FCI Lender Services Zombie Second Mortgage

FCI Lender Services, Inc. is one of the largest national private money and non-qualified mortgage servicers. The company provides a wide variety of services for lenders of many sizes. The company was established in 1982 and has its headquarters in California. The company states that it is dedicated to helping borrowers who have experienced financial hardships get back on track with their home loans. Sadly, the truth is that FCI Lender Services often tries to foreclose on zombie second mortgages and sometimes, unjustly so.

If you have received notice of foreclosure on your second mortgage from FCI Lender Services, it is critical that you seek legal advice. FCI Lender Services may not have the legal authority to foreclose. There may also be defenses available in your case that may allow you to keep your home or protect your credit score. Below, one of our Fort Lauderdale foreclosure defense lawyers explains further.

What is a Zombie Second Mortgage?

It is not uncommon for homeowners in Florida to have one or two mortgages on their property. Second mortgages are sometimes taken out after the first home loan, such as when a homeowner takes out a home equity line of credit. In other instances, a homeowner takes out a second mortgage at the same time they take out the first mortgage so they are able to buy the home.

During the housing collapse of 2008, and for many years afterward, many homeowners were unable to make the payments on their mortgage loans. At the time, many mortgages were classified as ‘underwater’. An underwater mortgage is one that has a larger balance than the market value of the home. For lenders, there was no point in foreclosing on these second mortgages and so, they simply sold them to other companies.

Many homeowners thought that they were no longer obligated to repay their second mortgages. Much time had passed without homeowners receiving any phone calls, statements, or any other attempt to collect on the debt. In recent years, however, homeowners have not been threatened with foreclosure lawsuits from companies such as FCI Lender Services that have purchased second mortgages. Now, they are referred to as ‘zombie second mortgages’ and stories about them have abounded in recent years. Fortunately, there are defenses to these foreclosure cases, just as there are in cases regarding first mortgage foreclosures.

The Statute of Limitations on FCI Lender Services Zombie Second Mortgage Foreclosure

Florida is a judicial foreclosure state. This means that in order for a mortgage lender or a company such as FCI Lender Services to initiate foreclosure proceedings, they must first file a lawsuit against you. As with most civil lawsuits, those involving second mortgage foreclosure cases are governed by a statute of limitations. The statute of limitations is the timeframe in which a mortgage lender or servicer must file the lawsuit.

The statute of limitations on foreclosure lawsuits is five years from the date the homeowner defaulted. However, there are many factors that determine when the clock on the statute of limitations starts ticking. It is not uncommon for each missed payment to count as a separate default. As such, FCI Lender Services often waits until nearly five years have passed from the last missed payment to file a zombie second mortgage lawsuit.

Still, if more than five years have passed, FCI Lender Services cannot proceed with the foreclosure lawsuit. If the company has threatened you with foreclosure when they do not have the legal right to, it may be a violation of the Fair Debt Collection Practices Act. If so, you can take action against FCI Lender Services to collect damages.

Ask FCI Lender Services for Proof of the Zombie Second Mortgage

FCI Lender Services has purchased most of their zombie second mortgages from other mortgage lenders who originally provided the loan to homeowners. This often makes it difficult for them to prove that they have a legal right to take foreclosure action. Like many companies that purchase debt, FCI Lender Services has not always properly documented the second mortgages they bought because they did not hold a lot of value at the time. If FCI Lender Services cannot prove that they own the debt, it can serve as a defense in a foreclosure lawsuit.

Failure to Notify You of the Loan Transfer

Defending against a foreclosure managed by a servicer such as FCI Lender Services is sometimes easier than defending against a foreclosure lawsuit filed by an original lender. This is due to the fact that companies such as FCI Lender Services have purchased the loan, which makes the entire case more complicated. Just as the servicer must prove that they actually own the loan, they must also notify you that your second mortgage loan has been transferred to another company.

Under the Truth in Lending Act, companies such as FCI Lender Services must inform you that they are now managing your loan within 30 days of purchasing it. They are also required to provide you with regular statements regarding the loan. This prevents lenders and servicers from holding onto a loan for many years and then surprising homeowners with a foreclosure action.

Bankruptcy

Filing bankruptcy can prevent a foreclosure action. In both a Chapter 7 and Chapter 13 bankruptcy case, an automatic stay is issued. Automatic stays prevent creditors and debt collectors from trying to collect on the debt while a bankruptcy case is proceeding. This can provide you with more time to negotiate with FCI Lender Services or find the right defense in your case.

Our Zombie Second Mortgage Foreclosure Defense Lawyers in Fort Lauderdale Can Assist with Your Case

Defending against a second mortgage foreclosure is possible, but that does not mean it is easy. At Loan Lawyers, our Fort Lauderdale zombie second mortgage foreclosure defense lawyers can review the facts of your case, determine the right defense strategy to use, and help you obtain the best possible outcome in your case. Call us now at (954) 523-4357 or contact us online to schedule a free review of your case.