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chelafr68 · Joined: 31 Jul 2010 Posts: 1 1.45 Dollars($)

I live in Ca and lost my job. I have a 1st mortgage which I received a loan modification for and I am current on it. But my 2nd mortgage (used for home improvements)was charged off by Bank of the West over a year ago. They are now calling me and are willing to negotiate a new payment plan. But they are saying that they keep their charge offs in-house and attempt to collect for 2 years. They are willing to do a 20% reduction (and won't negotiate for any less)and a low payment which I can afford. That 20% will be forgiven and I will receive a 1099 for it. Then when I sell the house if I am short, the amount will convert to unsecured debt and will come after me. However, they are saying if I don't work with them, after the 2 years they will send it off to their legal department (won't send it to a CA)and won't tell me what they will do after that point. My question is, do you know what can happen if I don't negotiate and they turn it over to the legal department? Will they continue working with me and possibly negotiate for less? I'm trying to weigh my options, but don't know what to do.

sara · Posted: Mon Aug 02, 2010 3:15 am Post subject:

Hi chelafr,

Once the lender signs off the account to the legal department, they will handle your account. The legal department can sue you for the deficient balance. It's better to accept the 20% reduction as the lender is offering you and pay off the dues as per the repayment plan.

Take care.

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