Credit Reporting by Mortgage Companies After Short Sales

Credit Reporting by Mortgage Companies After Short Sales In recent years, thousands of California homeowners sold their homes in short sales. In a short sale, the borrower sells the home to a third party for an amount that falls short of the outstanding loan balance. An open question has been whether the bank or mortgage company may collect the balance of the account from the borrower (absent an agreement to waive the balance). On January 21, 2016, the California Supreme Court held that no deficiency results after a short sale of an owner occupied property of four units or less....

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Debt Collectors Can’t Add Interest to Dishonored Check Debts

Merchants sometimes contract with check guaranty services that pay the merchant for dishonored checks. These services then attempt to collect the face value of the dishonored check. California Civil Code 1719 allows collectors to add a $25 service fee for the first check dishonored and treble the amount of the check if the check writer does not pay within 30 days after notice. Certain collectors add prejudgment interest to the debt. However, the California Supreme Court has decided these debt collectors have no right to add interest. Any debt collectors that have been adding interest to bounced check claims are...

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