New York Settles Expired-Mortgage Collection Case: Debt Buyers to Pay More Than $480,000 and Drop Expired-Debt Demands in 3,000-Loan, 140-Lawsuit Sweep
New York Attorney General Letitia James announced on October 23 that her office has secured more than $480,000 and additional debt relief for New York homeowners from a group of debt buyers that attempted to collect expired mortgage payments from homeowners facing foreclosure. The companies, including BCMB1 Trust; First Age, LLC; NS194, LLC; Second Start, LLC; Southern MBA Trust, and their affiliates, bought thousands of defaulted mortgage loans across the state, most of them originated in the years leading up to the 2008 financial crisis.
An investigation by the Office of the Attorney General (OAG) found that many of the loans were second mortgages. In the years before the financial crisis, lenders often financed a home purchase with two mortgages — a primary mortgage for 80 percent of the price and a higher-rate second mortgage for the remaining 20 percent. During the Great Recession, many homeowners modified their primary mortgages and kept paying, while the holders of the second mortgages often made no attempt to collect because falling property values had made the loans essentially worthless, leaving homeowners with no statements and no way to pay or resolve the debt. The OAG found that beginning in 2019, the debt buyers collectively acquired more than 3,000 of these 'zombie' second mortgages in New York and filed more than 140 foreclosure lawsuits seeking the full principal balance plus interest going back as far as 12 years, in violation of New York's statute of limitations, which bars collecting loan payments that are more than six years past due.
Under the outcome, the companies must pay $240,000 in penalties and provide more than $242,000 in restitution to consumers who paid or agreed to pay back expired debt. They are also barred from seeking to collect expired debt payments in the future and must amend their demands in existing foreclosure cases to exclude any expired debt. 'No New Yorker should face losing their home to a predatory company demanding mortgage payments that have long since expired,' Attorney General James said. 'These companies are illegally demanding money from homeowners who worked hard to keep their homes during the Great Recession.'
The Attorney General's Office asks any homeowner who believes they have been subject to an improper foreclosure to file a complaint online with the OAG's Consumer Frauds and Protection Bureau or call 1-800-771-7755.
Source: GSM·USA
Source: GSM · USA (original Chinese edition)
Photo: 图：纽约州议会大厦（Albany，资料图）。摄影：Matt H. Wade，CC BY 3.0，经 Wikimedia Commons。 / The New York State Capitol in Albany (file photo), by Matt H. Wade, CC BY 3.0, via Wikimedia Commons.
