Legal Question in Real Estate Law in California

I sold my property via short sale on February 16, 2010. The second mortgage was owned by Wilshire Mortgage and I received a letter of Full Reconveyance from them on 3/30/2010.
On April 1, 2010 I received a letter and a payment slip for Bank of America stating that they had taken over the servicing for Wilshire Mortgage. 5 days later I began receiving collection calls from BofA and have received multiple daily calls ever since demanding payment and threatenting harm to my credit score.
I have sent Bank of America all documentation that I have to no avail and I have retained an attorney. I have been advised to wait and see if BofA can figure out their mistake.
1. What can I do to figure out what happened?
2. What happens if BofA shows up on my credit report showing 30,60,90 days late?
3. I've asked BofA collection agents to stop calling me but 40 days later I receive daily calls.
Thanks for any assistance.

Asked on 4/09/10, 2:01 pm

3 Answers from Attorneys

Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

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You appear to have a good case under the Fair Debt Collection Practices Act, you can get your actual damages or $1000, whichever is greater, and your attorney fees. I'd live to hear from you. Watch out for legal time limits.

Answered on 4/14/10, 2:11 pm

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It sounds to me like there is no mistake. I don't know what a "Letter of Reconveyance" is. But the term "Reconveyance" is used in reference to a deed of trust, not the underlying debt. Unless the lender gave you a "release" of the underlying debt, all the lender did was release the deed of trust, so they are now an unsecured creditor. Short sales do not extinguish the debt, unless the lender expressly and formally agrees to accept whatever they get out of the short sale as payment in full. My guess is that the holder of your first loan was foreclosing, or about to start that process, and they got most if not all of the proceeds of the short sale. In that circumstance it does Wilshire/BofA no good to refuse to reconvey their deed of trust, because the result is that the short sale fails, the first forecloses, and they are wiped out. So they reconvey, but they do not release the underlying debt. Leaving you in the situation you find yourself in with them trying to collect the debt while no longer able to foreclose.

As for the phone calls, they have the right to call you as many times per day as it takes to get ahold of you. If you want to stop the collection calls, you have to contest the debt in writing. Then they must investigate whether the debt is valid, and if it is, they can resume calling. They cannot call you AND talk to you repeatedly in one day, but if you ignore the calls and let them go to voicemail or just unanswered, they can keep calling.

It sounds like your attorney doesn't know anything about mortgage lending or fair debt collection. You may want to find someone who does. From Mr. Stone's answer, it sounds like you may want to find someone other than him as well.

Answered on 4/14/10, 3:14 pm

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