Collections, Charge Off Required to Approve Short Sale - Part 2

Here is where I'm going to show you how to remove the collection account you get after the short sale of your house closes. Timing of your response is important. Hopefully, you won't receive the first contact for about 6 months. If it's sooner, then you just start sooner. I say 6 months because that gives plenty of time for the lender to archive the file and not be able to produce what ever the 3rd party collector might try to get from them to validate.

As soon as you get the first letter in the mail, respond with a letter demanding validation. Do this within the first 30 days of receiving the letter. DO NOT SIGN THE LETTER IN YOUR OWN HANDWRITING! Make a copy for your file, send it CMRR and keep the receipt. Look for that green proof of service card to come back to you and keep it in the file.  That's all you will do for now.

If they contact you by phone to collect, you will send them a limited cease and desist letter. This letter tells them that all contact to you must be in writing and not on the phone.  If they call you after you have sent the letter requesting/demanding validation, they have committed one of their first violations worth $1000 to you.  Document the date and time of the call, company name and name of the person, plus title (if they have one) of who called.  Keep this in your file.

Should they send you a bill at this time, they have also committed a violation.  Keep that letter in your file along with the envelope it came in. You want to be able to show that the date you received it is after your demand for validation.  They may attempt to send some kind of validation instead of a typical bill. However, if they claim that you owe it with some kind of print out, it is just a cleverly disguised bill and still  not validation and still a violation.

You next respond to their bill or amateur attempt at validation with another letter. This letter to them will state that though you appreciate their effort, that is not validation and now they have violated the law because what they sent you was collection activity. Let them know that you are documenting everything and that unless they can validate within the next 15 days, they must remove any and all negative reporting and close the account. They must agree that they will not sell the account to any other party and a violation of that will cause them to be liable to a suit you may file.

In order to make this work you will be inserting a self executing contract into the letter.  With this letter, you will include a notice and declaration of fraud against the original creditor. You can actually send this with the first demand for validation you send them.  The reason I like to send it on the second letter is because I like them to rack up the violations, thereby increasing the amount that they will actually owe my clients.

You can actually repeat this process again and tell them last chance, you're feeling a bit generous. Give them another 15 days to respond, on point, hand signed, on letterhead and notarized.  The beauty of this is that you are letting them mount up violations on something they cannot possibly validate!

But this is only half of the plan of action! It gets better. Well better for you, worse for them, and possibly the credit bureaus.  Stay tuned for part 3 where I show you how to get it off your credit report!

Collections, Charge Off Required to Approve Short Sale - Part 1

If you are trying to sell  your home as a short sale and waiting for an approval from a lender, you may get a condition from at least one of them saying that they will approve the short sale but you agree that they will charge off the remaining balance and submit that amount to 3rd party collectors because you are still going to be held liable for what you didn't pay off.  Pretty crappy since the banks got multiple bailouts already.  They are so greedy. 

I have encountered this situation with 2 of my listings already and I'm expecting it with all the new short sale listings I put under contract.  This can be very frustrating for the seller and scary, because, there's already a hardship trying to pay that mortgage. So to be out of a house and still have to pay the dang thing is just ridiculous and unfair. 

I know there are a lot of folks out there that like to say that everyone is responsible to pay their debts.  I only half heartedly agree with that.  I agree when it comes to real services you've received, but I don't when it comes to credit cards and bank loans.

I've stated before in other posts that banks do not lend you their money. They are creating the money and credit out of thin air by monetizing your signature.  This is the first reason I don't agree with having to pay them back, because your signature funded the loan.

When it comes to credit cards, the second reason I don't agree to paying them back is because it is a unilateral contract which is null and void. This is according to the constitution. A unilateral contract means that only 1 party is at risk, and you can bet your last pair of underwear that it ain't the bank or finance company that has the risk. They didn't fund the credit, they have nothing to lose. Your signature did and your peace of mind, wallet and credit standing is at risk. In order to be a valid contract, all parties to the contract have to carry risk. Therefore, a unilateral contract is void and unenforceable.

So how does this relate to what banks are doing to short sellers?  Well, I said it's not fair because they got bailouts and should pass the good will on. Heck, we're funding their bailouts already. But, do you say fine, just foreclose then, because then you can't come after me with collections or do you sign that grimy piece of paper?

I have told my clients that they should go ahead and sign the paper. A short sale is much better on your credit than a foreclosure. Plus, that balance is going where you want it to - to a collection firm. Now, you should know by now that that collector is going to get a file for this account so they can use it against you, report to the bureaus against you and start with the harassing phone calls and letters. 

Why is this a good thing? Because the file they get does not have every thing they need to validate the account when you challenge it.  This means that you will be able to remove that collection account from your credit and get them off your back.  This means that you can start racking up violations against them and if you decide to play the game on your terms, you can make some money.

Collectors violate the law, that's a given. Use the FDCPA and FCRA to track the violations. Most are worth a thousand bucks each. When they rack up enough to satisfy you, you can either use it as a bartering chip or sue them and pocket the winnings. Either way, you will get it off your credit report.

See part 2 for how to beat them in their game!