For deed in lieu and second mortgage, can they still come after me for the balance of the second? 5 Answers as of March 08, 2013

Deed in lieu and second mortgage. In 2009, I had a deed in lieu with Countrywide, which was later taken over by bank America, however before that transition country wide agreed to a deed in lieu on the first and asked $4600 on the second to release the lien on the property. Just recently, I got a letter from Bank America saying a debt collection company by the name of MSN would be seeking the balance payment of the second - 4 years after and debt notices? Plus the 1099 I got from bank America in 2009 said debt free of balance. I am confused - we settles on the second equity loan for $4600 to release the lien and 1099 stating no deficiency. I sent the letter from countrywide to the debt collector, money order to second loan of $4600 and 1099. Can they still come after me for the balance of the second? Thank you.

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The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
You should look at your pay off letter. If it just says that they are releasing the lien then they can still go after the debt. However, the 1099 is an issue that may allow you to sue them as they can not release the deficiency and then go after the deficiency. First talk to countrywide to clarify the 1099.
Answer Applies to: New York
Replied: 3/8/2013
Law Office of D.L. Drain, P.A.
Law Office of D.L. Drain, P.A. | Diane L. Drain
This could be a problem depending on who you were dealing with and what authority they had to negotiate the settlement. You might want to talk to a good real estate/foreclosure attorney licensed in the state where the property was located.
Answer Applies to: Arizona
Replied: 3/7/2013
Stephens Gourley & Bywater | David A. Stephens
That depends on whether they released the remaining balance as part of the deed in lieu transaction.
Answer Applies to: Nevada
Replied: 3/7/2013
Frank Law Group, P.C.
Frank Law Group, P.C. | David E. Frank
There is protection from deficiency liability to a second after a short sale in CA, but I'm not sure that law would apply to a deed-in-lieu situation. You could also argue that the payment they accepted constitutes an "accord and satisfaction" which extinguishes the debt. Bottom line, this is a complicated legal area and you should contact a lawyer who specializes in real estate finance law to review your situation and the applicable law, and advise you on your best course of action.
Answer Applies to: California
Replied: 3/7/2013
Stacy Joel Safion, Esq.
Stacy Joel Safion, Esq. | Stacy Joel Safion
They can attempt to but it sounds like you have several good defenses to their collection including the statute of limitations along with the 1099.
Answer Applies to: California
Replied: 3/7/2013
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