A question that is starting to be asked in the mortgage context (and one that has been often asked in the credit card arena) is whether a debt buyer who buys a mortgage loan from a defunct mortgage company can collect the entire amount of the loan or is the debt buyer limited to the amount paid.
The general answer is if it is a legitimate purchase and the new “owner” can prove it owns the debt, then the new owner is entitled to the full amount. There are serious questions about many mortgage loans and who owns them but we’ll address that at another time.
Here are some excerpts from an interesting article discussing this issue of how much the debt buyer can collect:
The purchaser “steps into the shoes of the original lender and is entitled to enforce all of the lender’s rights and borrower’s obligations under the loan,” Marsh explains. “The amount paid by the purchaser is irrelevant” in this process. The issue has reemerged with force in Marsh’s home state of Georgia, where a slew of bank failures has occurred, putting FDIC back in the business of selling off assets at a discount. Marsh has represented some of the buyers.
“Most longtime loan buyers have had this type of windfall and are in business to continue to do so,” says Patrick Blount, president of Benewolf, a loan management firm based in Guthrie, Okla. “This is the primary reason for buying loans.”
So if a new company has bought your loan then they have the right to collect on it but as we have seen with credit card debt purchases, the new company must prove that not only do you owe the debt but that it owns the debt…..
If you live in Alabama and would like to discuss your experience with mortgage companies or if you are or have faced foreclosure, feel free to let us know and we’ll be glad to meet with you to discuss your legal options.