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
Northwind Group’s Ran Eliasaf with 128 East 28th Street
Northwind files to foreclose on NoMad condo, rental properties
Northwind files to foreclose on NoMad condo, rental properties
From left: Ace Hotel’s Brad Wilson and Omnia Group's David Paz along with 225 Bowery (Getty, Google Maps, Ace hotel, Omnia Group)
Bowery micro-hotel files for bankruptcy
Bowery micro-hotel files for bankruptcy
Madison Realty Capital's Brian Shatz, P.S. 64
Auction set for long-vacant East Village school as owner vows to fight
Auction set for long-vacant East Village school as owner vows to fight
From left: Starwood Capital’s Barry Sternlicht and Veracity Development’s Edmond Li along with 111 Mercer Street (Getty, Google Maps, Veracity Development)
Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
DW Partners David Warren and 427 Marcy Avenue (Getty, DW Partners, Google Maps)
Bizarre bankruptcy stops Brooklyn condo project foreclosure
Bizarre bankruptcy stops Brooklyn condo project foreclosure
Salim Assa with 15 West 55th Street
Troubled Midtown rental saga headed for a foreclosure finale
Troubled Midtown rental saga headed for a foreclosure finale
Brooklyn District Attorney Eric Gonzalez charges disbarred lawyer with deed theft of 10 Pleasant Place in Ocean Hill, 1429 East 100th Street in Canarsie and 1100 Sutter Avenue in East New York.
Disbarred lawyer charged in deed theft scheme — again
Disbarred lawyer charged in deed theft scheme — again
(Photo Illustration by Steven Dilakian for The Real Deal with Getty)
Mortgage applications surge 25% in the new year as interest rates drop
Mortgage applications surge 25% in the new year as interest rates drop
arrow_forward_ios

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

Loading...