Maryland homeowners shocked by deficiency judgments and collections
The Washington Post reports that “Years after foreclosures, old debt haunts homeowners….Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorney’s fees and tens of thousands in interest that had been accruing for years.” – Kimbriell Kelly
After going through foreclosure, many families assume that the mortgage debt is satisfied as they focus on restoring their financial health. In Maryland, it appears that debt collectors have up to 36 years to pursue homeowners for amounts owed on deficiency judgments.
Lenders have learned that collections are doubtful if they take place a short time after a foreclosure. Experience has shown that if they wait a few years to give the mortgage borrowers time to recover, the chance of collecting the deficiency will be greater.
Some lenders are targeting strategic defaulters with collection actions. If mortgage borrowers were able to pay other bills but not their mortgages, they could be considered to be strategic defaulters. Part of the strategy of collection efforts is to deter future strategic defaulters.
Those that have gone through a foreclosure and did not file bankruptcy to clear their debts have long term reasons to be concerned with a possible deficiency judgment and collection actions. Once a judgment is entered, a lien attaches to real estate owned. A Chapter 7 bankruptcy could clear debt but those filings are now available to people earning no more that the state’s median income, which is $108,915 for a family of four in Maryland.
Peony, Kentlands IMG_5461
Photograph by Roy Kelley using a Canon PowerShot G11 camera.
Roy and Dolores Kelley Photographs