The problem, of course, is that nowadays, no one knows exactly who owns what or who is responsible for paying who.

Today, millions of Americans have stopped paying their mortgage notes. Up until recently, many were already well within the foreclosure process, while others who were 90 days or so past due on payments were lining up during the delinquency process. According to a recent quarterly report from JP Morgan Chase, the average foreclosure process takes approximately 14 months, meaning that if you stop paying your loan today, you’d probably be able to remain in your home for upwards of one year before the foreclosure process was completed.

In many cases, however, foreclosures have reportedly been processed in error. In one widely reported instance, a homeowner was actually foreclosed on by two different banks who claimed ownership of the mortgage note! In many other cases, homeowners returned after a hard day of work only to find the locks on their doors changed and all of their belongings gone – and they had never missed a payment!

Errors are rampant in the mortgage market of today. To avoid becoming another mistaken foreclosure victim, we urge Texans, as well as all Americans, to take steps today to ensure that the bank which claims to own your mortgage note, as well as the mortgage service company collecting your monthly mortgage payments, are doing so under full legal authority.

Failing to do so may lead to credit problems down the road. Can you imagine having a foreclosure on your credit report, even though you made timely payments?

What You Should Do

Several web site have popped up that promise to generate a form letter that you can send to the mortgage/service company to verify the legitimacy of the mortgage note. While these web sites have good intentions, the letters which they generate are often lacking the necessary legal requests, and fall short of providing specific details of how to initiate the process with proper personal documentation of the process.

The following sample letter, provided by Foreclosure Detonator will ensure that you are requesting the proper information when contacting your lender.

This is a sample letter that acts as a Demand for your Mortgage Note and Service Agreement from the company that collects your monthly payments. It may need to be modified for your specific needs.

This letter will do several things which are very important to the initiation process:

• Requests that the mortgage company provide you a copy of the mortgage note, for which they should have immediate access if they are the rightful owner/collector of payment on the mortgage
• Requests that the mortgage company – if they are not the owner of the note but only service the monthly payments – provides a copy of the service agreement from the original note holder giving them the right to collect monthly payments on the note
• Gives the mortgage company 30 days to respond – failure to do so will have legal ramifications for them
• Requires that the mortgage company responds in writing, so a paper record(s) exists

The following letter should be sent to the bank to which you make your regular monthly mortgage payments.

To whom it may concern: I own the property at the address listed above, and your bank services my mortgage.

Over the last several weeks there have been many stories documenting the problem that banks are foreclosing on homes without proof that they own the loan.  I have learned that in many cases, banks like yours do not even know who owns the loans you service.  Employees at several leading banks have admitted to rubber stamping tens of thousands of foreclosures every month, without even checking to make sure that the bank had a legal right to proceed with foreclosure.  In some cases, banks allegedly falsified mortgage documents to cover up their mistakes.  There have been reports of two banks trying to foreclose on the same home, banks foreclosing on homeowners who were current on their payments, and even of a bank foreclosing on a home where the homeowner had never taken out a mortgage to begin with.  This is not merely a “technical problem”–it is the difference between having a warm bed at night and being out on the street.

As a homeowner and a customer of your bank, I am horrified.  I had always believed that it I played by the rules, I would be protected, but now I know that banks like yours think the rules don’t apply to them.

To protect myself and my family, I need to know who owns my mortgage.  Within thirty days, I would like to know the name, address, and phone number of the bank or investor that owns my mortgage.  Furthermore, in light of the recent allegations of foreclosure fraud, I demand to see the original mortgage note proving ownership over my home loan.  I would like to see copies of all endorsements and assignments of my mortgage note and where and when the assingment(s) _if any – were recorded.  I also ask that you provide me with evidence of your firm being contractually retained to service my loan.

If you fail to provide the information I am legally entitled to,  I will be forced to consider all options available to me to ensure that my family and my home are protected.

I ask that I receive my response in writing.

Thank you for your attention to this matter.

Following Up After 30 Days

Because a bank claims to be the rightful servicer of the mortgage loan, they must respond within 30 days. Failure to do so may have legal ramifications for them.

If the bank is unable to, for whatever reason, provide the necessary documentation proving that they are the rightful owner of the loan, you’ll need to contact an attorney for further action.

Though you may not end up “getting a free house,” you may very well be able to delay loan payments until the bank is able to sort out the paperwork – if ever. As mentioned above, the current foreclosure process takes in excess of one year to complete, suggesting that, if nothing else, you may be able to obtain interest-free deferred payments until the bank is able to provide you with the necessary paperwork.

Important Note to Readers: Do not stop paying your mortgage loan just because the bank has not responded or failed to respond with the appropriate documentation.

The remainder of this process will need to be handled through the proper legal channels and will require an attorney. If you need assistance with this, please contact us and we can put you in touch with an attorney who can help. Though you may need to retain an attorney with a payment, if the bank  has failed to meet their obligations, the payment to the attorney should offset your monthly mortgage payment. You may also be able to recover this payment via your lawsuit against the bank or mortgage company.

Whether you have failed to make mortgage payments, or are current on your monthly payments, taking a few minutes to generate a letter to the banking institution will ensure that your home does not get foreclosed on in error, or by the wrong institution. Taking steps to verify the legitimacy of your mortgage service company and bank can help to avoid significant headaches down the road.

Click here for more Tips for Texans

The sample letter has been provided by Foreclosure Detonator

What does legal obligation mean?

Once a debt exceeds a certain amount of time, a debt collector is no longer able to take legal action through the civil justice system to collect a debt.

This means that you cannot be sued, your wages cannot be garnished, and your assets cannot be seized in order to make good on your debt.

What is the statute of limitations on personal debt in the State of Texas?

Texas Civil Practice and Remedies Code, Title 2, Subtitle B, Chapter 16.004 sets clear guidelines for the amount of time a debt collector has to take legal action through the Texas court system.

In order to legally challenge you in a court of law, a suit must be brought against you within four (4) years, thus, once your debt is over four years old, you are no longer legally obligated to make payment.

When does the four year State of Limitations clock begin?

Credit collection agencies may attempt to confuse the consumer, or may themselves be confused as to when the statute of limitations on outstanding debt begins.

Normally, the original creditor will wait 180 days before they “charge off” an account and transfer the account to a collection agency. Some consumers and collection companies assume that this is when the statute of limitations begin. Often times, the debt collection agency is located outside of Texas, and therefore, they are not familiar with the intricacies of our statutes.

In actuality, the statute of limitations clock begins the day the cause of action accrues. This means that the first day of non-payment of your debt is the day that the cause of action occurs.

Example: If you your credit card payment was due on March 1, 2005 and you failed to make that payment and all payments thereafter, the cause of action occurred on March 1, 2005. The credit card company would then hold the debt on their books and attempt to collect the debt through internal collection employees for 180 days, at which point that debt will be charged off and transferred to a third party debt collector. The third party debt collector would then have three and one half (3 1/2) years to take legal action against you. On March 2, 2009, you would no longer be legally obligated to pay that debt.

Can credit collectors continue to attempt collections on the debt after the four year statute of limitations expires?

Yes. A credit collection agency can continue to collect the debt forever, even after the seven (7) year consumer reporting requirements have expired.

However, you cannot be forced, legally, to pay this debt.

Can the statute of limitations be re-started somehow?

Yes. If at anytime you make a payment against the remaining balance of the debt, the statute of limitations period restarts.

If, for example, it has been five years since the debt became delinquent, and you send a payment to a collection company, the statute of limitations clock restarts from that day and you may be legally obligated to pay the remainder of the debt. This would also restart the credit bureau reporting time line, meaning the debt could appear for another seven (7) years on your credit report.

In order to prevent the statute of limitations from restarting, do not make a payment to a third party debt collector or the original creditor unless you understand the implications of making such a payment.

A law suit has been filed against me, but the statute of limitations on my debt has expired. What should I do?

Unless you are an attorney or understand the process of filing paperwork through the justice system, it is highly recommended that you contact an attorney to assist you. The debt collection agency has taken the extraordinary step of filing a legal claim through the civil justice system, and they have an attorney who will fight for them.

You should do the same, especially if the statute of limitations has expired.

Click here and we may be able to assist you in locating an affordable attorney or consumer advocate in your area.

How can Big Tex Credit Repair help me if the Statute of Limitations on a debt has expired?

Our credit repair program has been designed specifically with Texas laws in mind. There are a variety of protections under Texas law that are not available through Federal statutes.

If the statute of limitations on your debt has expired, you can, without worry of legal ramifications being taken against you, combat the credit collection company directly and have the debt corrected or removed, depending on your specific circumstances.

The do-it-yourself Big Tex Credit Repair program uses techniques so powerful that debt collectors often give up their collection efforts permanently rather than face the risk of legal action if they have made even minor mistakes with how your debt has been reported or how they have attempted to collect the debt.*

Big Tex shifts the power from their hands to yours.

[*Every individual's circumstances are different, and therefore the results for each individual are dependent on the particularities of your specific case.]

While the FDCPA protects consumers on the federal level, the State of Texas has also found it necessary to create its own consumer protections against unscrupulous debt collectors.

How are Texans protected from debt collectors who threaten, harrass or use coercive means to try and collect debt?

The State of Texas protects consumers from debt collectors under the Texas Finance Code, Title 5, Chapter 392.

What protections does the Texas Finance Code offer?

Under Texas Finance Code, a resident is protect from debt collectors who engage in threats, coercion, harassment, abuse, fraud, deception and unfair or unconscionable collection methods. Some common illegal methods employed by debt collectors include:

• using or threatening to use violence to collect a debt
• falsely accusing the debtor of fraud
• threatening the consumer with arrest
• threatening seizure of assets without proper court proceedings
• using profane or obscene language
• making repeated phone calls and causing a phone to ring repeatedly with the intent to harass the consumer

For a complete overview of prohibited debt collection practices under the Texas Finance Code, click here.

What recourse do I have if a debt collector has broken the law and acted without regard to Texas Finance Code?

Violations of Texas Finance Code are remedied through criminal and civil means.

Criminal: Any violation of Texas Finance Code is a criminal misdemeanor. If a debt collector attempts to collect a debt using illegal means, they can be held criminally liable and may face fines of $100 to $500 for each violation.

Civil: In addition to criminal remedies, action by the consumer can be taken under civil law. Remedies include injunctive relief, monetary damages and attorneys fees.

Deceptive Trade Practice: Any violation of the Texas Finance Code by a debt collector is considered a deceptive trade practice under Texas Business and Commerce code and allows the consumer to also take legal action under this code. Texas Business and Commerce code includes financial remedies that amount to three times the amount of any monetary damages incurred by the consumer.

What should I do if I think a debt collector has broken the law by trying to harass, coerce, deceive or abuse me?

These specific violations are best handled by an attorney that is familiar with Texas Finance Code.

If you believe you have been harassed, coerced, deceived, defrauded or abused by a debt collector, click here and we can assist you with finding a qualified attorney that can help.

However, if that balance has been transferred to a collection agency, then the fees and interest payment obligations may change. In Texas, the law states that a third party debt collection agency must detail fees or charges they have added to the original debt.

Which Texas statute details the interest and fees requirements?

All third-party debt collection agencies are required by Texas Finance Code, Section 392.303 to provide evidence that they have the authority to collect interest or a charge, fee, or expense incidental to the debt obligation.

The debt collector is attempting to collect more than my original balance with the original creditor. Is this Legal?

Maybe.

At the time you were issued your loan or credit line you most likely completed and signed an application. This application should have specifically detailed the interest rate, charges, fees or incidental expenses that could be charged in the event of late payment, non-payment or default.

According to Texas Finance Code, the debt collector must show proof that you agreed to these additional charges and that those charges have been expressly authorized by said agreement.

If they are unable to show definitive proof, which includes your agreement to the terms of the loan, then they are illegally adding fees, interest and charges to your balance.

How do I request proof that these additional charges have been expressly authorized?

You may request that the third party debt collector “validate” the debt. In this debt validation, the debt collector must provide, among other things, the name of the original creditor, the date of transfer from the original creditor to the third party debt collector, and signed documentation proving that the debt has been transferred.

When requesting a debt validation from the original creditor, you may also request other pertinent information related to the debt, including a detailed description of all interest, fees, charges and incidental expenses that have been added to your balance after it was transferred from the original creditor to the third party debt collector.

Additionally, if even $1 in additional expenses have been added to your balance, the debt collector must provide evidence that they are expressly authorized to add such charges.

Evidence, in this case, would be the original signed (with your signature) contract detailing the third party debt collector’s authorization to collect such fees.

Learn more about debt validation here…

What is the likelihood that the third party debt collector will have this contract?

Because debt is generally purchased from original creditor in bulk, and is often passed from one collection agency to another, the odds that a third party debt collector has the original contract signed by you authorizing additional fees and expenses are pretty low.

So, if I have been charged additional fees illegally, can the account be removed from my credit report and does the debt collector have to cease collections?

It depends.

Option 1: After you have requested a debt validation, and if the third-party debt collector is not able to provide evidence that they are authorized to collect additional interest and/or fees, you can request that they update your outstanding balance with the credit bureau(s) so that it is accurate.

Option 2: If the third party debt collector is unable to provide evidence that they are authorized to collect additional interest and/or fees, you can hold them accountable under Texas Law. This option often leads to complete removal of the inaccurate listing with the credit bureaus and a permanent stop to collection attempts on the account.

By illegally collecting interest, charges, fees or incidental expenses, the third party debt collector has engaged in what Texas Law defines as “unfair and unconscionable means.” As such, they have commited a criminal act and can be held accountable by the State of Texas. They are also subject to civil remedies under Texas Finance Code 392.403 holding them financially responsible to you, the alleged debtor.

In addition, a violation of Texas Finance Code can be legally pursued under the Texas Business and Commerce Code Deceptive Trade Practices statutes. Under these statutes, the debt collection agency can be ordered to pay a trebling, or three times the amount of damages awarded under Texas Finance Code.

What steps do I need to take if I believe a third party debt collector is illegally collecting interest or fees?

Step 1: Verify that the debt collection agency is, in fact, illegally collecting these fees by requesting a debt validation.

If you find that they have violated Texas Law, then you can further pursue the matter.

Step 2: In order to effectively fight third party debt collectors, it is recommend that you pursue further action under Option #2 from the above question/answer. You have several different approaches to take, with the two most effective techniques below:

• Take the third party debt collection agency to court for violation of Texas Finance Code and Deceptive Trade Practices Law. You can also file a complaint with the Texas Attorney General to have the State pursue criminal action. The process of pursuing civil remedies may take several weeks or months to complete. Criminal remedies are at the discretion of the Attorney General’s office and may or may not be initiated.
• Offer the debt collector a settlement option. If you would prefer to focus on quickly removing this inaccurate listing from your credit report and to stop all future collection attempts, then it  may be in your interest to offer a settlement to the third party debt collector. The Big Tex Credit Repair Program lets you take charge of your personal credit and provides clients with the tools necessary to initiate a Debt Validation and subsequently an Intent to Sue action against a debt collector who has violated any provision of Texas Law. Within these actions you will provide the third party debt collector the ability to settle out of court, on your terms, or face legal action. If history is any guide, then most debt collection agencies buckle under the pressure.

By initiating a debt collection, the third party debt collector must be able to prove that they are the legitimate owners of the debt, as well as to provide the alleged debtor with specific information regarding the debt.

What is a “debt validation” request?

All debt collectors operating in the State of Texas must be able to verify, or “validate,” any debt on which they are attempting to collect payment.

Texas Finance Code Section 392.202 requires a debt collection agency or credit bureau to provide the alleged debtor with specific information concerning their debt including but not limited to:

• The name of the original creditor
• The original date of default or non-payment of the debt
• The date the debt was transferred from the original creditor to the third party debt collector
• The original balance
• The current balance
• Surety bond information

How do I request a debt validation?

The most effective way to request a validation of debt is to send the debt collector a certified letter requesting specific information.

You must also request that the debt collector reply in writing to ensure that there is a record of all correspondence between yourself and the collection agency.

How much time does a debt collector have to respond to my debt validation request?

The debt collection agency has thirty (30) calendar days to respond to a debt validation request.

I sent a debt validation request and the debt collector failed to respond or did not respond in time. What next?

If a debt collector has failed to respond to your debt validation request, then they have essentially admitted, per Texas Finance Code 392.202(b)(2), that the debt in question is inaccurate.

As such, all collection efforts on the debt must cease and any derogatory listing should be permanently removed from any consumer credit reports.

The debt collector has five (5) days after admission of inaccuracy of this debt to cease collections and remove credit bureau listings. Failure by a collection agency to meet this five (5) day deadline means that they have violated Texas Law and would subject the third party debt collector to civil and criminal penalties.

By taking charge of your personal credit with the Big Tex Credit Repair Program, you can force credit collection agencies, through legal means, to stop collections, clear your credit report and restrict the transfer of the alleged debt to another collection agency.

The third party debt collector responded to my debt validation within 30 days. Is there anything else I can do?

It depends.

By following the Big Tex Credit Repair Program guidelines, you should have requested information specific to the alleged debt that would only be available to a debt collector who legitimately transferred the debt from the original creditor to themselves.

Because debt collectors may often purchase debt for pennies on the dollar and en masse, they may not have all of  the specific information pertaining to the debt. While they may have your name, social security number, original balance and current balance, they may have failed to properly acquire additional paperwork regarding this debt, namely a contract signed by you authorizing the original credit line or interest/fees information authorizing the debt collector to add additional expenses to the original debt balance.

In some cases, the debt collection agency may not even be legally collecting debt in the State of Texas, which immediately invalidates their collection claim.

Failure of the credit collection agency to provide this important information, even if they sent a response within thirty days, may allow you to continue to pursue the debt’s inaccuracy through legal means.

The Big Tex Credit Repair Program puts the power and legal know-how in your hands so that you can pressure the credit collection agency to provide you with all of the necessary information concerning your debt or force them to cease collections.

This law was instituted because the State of Texas wanted to protect consumers from unscrupulous debt collection methods and prevent inaccurately reported information from appearing on credit bureau reports. Under these laws, an alleged debtor who is a resident of Texas has the right to pursue monetary civil remedies against a third party debt collector’s surety bond.

What Texas State Law requires that third party debt collectors maintain insurance?

Texas Finance Code Section 392.101 requires that “a third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by this section. A copy of the bond must be filed with the secretary of state.”

What exactly is a Surety Bond?

A third party debt collector essentially obtains insurance from a surety company in the form of a bond, so that if the collector violates Texas debt collection law, they can be held financially accountable.

Because most debt collectors operate outside of the State of Texas, the state’s Attorney General has no jurisdiction to pursue criminal action. Pursuing civil actions for Texas Residents would be a burdensome and difficult process, as it would need to be done in the home state of the debt collector, through that particular state’s court system.

Thus, a surety bond valued at $10,000 is required for all debt collectors operating in Texas.

If the company fails to follow Texas Law, victims seeking monetary damages for debt collection violations can pursue the Surety Bond company in a state court of law.

Does a debt collector based in Texas also have to maintain an active surety bond?

Yes. All third party debt collection agencies must maintain an active surety bond with a surety company authorized to do business in the State of Texas.

How can I find out if the debt collector that has contacted me has an active surety bond in Texas?

The Texas Secratary of State maintains a Debt Collector Search that lists all debt collectors who have ever applied for a surety bond.

It also lists the date the surety bond was issued, the current status of the bond, the name of the surety company, and the surety bond number.

You can perform a search to determine if a debt collector has a surety bond by visiting the following link at the Secratary of State’s web site:

http://direct.sos.state.tx.us/debtcollectors/DCSearch.asp

You can find a list of authorized surety companies by visiting this link:

http://www.tdi.state.tx.us/commercial/pcbondsurety.html#surcompany

The debt collection company that has contacted me does not have a surety bond, or their surety bond is no longer active. What do I do next?

If you have confirmed that the debt collector that has contacted you does not have an active surety bond, then they are illegally attempting to collect debt in Texas.

You can immediately take action to remove this listing from credit bureaus and cease future collection attempts for this debt.

Step 1: You must request a debt validation from the collection agency. This is a request for evidence that the debt is legitimate and that it is being collected lawfully. In this debt validation request, you must request proof of an active Texas surety bond.

Step 2: If the company fails to provide a satisfactory response to your debt validation, you can move to cease collections. Within this step you may also advise the debt collection agency that you intend to file a complaint with the Texas Attorney General if they fail to comply with your request. While the collection company may escape Texas civil penalties in this particular case, their violation may impede their ability to collect debt in Texas in the future because of a denied surety bond application, costing their business untold revenue.

Step 3: Have related collection accounts removed from all major credit bureaus. Because the debt collector is out of state and does not maintain an active bond the credit bureaus must comply with your deletion requests, as they themselves must be bonded to do business in the State of Texas.