Second mortgage charge off - What does it mean?

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Our 2nd mortgage with beneficial was an original 15,000.00 loan. It has escalated to 32,000.00. They are going to charge off this month. My husband is disabled & 1 child disabled. The loan is only in his name. But my name is on the deed. I understand a 1099 we will receive. What happens to the charge off. with a lien against the home. Will it come off in 7 years? Thanks, Melissa

sara · Posted: Thu Dec 07, 2006 8:43 pm Post subject: RE: charge off

Hi Melissa,

If the second mortgage lender wants to charge off your debt, it means that the unpaid loan amount with interest will be reported as a loss for the creditor when he uses an accounting method for calculating tax purposes.

A charge off does not mean that you no longer owe the debt. The creditor has the right to collect the debt long after it has been charged off and for this, he takes the help of a collection agency most often. Usually charge-offs occur when the monthly loan payments are not made for more than 6 months.

Thanks,

Sara

Caron

Hi Melissa,

I can feel what you are going through. But don't lose hope. Let's hope that things will be better after some time. The only thing is that you need to be confident and have patience.

Regarding the charge-off, it does have a negative affect on the credit report; most charge-offs stay on the report for 7 years and 180 days from the date of the first non-payment (under the Fair Credit Reporting Act).

Paying down the debt cannot remove the charge-off from the report. Instead, it will be updated to a "paid charge-off" after the unpaid debt is paid off. Often a creditor may accept a partial payment towards the debt and in that case, the account is reported as "settled charge-off".

Once the charge-off is marked as "settled" or "paid", the lien on your house will be removed. It does not matter if the loan is in your husband's name. If your name is on the deed and you are able to pay off a certain amount towards the unpaid debt, the creditor may settle the charge-off and remove the lien. You can thus save your home.

Thanks,

Caron.

Guest 0.10 Dollars($)

We did a short sale in 2006 and we sold the house for what they wanted to sale for but on our 2nd they are saying that it was paid for less than owed but also shows collection account. I am trying to clear this up but when I call I get the account is paid in full then I called back to get a fax copy of our conversation and the next person told me it was a collection but charged off so now it stand as if it was a foreclouser. What can I do about this. We were suppose to close escrow tomorrow but the loan company told us Tuesday that they can't do it because this is showing like a foreclouser. Please help any advice would be appreciated.

Thanks,

Sheila

larry · Joined: 27 Jun 2007 Posts: 2598 349.41 Dollars($)

Hi Sheila,

What you are saying is totally confusing. see if the second mortgage charged off that doesn't mean that the mortgage is paid in full. It seems it is now in collection and you should pay it off. So pay it of ASAP before going for another mortgage.

You have gone for short sale. So it should not shown foreclosure on your credit report. So pay the due debt off and ask the credit repairing agency to update your report.

Feel free to ask if you have any further questions.

Best of luck,
Larry

Jessica · Posted: Fri May 09, 2008 5:37 am Post subject: RE: foreclosure or collection?

Hi Sheila,

Foreclosure and collections are two different issues altogether. So, you need to get clarified as to whether the second is shown to be foreclosed or charged-off on your credit report. Depending upon how it's reflected on your report, you need to dispute inaccurate information, if any with the credit bureau. By the way, did you pay the second mortgage in full or was it a partial payment?

Regards,

Jessica.

Niicss · Joined: 03 Oct 2005 Posts: 662 94.17 Dollars($)

Hello all.

Mortgage charge off means that the lender has written it off as bad debt but the borrower is still liable to pay it off. Mortgage charge off make a bad effect on the credit report. So if it is possible, it is better to pay it off.

Why are you going for a new mortgage when you have not yet pay the outstanding balance of your previous mortgage? First pay it off. That will make a good effect on your credit and help you to improve your credit. Then you can go for a new mortgage.

Let me know if you have any further question.

cliff · Posted: Fri May 09, 2008 6:06 am Post subject:

Hi Melissa,

It appears you are asking a question about your husbands credit and how to improve it from this charge off that is on his report is that correct?

Niicss · Joined: 03 Oct 2005 Posts: 662 94.17 Dollars($)

Hi cliff.

Are you saying charge off improve credit??? oh I do not think charge off can help anyone to improve credit. If you only pay it off that will help you to improve the credit. Isn't it???

Guest 0.10 Dollars($)

What the bank is saying that anytime you do a short sale it shows as a charge off. But we did a short sale and sold the house for what they asked for. I did contact them and they said they had to show some where, where it says charge off but it was suppose to be on their books not my credit report that is what they told me. What is says on my credit report is that the balance was paid in full for less than the amount. I had a prepayment penalty on my loans and that is what they took off to settle the loan through short sale.

cliff · Posted: Mon May 12, 2008 9:36 am Post subject:

So no charge off is shown on your credit report? Also, what about your second mortgage is it paid or was it part of the negotiated short sale?

Sorry, Niics I just saw your question from an earlier post and I definatley was not saying a charge off would help your credit.

Guest 0.10 Dollars($)

yes both 1st and the 2nd was included in the short sale. We did sell for what they wanted to sell for but on my credit report it is showing a charge off and an m9 (I don't know what this is).

Guest 0.10 Dollars($)

yes a charge off is showing on my credit report because they said anytime you do a short sale it is considered a charge off.

larry · Joined: 27 Jun 2007 Posts: 2598 349.41 Dollars($)

Hi sheila,

Short sale means you have sold the property in less than what you owe. So you have not paid the full payment. As Niicss mentioned charge off does not mean that the debt is forgiven and you still owe it. So better pay the due debt off. That will help you to improve the credit report.

You should inform the credit bureau that it was short sale not foreclosure. You can also talk with an attorney on this regard.

Feel free to ask if you have any further questions.

Best of luck,
Larry

Guest 0.10 Dollars($)

I was just informed yesterday that fha made a mistake and said that we had a foreclouser but in fact it was the people that bought it from us, they figured it was the same loan company so they thought it was us. They never bothered with pulling the deed or what ever it is called to check to see if it was cleared under our name. Our loan company that we had a short sale with agreed that it was reported wrong but to get them to clear this matter is taking forever.

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