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CGaskill
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 Posted: Fri Aug 17, 2007 8:34 am Post subject: What do I do if my second mortgage is in charge off status, |
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| I have two mortgages and I went through foreclosure several months ago but was able to get my loan with my first mortgage reinstated. The second lein holder immediately charged off my loan with them and won't negotiate at all. What are the rights of the second mortgagor and what are the possible repercussions if I continue only to pay my monthly payment with my first mortgage? |
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 evolovik26
Community Experts
Joined: 15 Aug 2007
Posts: 538
Location: Minneapolis
28.93 Dollars($)
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| Posted: Fri Aug 17, 2007 10:40 am Post subject: |
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A second mortgage holder cannot do anything but wait ( unless they are the same bank ) they are in the second position and therefore cannot initiate foreclosure untill the first mortgage calls the loan due or they are in first position ( first motrtgage been paid off ). However expect your second mortgage to charge off and your credit will be hurt significantly. You will likely never will be able to purchase another home and will continue incurring late fees and interest on your second mortgage. In addition if you ever attempt to sell or refinance the home they will come and collect the ballance you owe them before you get your money.
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Eugene Volovik
Home Loan Consultant
Countrywide
612-481-3127
Conventional, FHA and Commercial Lending in 48 states |
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colin
Moderator
Joined: 30 Jun 2006
Posts: 602
Location: Waltham, Massachusetts
112.65 Dollars($)
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| Posted: Fri Aug 17, 2007 12:50 pm Post subject: |
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Hi Gaskill & Eugene,
Welcome to Mortgagefit forum.
| Quote: | | what are the possible repercussions if I continue only to pay my monthly payment with my first mortgage? |
Gaskill if you continue paying only the first mortgage, the second mortgage has very less powers to do anything against you. The reason is that his mortgage lien is subordinate to the first mortgage lien.
What it means that even if the mortgage is in default, he will not attempt to foreclose as if he forecloses then he will have to pay off the first mortgage balance out of the sale balance and then anything left after first mortgage is paid can be used in settling the second mortgage dues.
First mortgage holder has the right to recover his dues first because of the first lien position. And if any other subordinate loan attempts recovery of their dues they will have to pay off the first mortgage holder.
But as the second mortgage holder has charged off the loan, it is affecting your credit score. You score must be going down because of the charge off. It will have an affect if in future you plan to take any other type of loan. And the interest rates charged from you will be quite higher than normal because of the second mortgage charge off on your credit report.
Colin |
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larry
Joined: 27 Jun 2007
Posts: 3328
474.61 Dollars($)
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| Posted: Sat Aug 18, 2007 2:06 am Post subject: |
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Hi Gaskill,
As the second lien holder has charged off the loan, it means that you no longer have to pay for the outstanding debts towards the second loan. But the lender may inform this to the IRS and you may have to pay the income tax on the amount of the forgiven debt. To know more on the consequences after a loan is charged off, please refer to: http://www.mortgagefit.com/foreclosure/charge-off.html |
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Dee
Guest
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| Posted: Wed Sep 30, 2009 12:37 pm Post subject: Incorrect information |
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In regards to the information given about the charge off, you DO still have to pay for your outstanding debt. A charge off is an accounting function that affects the company internally. The mortgage company is basically taking a loss on your bad debt, since you are not paying. You receive a 1099-C at the end of the year, and have to claim the entire amount as income.
You still owe the debt, they will still come after you, and they can still refer you to outside collection agencies who will pursue payment.
Also, the second lien holder can and will foreclose on you for non-payment if foreclosure is warranted. The second lien holder will complete a financial analysis and review the expected return due to them. If the return qualifies under their guidelines, they will commence foreclosure, pay off your senior lien, and take title to your property.
In this case, since they charged off your second lien, they have already made the determination that foreclosure is not warranted.
When you choose to sell your home, the second lien holder still has a lien on your property, and you will need to satisfy both the first and second lien in order to sell.
If your first lien goes into foreclosure, and the bid amount at the sale is not enough to satisfy your total debt, it will create a deficiency balance which you may be liable to pay, depending on your state law.
You would still be responsible for the 2nd lien, regardless of the foreclosure as you signed under the terms of the note.
Hope the info helps! |
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L
Guest
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| Posted: Wed Jan 20, 2010 9:11 am Post subject: morgage in charge off |
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| Hi. my morgage is in charge off status and the morgage company said that if i pay somthing a month . they will not foreclose on my home. Can i trust that? The morgage will not give me the agreement in writing, but the said i can keep my home. What can i do? |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 9749
Location: bloomfield, ct
35.02 Dollars($)
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| Posted: Wed Jan 20, 2010 11:37 am Post subject: |
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you have two options - do what they've suggested and hope they back up their word with deeds; or do nothing and let them foreclose.
as long as you've got proper receipts for payments made, or canceled checks or some other documentation, you can't be hurt. that is, unless you're heading for foreclosure no matter what happens. obviously, all the payments they'd be looking for would have to arrive or else they'd begin the foreclosure.
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George M. Akerley
Loan Consultant
860-221-5044 |
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