Everybody understands the concept of a sale. Whether it’s a purchase of services, or groceries, or hardware, or whatever, everybody understands how the system works. For a price, sellers will part with something of value when a buyer pays cash (or uses a check or a credit card).
But few people are aware that many legal rights can also be bought and sold. For example, a business can sell its receivables, or its rights to be paid for goods or services it has sold to customers. And a lender who remains unpaid can often sell its loan, or its repayment rights. The right of a lender to be paid can still exist following a foreclosure. For example, some homeowners buy their homes using both a first and a second loan. If such a homeowner defaults on their loan payments, then either of the two lenders can foreclose. If the first lender forecloses, then the second lender’s mortgage will probably be eliminated. However, the elimination of the mortgage does not eliminate the loan. In some cases, a second lender who loses their mortgage may still have the right to collect on the loan. But some lenders aren’t interested in pursuing collection efforts on the loan. In these circumstances, such lenders may elect to sell their loan rights to a third party, such as a debt collector. If this happens, a homeowner who loses their home in foreclosure may find themselves dealing with a debt collector following such foreclosure. This can be a difficult and expensive situation.
How can homeowners avoid such a situation? In part by being proactive. Homeowners may be able to avoid dealing with debt collectors if they take proper or appropriate steps before or early in the foreclosure process. When homeowners find themselves in foreclosure, or unable to make their payments, they do well to seek skilled, competent, professional advice early.