Legal Question in Credit and Debt Law in California

My daughter bought a house before the economy and housing collapse . It was a mistake because the payment was about 80% of her net income. After the fall of the market she did a short sale. She did not understand they did not include an equity loan that was made at the same time as the first and also went to pay for the house (this was the lenders idea to get the loan through). She found out about this when a forclosure showed up during a credit check to buy a home I was selling her for 50% of value and could not get the loan. When my estate attorney spoke with them they refused to remove the forclosure that never happened from her credit report because they may try to collect some day. It has been 3 1/2 years for the final of the short sale and the banks will overlook the short sale but not the forclosure . Any ideas.

Bill


Asked on 7/06/14, 1:17 pm

1 Answer from Attorneys

Unfortunately, once a notice of foreclosure goes out, it is reported as a foreclosure, even if it never happened, if the debt is not paid. That is a legal and legitimate credit report entry. An unpaid debt is an unpaid debt, even if it is not collected and cannot legally be collected. Look at it from the perspective of a lender. They are entitled to know of an unpaid debt, regardless of whether it is collectible or not. There is not only no legal right to have that removed, it would be misleading to creditors to do so.

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Answered on 7/06/14, 1:48 pm


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