{"id":1089,"date":"2011-10-25T06:30:54","date_gmt":"2011-10-25T12:30:54","guid":{"rendered":"http:\/\/stateimpact.npr.org\/idaho\/?p=1089"},"modified":"2013-05-10T13:47:41","modified_gmt":"2013-05-10T19:47:41","slug":"in-the-wake-of-foreclosure-a-debt-that-wont-die","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/idaho\/2011\/10\/25\/in-the-wake-of-foreclosure-a-debt-that-wont-die\/","title":{"rendered":"In the Wake of Foreclosure, a Debt That Won’t Die"},"content":{"rendered":"
\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

Ben and Lori Jensen of Meridian say they were stunned to receive a lawsuit from their bank months after they lost their home to foreclosure.<\/p><\/div>\n

Month in and month out, Idaho\u2019s foreclosure rate<\/a> remains one of the highest in the nation.\u00a0 For many, losing a home is the definition of hitting bottom.\u00a0 But some former homeowners are finding themselves in an even tighter spot than they thought<\/del> possible.\u00a0 They\u2019ve lost their homes and wrecked their credit ratings.\u00a0 Now lenders are pursuing them for the debt that remains.<\/p>\n

The day <\/del>Ben Jensen found out that he and his wife, Lori, were being sued for more than $140,000 is fixed in his mind, like the slow-motion moments before a car crash.\u00a0 It was a weekday afternoon, and he\u2019d just come home from work.\u00a0 “My wife and I were standing in the kitchen talking,” he remembers.\u00a0 “There was a knock at the door, she went to get it.\u00a0 And as she was walking back she had a really perplexed look on her face.”<\/p>\n

<\/param><\/param><\/embed><\/object>In The Wake Of Foreclosure, A Debt That Won’t Die<\/a><\/p>\n

<\/p>\n

She was holding a hand-delivered envelope.\u00a0 Ben says they both knew something serious was happening.\u00a0 “We start going through the paperwork.\u00a0 It\u2019s all in legalese.\u00a0 There\u2019s no simple explanation on the front saying, ‘Bank of America is suing you.’\u00a0 We\u2019re going through the documents, we\u2019re seeing the lawsuit, and my heart is just sinking.”<\/p>\n

Ben and Lori had already been through a hard couple of years.\u00a0 They lost their home to foreclosure in a long process that began when the engineering firm where Ben works cut his hours.\u00a0 By the time Ben and Lori had moved themselves and their two young children from their old home in Star to a rental in Meridian, they thought they had seen the worst of it.\u00a0 Then they learned the bank was suing them for the money it lost on their loan.\u00a0 It\u2019s<\/del> called a deficiency judgment.\u00a0 Lawyers who represent Idaho homeowners say more of them are being filed.\u00a0 One of those attorneys is Brian Webb, of Angstman Johnson<\/a>. \u00a0“My practice definitely has seen an increase from 2010 to 2011,” he says.<\/p>\n

Ben and Lori Jensen called Webb within hours of learning they were on the hook for tens of thousands of dollars that they simply didn\u2019t have.\u00a0 “I only handled five or six in 2010,” Webb says.<\/del> “Versus 2011, it\u2019s been between 15 and 25 deficiency cases that I have actually handled.”<\/p>\n

The National Consumer Law Center<\/a>, a nonprofit consumer advocacy group, confirms that deficiency judgments appear to be going up across the country, but how that plays out depends on state law.\u00a0 Geoff Walsh, a staff attorney with the organization, says approximately 40 <\/del>states<\/a>, including Idaho, allow lenders to sue former homeowners for the amount of the mortgage that remains after a foreclosure.\u00a0 Idaho is more protective of homeowners than some of those states.<\/del>\u00a0 It requires lenders to act within 90 days of the foreclosure sale.\u00a0 Elsewhere, the statute of limitations can be much longer.\u00a0 “In many other states around the country, homeowners find themselves subject to deficiency actions one, two, three, four or five years after they\u2019ve been foreclosed,” Walsh says.<\/p>\n

That means former homeowners can think they\u2019ve moved on, only to find that the debt is still there<\/del>.\u00a0 “They\u2019ve definitely been under the impression that they walked away from a situation, or it\u2019s over,” says Walsh, “and then this deficiency claim in court just comes back and hits them.”<\/p>\n

Idaho\u2019s law may be more restrictive than some, but that doesn\u2019t mean<\/del> all Idaho homeowners who have been through foreclosure can heave a sigh of relief after the 90-day window has passed.\u00a0 According to the state attorney general’s<\/strong> office, that short statute of limitations only applies to the first mortgage.\u00a0 If a homeowner has a second mortgage that receives no repayment in the foreclosure process, that lender has five years to try to collect.<\/p>\n

Terri Pickens, a private practice attorney in Boise, says it’s a small wonder that with such a complex and state-specific set of statutes, people don’t have any clue what they could face.\u00a0 “<\/em>Most people don\u2019t know,” she says.\u00a0 “And that\u2019s a problem.”<\/p>\n

What’s more, Pickens says there is an additional unnerving trend that former homeowners should consider.\u00a0 Lenders are selling deficiency claims.\u00a0 “I do know some private investors who are coming in and purchasing up bank loan packages and have been paying literally pennies on the dollar, ” she says.\u00a0 “Just sitting on the paper, waiting for the right time to collect on it.”<\/p>\n

The National Consumer Law Center\u2019s Geoff Walsh and others agree<\/del> it’s an emerging investment strategy.\u00a0 Pickens says she\u2019s watched it happen in her own work with clients.\u00a0 Suddenly, a loan changes hands.\u00a0 Often the new owner is a recently-formed limited liability company. \u00a0Clearly, collection is the aim.<\/p>\n

Pickens and others say there are things homeowners can do to avoid all of this.\u00a0 Their number one suggestion is to negotiate a short sale.\u00a0 In the course of that sale, homeowners work out agreements with lenders, giving them a clear sense of where they\u2019ll stand once the sale is done.\u00a0 It’s advice Ben Jensen wishes he had received. “I wish that somebody had come to us in the months before all of this happened and said, ‘Look, you really, really should look at a short sale or taking any other option other than foreclosure,'” he says.<\/p>\n

Ben says that when he and his wife, Lori, were served with a deficiency judgment, there was no way they could pay.\u00a0 They had $5,000 to their name.\u00a0 One hundred and forty thousand was an impossible amount.\u00a0 “I kept running the number through in my head,” Ben remembers.\u00a0 “That\u2019s almost the entire mortgage amount that we signed up for with the house, and I felt like if we had to pay that amount there was absolutely no way we had any kind of a financial future.\u00a0 We were going to be bankrupt.”<\/p>\n

In the Jensens\u2019 case, attorney Brian Webb was able to work out a settlement.\u00a0 The couple turned over their savings and agreed to pay $75 each month for three years.\u00a0 They say it doesn\u2019t make sense to them that the bank went through so much effort to recover a total of about $8,000, prolonging the nightmare of their foreclosure.\u00a0 But at least they know that it will be behind them.<\/p>\n

StateImpact Idaho contacted Bank of America for comment, but received no response by the given deadline.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Month in and month out, Idaho\u2019s foreclosure rate remains one of the highest in the nation.\u00a0 For many, losing a home is the definition of hitting bottom.\u00a0 But some former homeowners are finding themselves in an even tighter spot than they thought possible.\u00a0 They\u2019ve lost their homes and wrecked their credit ratings.\u00a0 Now lenders are […]<\/p>\n","protected":false},"author":46,"featured_media":1094,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[13],"tags":[40],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts\/1089"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/users\/46"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/comments?post=1089"}],"version-history":[{"count":20,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts\/1089\/revisions"}],"predecessor-version":[{"id":1112,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts\/1089\/revisions\/1112"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/media\/1094"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/media?parent=1089"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/categories?post=1089"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/tags?post=1089"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}