I had a house go into foreclosure in 2007. However, I just cleaned up my credit report and am in the process of purchasing another house. My loan officer advised me yesterday that the mortgage company that financed the house that went into foreclosure has put that house back on my credit report as outstanding, indicating I owe them 20K. I had a 80/20 loan. Where will I go to get info to prove that this house was in foreclosure?
You should have gotten lots of documentation at the time of the foreclosure which should show that the house was foreclosed. Find out where legal documents are recorded in your location. It is usually the county Recorder's office. Go there and look up the property. You can search for the documents that will show the "chain of title", which will show that the bank acquired the property. You also need to see if the bank got a "deficiency judgment" against you. If they did, that means you owe them the difference between the loan balance at the time of the foreclosure and the amount they were able to sell the property for. If you don't have documentation indicating that the bank agreed not to come after you for that, then you may owe the money. Even if they did "forgive" the loan, you may still have a problem. The IRS generally considers the amount "forgiven" to be income to the debtor, meaning the debtor would have to pay income tax on the amount (just as though it was earned income)! See if there is an agency that provides free or low-cost legal help in your area.
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