About three years ago we bought a new home. We were assured by the real estate agent that our old home would sell right away. Three real estate agents and almost three years later the house is still not sold. We quit making payments in October of last year because we could no longer afford two house payments and were falling behind on our current home. We WANTED the bank to take it!! In March 08 they filed for foreclosure, in May they filed for a default judgment. Two days ago I received a letter in the mail from the courts saying the plaintiff dismissed the case WITH prejudice. I called the mortgage company and they gave me the run around saying they could not find my mortgage. Finally after holding ten times for a total of over an hour the woman said she found it. She became very nasty because the loan was so overdue. I asked her why the foreclosure was stopped first she said it was to save my credit….come on. Then she said that they were not going to sell my house for me and that the area’s property values were rapidly declining and they would not get enough money for the amount I owe. She then told me that I had better do something fast (such as a short sale or make payments) because they are going to start garnishing wages. My questions are:

How can they garnish if they dismissed their own case with prejudice? Doesn’t that mean they cannot sue again?
Why on earth would they dismiss with prejudice unless they had lost the original loan documents or something?
Can they really garnish without taking the house, or is the house collateral that they have to use to cover some or all of the debt?

Please help!! I plan on seeing an attorney Friday, but I cannot stop thinking about this mess.
Thank you for your response bull. We did rent the house from April ’05 to Feb ’06, they damaged the house so badly we spent five months remodeling. We swore we would never do that again lol.
I just spoke with an attorney over the phone and he said they can garnish and probably will. So l guess we will try a shortsale and if that does not work he wants to do a chapter 7 bankrupty. Ugh if anyone reading this is planning on buying a new home….SELL YOUR CURRENT HOME FIRST!!!!!! Do not trust a real estate agent who says they will sell the property fast!!! That is just real estate lingo for, “I would rather have a sure buy than an iffy sale”.