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palladinos2 · Joined: 11 Jan 2009 Posts: 1 1.32 Dollars($)

I recently had a loan modification done on my principal residence. We asked for a principal reduction however the documents never addressed a principal reduction. I have paid two months of mortgage payments and all of a sudden my second has been charged off and I cannot pay on it. No one at WaMu knows whats going on. Could it be they charged off the 2nd to reduce my principal?

helping_user · Posted: Sun Jan 11, 2009 11:37 pm Post subject:

Welcome palladinos.

The mortgage company should send you a notice before issuing a charge-off. A charge off has a negative impact on your credit score. So, they should have informed you prior to the charge-off.

I suppose the lender charged-off the second loan just because they felt it wouldn't be easy for you to pay off the entire first loan as well as the second. They charged-off the second so that you can make full payment on the first, that is, they haven't reduced the principal balance on the first mortgage. After paying off the first in full, if possible you can pay off the second.

A second mortgage charge off doesn't mean you don't owe the debt. But yes, the lender won't come after you to collect it. However, if he wants, he can sell it off to a collection agency who'll collect the debt from you. You can ask the lender as to whether he has any plans of selling your second mortgage to a collection agency.

Thanks.

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Do mortgage companies consider principal reductions charge offs