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   (Reuters) - Many thousands of Americans who lost their homes in   
   the housing bust, but have since begun to rebuild their   
   finances, are suddenly facing a new foreclosure nightmare: debt   
   collectors are chasing them down for the money they still owe by   
   freezing their bank accounts, garnishing their wages and seizing   
   their assets.   
      
   By now, banks have usually sold the houses. But the proceeds of   
   those sales were often not enough to cover the amount of the   
   loan, plus penalties, legal bills and fees. The two big   
   government-controlled housing finance companies, Fannie Mae and   
   Freddie Mac, as well as other mortgage players, are increasingly   
   pressing borrowers to pay whatever they still owe on mortgages   
   they defaulted on years ago.   
      
   Using a legal tool known as a "deficiency judgment," lenders can   
   ensure that borrowers are haunted by these zombie-like debts for   
   years, and sometimes decades, to come. Before the housing   
   bubble, banks often refrained from seeking deficiency judgments,   
   which were seen as costly and an invitation for bad publicity.   
   Some of the biggest banks still feel that way.   
      
   But the housing crisis saddled lenders with more than $1   
   trillion of foreclosed loans, leading to unprecedented losses.   
   Now, at least some large lenders want their money back, and they   
   figure it’s the perfect time to pursue borrowers: many of those   
   who went through foreclosure have gotten new jobs, paid off old   
   debts and even, in some cases, bought new homes.   
      
   "Just because they don't have the money to pay the entire   
   mortgage, doesn't mean they don't have enough for a deficiency   
   judgment," said Florida foreclosure defense attorney Michael   
   Wayslik.   
      
   Advocates for the banks say that the former homeowners ought to   
   pay what they owe. Consumer advocates counter that deficiency   
   judgments blast those who have just recovered from financial   
   collapse back into debt — and that the banks bear culpability   
   because they made the unsustainable loans in the first place.   
      
   “SLAPPED TO THE FLOOR”   
      
   Borrowers are usually astonished to find out they still owe   
   thousands of dollars on homes they haven't thought about for   
   years.   
      
   In 2008, bank teller Danell Huthsing broke up with her boyfriend   
   and moved out of the concrete bungalow they shared in   
   Jacksonville, Florida. Her name was on the mortgage even after   
   she moved out, and when her boyfriend defaulted on the loan, her   
   name was on the foreclosure papers, too.   
      
   She moved to St. Louis, Missouri, where she managed to amass   
   $20,000 of savings and restore her previously stellar credit   
   score in her job as a service worker at an Amtrak station.   
      
   But on July 5, a process server showed up on her doorstep with a   
   lawsuit demanding $91,000 for the portion of her mortgage that   
   was still unpaid after the home was foreclosed and sold. If she   
   loses, the debt collector that filed the suit can freeze her   
   bank account, garnish up to 25 percent of her wages, and seize   
   her paid-off 2005 Honda Accord.   
      
   "For seven years you think you're good to go, that you've put   
   this behind you," said Huthsing, who cleared her savings out of   
   the bank and stowed the money in a safe to protect it from   
   getting seized. "Then wham, you get slapped to the floor again."   
      
   Bankruptcy is one way out for consumers in this rub. But it has   
   serious drawbacks: it can trash a consumer's credit report for   
   up to ten years, making it difficult to get credit cards, car   
   loans or home financing. Oftentimes, borrowers will instead go   
   on a repayment plan or simply settle the suits — without   
   questioning the filings or hiring a lawyer — in exchange for   
   paying a lower amount.   
      
   Though court officials and attorneys in foreclosure-ravaged   
   regions like Florida, Ohio and Illinois all say the cases are   
   surging, no one keeps official tabs on the number nationally.   
   "Statistically, this is a real difficult task to get a handle   
   on," said Geoff Walsh, an attorney with the National Consumer   
   Law Center.   
      
   Officials in individual counties say that the cases, while   
   virtually zero a year or two ago, now number in the hundreds in   
   each county. Thirty-eight states, along with the District of   
   Columbia, allow financial institutions recourse to claw back   
   these funds.   
      
   "I've definitely noticed a huge uptick," said Cook County,   
   Illinois homeowner attorney Sandra Emerson. "They didn’t include   
   language in court motions to pursue these. Now, they do."   
      
   "A CURSE"   
      
   Three of the biggest mortgage lenders, Bank of America,   
   Citigroup, (C.N) JPMorgan Chase & Co (JPM.N) and Wells Fargo &   
   Co. (WFC.N), all say that they typically don't pursue deficiency   
   judgments, though they reserve the right to do so. "We may   
   pursue them on a case-by-case basis looking at a variety of   
   factors, including investor and mortgage insurer requirements,   
   the financial status of the borrower and the type of hardship,"   
   said Wells Fargo spokesman Tom Goyda. The banks would not   
   comment on why they avoid deficiency judgments.   
      
   Perhaps the most aggressive among the debt pursuers is Fannie   
   Mae. Of the 595,128 foreclosures Fannie Mae was involved in –   
   either through owning or guaranteeing the loans - from January   
   2010 through June 2012, it referred 293,134 to debt collectors   
   for possible pursuit of deficiency judgments, according to a   
   2013 report by the Inspector General for the agency’s regulator,   
   the Federal Housing Finance Agency.   
      
   It is unclear how many of the loans that get sent to debt   
   collectors actually get deficiency judgments, but the IG urged   
   the FHFA to direct Fannie Mae, along with Freddie Mac, to pursue   
   more of them from the people who could repay them.   
      
   It appears as if Fannie Mae is doing just that. In Florida alone   
   in the past year, for example, at least 10,000 lawsuits have   
   been filed — representing hundreds of millions of dollars of   
   payments, according to Jacksonville, Florida-based attorney Chip   
   Parker.   
      
   Parker is about to file a class action lawsuit against the   
   Dallas-based debt collection company, Dyck O'Neal, which is   
   working to recoup the money on behalf of Fannie Mae. The class   
   action will allege that Dyck O'Neal violated fair debt   
   collection practices by suing people in the state of Florida who   
   actually lived out of state. Dyck O'Neal declined to comment.   
      
   In Lee County, Florida, for example, Dyck O'Neal only filed four   
   foreclosure-related deficiency judgment cases last year. So far   
   this year, it has filed 360 in the county, which has more than   
   650,000 residents and includes Ft. Myers. The insurer the   
   Mortgage Guaranty Insurance Company has also filed about 1,000   
   cases this past year in Florida alone.   
      
   Andrew Wilson, a spokesman for Fannie Mae, said the finance   
   giant is focusing on "strategic defaulters:" those who could   
   have paid their mortgages but did not. Fannie Mae analyzes   
   borrowers' ability to repay based on their open credit lines,   
   assets, income, expenses, credit history, mortgages and   
   properties, according to the 2013 IG report.  "Fannie Mae and   
      
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