Posted on: 15th Nov, 2009 11:24 am
been cruising the boards and haven't found any situation similar to mine, so here goes. About 4 years ago my house was foreclosed on in kentucky. it sold at foreclosure for 55k and the loan balance was 70k. After chase bank sold it the deficit was apparently covered by either my PMI or the department of agriculture who i guess backed the Rural housing loan that i had. so a collection agency dogged me for awhile wanting 40k in deficet, fees, etc.i told them that was unreasonable and i would be willing to do 22k. they said that would work if i could pay it all at once. i told them there was no way i could do that. so they said they were going to garnish my wages. i contacted a bankruptcy lawyer a year and half ago. he doesn't seem to understand why the dept. of agriculture has the note now and said we would get to that when the time came. since then i haven't messed with the bankruptcy anymore and haven't heard from the dept of ag. or any collection agencies and my wages have NOT been garnished. My credit report shows the foreclosure but it also has chase as showing the debt paid and nothing on there about any current debt. So do i owe anything or did my pmi cover it? also although my wages haven't been garnished they have been taking my tax refund check every year. is this a deal where i owe the debt but they can't come after it? is there ever a point where the debt just dies or is dicharged? do i need to file bakruptcy? why hasn't anything been done after all this time? really not understanding this. any help would be much appreciated. BTW never by a house for your 18th birthday.
When you closed the loan you probably signed USDA Form 1940-16 "Applicant Certification, Federal Collection Policies for Consumer and Commercial Debts" (check your loan package from closing). If so, that says the "Government" can do any number of things to collect without notice, including offset tax refunds, use a collection agency or garnish wages. Apparently they have not yet decided to garnish, but could do so. The form also says you owe the unpaid balance ($15,000) plus interest, plus their costs of recovery. So, if they only recovered part of your debt with your tax refunds after the foreclosure, and that isn't enough to cover continuing interest, your debt could actually be growing.
As far as Chase is concerned, their loss was probably fully covered and paid off by USDA, leaving the USDA as your only creditor. The USDA guarantee, paid by your 2% funding fee, covers 100% of the first 35% of a lender's loss and 85% of the balance of the loss including interest and costs of liquidation. So Chase's loss of about $15,000 plus interest and foreclosure costs might have been fully covered after the home was sold out of foreclosure. But the remaining debt passes to the USDA.
If you want to get rid of the debt outside of bankruptcy, go to the USDA website and find Form 3550-20 "Application for Settlement of Indebtedness." You can fill it out online and save it. Talk to the USDA about instructions. They'll probably help you determine a reasonable settlement. My guess is your initial debate about settlement amount was with a private collection agent working for a commission, not a USDA agent, and that you might get a much better deal working directly with USDA.
Sorry that the system wouldn't allow me to put in links to the forms. e-mail me privately and I'll send them if you want them.
Dan Stephens
Mortgage Banker
Home Savings of America, FSB
[Contact details deleted as per forum rules. Thanks.]
As far as Chase is concerned, their loss was probably fully covered and paid off by USDA, leaving the USDA as your only creditor. The USDA guarantee, paid by your 2% funding fee, covers 100% of the first 35% of a lender's loss and 85% of the balance of the loss including interest and costs of liquidation. So Chase's loss of about $15,000 plus interest and foreclosure costs might have been fully covered after the home was sold out of foreclosure. But the remaining debt passes to the USDA.
If you want to get rid of the debt outside of bankruptcy, go to the USDA website and find Form 3550-20 "Application for Settlement of Indebtedness." You can fill it out online and save it. Talk to the USDA about instructions. They'll probably help you determine a reasonable settlement. My guess is your initial debate about settlement amount was with a private collection agent working for a commission, not a USDA agent, and that you might get a much better deal working directly with USDA.
Sorry that the system wouldn't allow me to put in links to the forms. e-mail me privately and I'll send them if you want them.
Dan Stephens
Mortgage Banker
Home Savings of America, FSB
[Contact details deleted as per forum rules. Thanks.]
Hi jkendrick!
Welcome to forums!
If the deficient amount is send to collections by the lender, then the collection agency has the right to collect the dues from you. The debt cannot simply die or get discharged in any way unless you file for bankruptcy. I guess the collection agency is garnishing your tax refunds. This is their way of collecting the dues from you. Once the tax refunds satisfy the debts, the collection agency will not come after you.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If the deficient amount is send to collections by the lender, then the collection agency has the right to collect the dues from you. The debt cannot simply die or get discharged in any way unless you file for bankruptcy. I guess the collection agency is garnishing your tax refunds. This is their way of collecting the dues from you. Once the tax refunds satisfy the debts, the collection agency will not come after you.
Feel free to ask if you've further queries.
Sussane