Second lien holders begin freezing bank accounts, garnishing paychecks for underwater homeowners

New York /
Dec.December 07, 2009 09:30 AM

Underwater homeowners are now facing yet another financial threat: lenders and debt collectors are beginning to freeze bank accounts and garnish pay checks for clients who have second mortgages and who are already in default on their first. Whereas foreclosure is a process run by the first mortgage holder, the new tactic allows second lien holders to “jump the line” by recouping whatever money they can and making it more difficult for already-troubled homeowners to obtain loan modifications in order to avoid foreclosure. In Staten Island, stories abound of homeowners who received no notice that debt collectors would be taking such actions against them, and only found out when they went to their banks to try to take out money. Those targeted are often already worst-off. “The backdrop to that is there are real fundamental problems in the debt buyer industry,” said Josh Zinner, who works with the Neighborhood Economic Development Advocacy Project in Manhattan. “The combination of the second mortgage problem with all the abuses in the debt collection industry is toxic, and could really create havoc for homeowners who are trying to avoid foreclosure on their primary mortgage.”


Related Articles

arrow_forward_ios
Maverick Real Estate Partners principal David Aviram and the buildings to be sold. (Rosewood Realty Group)
Part of Chaskiel Strulovitch’s Brooklyn portfolio to be sold at auction
Part of Chaskiel Strulovitch’s Brooklyn portfolio to be sold at auction
Sen. Brian Kavanagh (Getty, iStock)
New York votes to extend eviction ban through August
New York votes to extend eviction ban through August
Lenders are being stingy about granting home equity lines of credit. (iStock)
Home values are up, but just try getting a line of credit
Home values are up, but just try getting a line of credit
(Getty)
Mortgage applications resume decline after one-week surge
Mortgage applications resume decline after one-week surge
Avishai Abrahami with Ziel Feldman and Nir Meir, and 500 Bailey Ave, Buffalo, NY; 707 Spence Lane, Nashville, TN; 1100 Milwaukee Avenue, South Milwaukee, WI (Getty, Google Maps, NY Supreme Court)
Ziel Feldman, Nir Meir accused of fraud over $30M loan
Ziel Feldman, Nir Meir accused of fraud over $30M loan
Hispanics account for more than half of U.S. homeownership growth in the past decade despite making up only 18 percent of the population. (iStock)
Buenas noticias: Hispanic homeownership soars
Buenas noticias: Hispanic homeownership soars
Refinances made up 60 percent of all applications, up slightly from 59.2 percent the previous week. (iStock)
Mortgage rates dip, triggering surge in loan requests
Mortgage rates dip, triggering surge in loan requests
Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)
Fannie, Freddie say housing market could see slight hiccup
Fannie, Freddie say housing market could see slight hiccup
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...