the whole process. I too walked away from a cook county condo. It took Citi 8 months and they have finally just filed for foreclosure 2 weeks ago. My biggest fear is the deficiency judgement and I must admit your situation scared the pants off of me. Thank you for sharing you experiences and the end result. Good luck on your road to recovery!