First Franklin Mortgage Loan Trust was established in 2007 and is based in Dawson, Georgia. However, they do business all around the country, managing funds, foundations, and trusts. First Franklin Mortgage Loan Trust is one of many companies that took advantage of borrowers during the subprime mortgage crisis. At the time, many homeowners were struggling with underwater mortgages or loans that owed more than the market value of the home.
Like so many other companies during these times, First Franklin Mortgage Loan Trust purchased defaulted home loans from the big banks and financial institutions. Due to the fact that the loans were underwater, the big institutions knew there was no point in foreclosing on a home with very little to no value. As such, they sold first and second mortgages to other third-party companies such as First Franklin. First Franklin has not always been honest or fair when trying to collect on these loans. Below, our Fort Lauderdale First Franklin Mortgage Loan Trust zombie second mortgage foreclosure defense lawyer explains more.
What are Zombie Second Mortgage Foreclosures?
A zombie first mortgage foreclosure occurs when homeowners are sent notice that the lender is going to foreclose on the home and they simply vacate it. The homeowner believes foreclosure is inevitable and so, they leave the property. Sometimes, these foreclosure cases proceed but that is not always the case.
Zombie’s second mortgage foreclosures are quite different. A zombie second mortgage foreclosure refers to when a company such as First Franklin Mortgage Loan Trust purchased a loan from another company years ago. Regardless of the legal requirements under the Truth in Lending Act, borrowers were never notified that their loan had been transferred to First Franklin Mortgage Loan Trust. Borrowers also never received notice from First Franklin Mortgage Loan Trust regarding the status of their second mortgage, which is also against the law.
Due to the fact that borrowers were never contacted about the loan, they assumed they were no longer obligated to pay it. This is especially true when a borrower loses their home due to a foreclosure on their first mortgage. Many people presume that foreclosure eliminates the second mortgage debt as well, even though that is not true.
When housing values started to climb again, First Franklin Mortgage Loan Trust and companies like it started to try and collect on second mortgages again. Due to the fact that these second mortgages have seemingly ‘risen from the grave,’ they are known as zombie second mortgages. Fortunately, the steps First Franklin and other companies take are often illegal, and that can serve as a defense in your case.
The Statute of Limitations on Zombie Second Mortgages
One of the most common defenses to zombie second mortgage foreclosures is the statute of limitations. Companies such as First Franklin Mortgage Loan Trust only have a certain period of time to file a second mortgage foreclosure lawsuit against borrowers. This is five years from the date of default. With second mortgages, the statute of limitations can start on the last day of default. Still, if First Franklin does not file a lawsuit against you within five years from the last date of default, they have lost the legal right to do so. This can serve as a defense, meaning you will not be obligated to repay the debt.
The statute of limitations is particularly important in cases involving zombie second mortgages. Due to the fact that the company essentially sat on these loans for so long without taking action, there is always a very good chance that the statute of limitations has expired.
Proving Ownership of the Zombie Second Mortgage
The vast majority of zombie second mortgages are no longer held, or owned, by the original lender. As stated earlier, many of these loans were purchased during the Great Recession or shortly after. At that time, companies such as First Franklin Mortgage Loan Trust were purchasing so many bundles of first and second mortgages that they did not perform due diligence. They often did not ensure that they had the proper documentation that established them as the owner of the loan.
If First Franklin Mortgage Loan Trust cannot prove that they own the loan, they cannot proceed with a foreclosure action. It is also not uncommon for the proper documents to get lost along the way as an account changes hands multiple times. A Fort Lauderdale foreclosure defense lawyer can determine if First Franklin Mortgage Loan Trust actually owns the loan.
Filing Bankruptcy in Cases of Zombie Second Mortgage Foreclosure
As with foreclosures on first mortgages, you can file for bankruptcy in cases of second mortgage foreclosures. Firstly, as soon as you file for bankruptcy, the judge will issue an automatic stay in your case. The automatic stay prohibits creditors and debt collectors from contacting you in an attempt to collect a debt, and that includes second mortgage holders.
During a Chapter 13 bankruptcy, any debt you owe can be restructured into a repayment plan. Repayment plans in these cases extend between three and five years, which may give you the time you need to repay your second mortgage. If the mortgage on your home is still underwater, the court may even deem it to be unsecured debt and discharge it, meaning you will not be responsible for paying it.
No one ever wants to file for bankruptcy. However, it can give you the time you need to negotiate the debt or provide a way to eliminate it, particularly if the other defenses do not apply in your case.
Our Zombie Second Mortgage Foreclosure Defense Lawyers in Fort Lauderdale Can Defend You
Just because you have received a notice of default or foreclosure from First Franklin Mortgage Loan Trust does not necessarily mean you are responsible for paying it. At Loan Lawyers, our Fort Lauderdale zombie second mortgage foreclosure defense lawyers can review the facts of your case and help you determine the best path for moving forward. Call us now at (954) 523-4357 or contact us online to request a free consultation and to learn more.
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