Uh-oh, I found a collections letter in the mail!

By Stew

Near the beginning of this month, I found a collections letter in the mail box. I opened it up to find a notice that we were 30 days overdue on a payment to a bank of which I had never heard.

I called the number provided as quickly as possible and discovered that this notice was in regards to our home equity line of credit, or second mortgage from the home that we sold last summer. You can read about some of the travails regarding our house that took 16 months to sell in these posts:

My house: a cautious reason to hope

Housing update: short sale, foreclosure, etc.

Congratulations! You just sold your house, now what?

If you remember, we had a first mortgage that was completely paid-in-full by the proceeds of the sale. Our second mortgage was a little more complicated – we were about $11,000 short of being able to pay that one off, so I was able to negotiate a deal with the credit union that allowed us to continue paying on that balance after the house sold. It was a good deal because we were not forced into a short sale, default or foreclosure – all of which have a negative effect on one’s credit score. Since the loan was now no longer backed by our home or any other collateral, it basically became an unsecured loan. I want to make every effort possible to pay back the money that we owed.

After the sale was completed, I called the credit union in order to check on repayment details and they said that they had given or sold (not sure which) the balance of the loan to their mortgage insurers. I think that the credit union must have collected on the mortgage insurance then the insurance company intended to collect the balance of the loan from me. Either way, I never knew what company was holding the note. I called and emailed the credit union at least three times and each time they said that “things were moving forward”. I wanted to make sure that I did not have an “overdue” notice go into my credit report. The credit union assured me that they had not reported the fact that I had not paid on the loan in months . . . so I waited.

Until three weeks ago, when I received a collections letter.

I was a little annoyed that things had progressed to this point since I had not had any idea where I was to send my HELOC payments and it has been nine months since we closed on the sale of our house. Anyway, I called and spoke to a customer service representative and found out that the loan was not at the mortgage insurer, but that they had given my note to a collections agency. I expressed my dismay at getting a collections letter as the first piece of correspondence regarding this loan since the sale of the house. He claimed that they had called me and written several times . . . you are going to have to trust me on this, but I never received any information.

I told the customer service representative that I would be happy to pay off the loan according to the original terms, as long as they sent me a paper statement that listed the terms of the loan, the size of my payments, interest information, etc. I was not going to just send a check to a company that I had never heard of before, just because I talked to one of their employees on the phone. I wanted to make sure that I knew the exact picture before I sent any money.

It has been three weeks and I have not yet seen that statement – no letter, no email, no phone calls. I would like to pay off this loan, but I need a little more information. So far, I have only had one notification letter that included no specifics on the loan and one phone call conversation initiated by me in nine months.

Seems like this particular collections agency has some trouble with communication, can I put a notification in their credit report?

Article by Stew

Photo by uberzombie

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5 Responses (including trackbacks) to “Uh-oh, I found a collections letter in the mail!”

  1. Ben Says:

    Stew,

    Something like this happened to my sister. She was behind on her house a bit but was able to get some assistance. She had the money waiting. She called the company who held the loan, apparently a predatory one. She asked for the paperwork so that she could pay and they said they would send it. She waited and waited. Nothing. So, she called again and they said they would fax the paperwork right over. She waited and waited. In the end, her house was foreclosed on because of all this. She had the money, but they made it impossible for her to pay it.

    I assume that they just wanted the house. Turns out it was a bad move for them as the house is located in an area that is being encroached on by a bad one. As far as I know, that house is still for sale after 2yrs with no occupants.

    You aren’t in the same kind of trouble that she was, but it sounds like the owners of the loan are doing some murky business. You may want to send a certified letter to them with all of your questions and requirements for the loan.

    I hope everything gets worked out for the best.

  2. Stew Says:

    Ben, I really appreciate your comment. I am going to take a much closer look at this – especially now that I see that this might not be an isolated event. Thanks.

  3. Guy G. Says:

    Hey Stew,

    It is completely unacceptable for you to have had to wait so long to receive the information you needed.

    I’m sure you’re on it now, but it may be of benefit in the future to keep a closer eye on your credit report. Don’t check too regularly, or it will affect your score, but make sure that every 6-12 months you know what is on your report.

    Thanks for sharing, I’m sure a lot of people can learn from this.

    Thanks,
    Guy

  4. Funny about Money Says:

    This rings of scam. I’d be very suspicious of it. There must be an government agency in your state that regulates banks and credit unions. You might want to get in touch with a human being there (if you can find one) and discuss this matter.

    If you get another collection letter, it might be wise to contact the state attorney general. If the lender (whoever it is) made it impossible for you to pay on the loan by never sending you a statement and never letting you know where to send a payment, they can’t get away with wrecking your credit and selling your account to a harassing collection agency. It’s amazing how fast an inquiry from a state attorney general will sweeten a sour situation….

  5. Ryan Says:

    Send a certified letter to the original lender and the company purporting to hold the loan now. At least you can show proof that they contacted you.

    It may also be a good idea to hire a lawyer who can help you get to the bottom of this. Sure, it might cost money, but it would be worth saving your credit score and avoiding this hassle any longer. I wrote about how to hire a lawyer not long ago. Hopefully that can help.

    Best of luck, and I hope you can avoid any major problems on your credit score.

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