If there’s any upside to foreclosure it’s the relief that comes with no longer being in debt. But one Texas company seems to be testing even that assurance for foreclosure victims.
Ahmed Abdelfattah may finally be free from his mortgage nightmare after a judge dismissed a lawsuit in March against him from Heritage Pacific Financial, a company he’d never heard of until after he lost his home to foreclosure, ABC News reports.
Heritage Pacific Financial of Plano, Texas contacted Abdelfattah seeking payment on a second loan worth $135,000, a loan he took out to cover the down payment on the house he purchased years ago. By law, homeowners can not be pursued for two debts on the same property after its been foreclosed on, but Heritage Pacific Financial claims that when borrower fraud is involved they can pursue debt on second mortgages.
Heritage purchased around 40,000 second mortgage debts in California and have gotten many previous homeowners who don’t know any better to pay up, according to The Press-Enterprise. But often, as in Abdelfattah’s case, there isn’t actually any fraud to be found on the part of the borrower.
"Some of the loans that Heritage has do have fraud in them, but I believe many of the loans the fraud was not the borrower's fraud but was instead the broker's fraud,” Eric Schwinn, an attorney currently involved in a lawsuit with Heritage Pacific Financial, told ABC 7. “And Heritage is in a sense re-victimizing the same victims of the mortgage crisis.”
The company now faces a class-action suit that claims the company is running an “insidious and illegal debt collection scheme,” The Press-Enterprise reports.
Indeed, Abdelfattah’s account that one caller from Heritage was “really aggressive, cursing on the phone” fits in with a rising trend of debt collector abuse. The Federal Trade commision is currently cracking down on the industry that accounted for a record number of complaints last year, with individual debt collection abuse ranging from the illegal impersonation of police officers to threats and lies.
It was reported in 2011 that borrowers with second mortgages are twice as likely to have an underwater loan. Indeed, Sovereign Bank is facing a lawsuit that alleges it charged borrowers exorbitant rates on second mortgages, Courthouse News reports. Bank of America, meanwhile, has actually been known to sue itself over second mortgages it owns in order to foreclose on the first mortgage.
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