How long does a 2nd mortgage holder have to collect after the 1st has foreclosed?

UPDATED: Apr 2, 2012

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How long does a 2nd mortgage holder have to collect after the 1st has foreclosed?

I stopped paying on my 1st and 2nd mortgages over 2 years ago. My home was foreclosed on and sold at auction 14 months ago. My Credit report says, “Profit and Loss Write-off: Home Equity Loan, Closed”. Under the payment column it says “Profit & Loss Paid” I spoke with them several times on the phone previous to foreclosure, and just after explaining I had no way to pay them. I have not heard anything for the last 8-10 months. Today I got a letter from a third party collection agency. Can they still pursue legal action against me for the debt? How do I know this third party company is valid?

Asked on April 2, 2012 under Real Estate Law, Utah


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Typically under the laws of most states in this country, the statute of limitations to bring an action in state court for a foreclosed second that was not part of a purchase money loan is four years from when the last payment was made on it. From what you have written, the second mortgager is not time barred.

You are correct to question whether or not the third party collection agency has been assigned the debt allegedly owed. There are many "scam" collection agencies present. I would ask its representative to send you a copy of the assignment of the debt you owe from the second lender.

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