Can 2nd lender pursue deficiency judgment after charge off?

hi robert,

i don't think the second mortgage holder will get the mortgage note back from the collection agency. they have sold the debt to the collection agency, who will now be collecting the money from you. but since you say you have no assets which they can go after, i believe they will be keen on working out a settlement with you than suing you for the debt. talk with the collection agency and negotiate with them to settle the second mortgage debt. your first mortgage has nothing to do with the second mortgage. thus, the modification process on the first mortgage will not be affected by your second mortgage debt.

My house foreclosed 2 years ago in AZ, and I recently began receiving calls from a collection agency. Wells Fargo charged off the HELOC (not purchase money 2nd). Can teh collection agency file a judgement against me for the $63k even though Wells Fargo wrote it off?

To Melissa,

A charge off does not mean the debt has been written off or cancelled. If Wells Fargo charged off the debt and sold it to the collection agency, the agency can collect it from you from. They can sue you if you do not pay them off and can garnish your wages or come after your assets. However, you can negotiate with the collection agency and settle the debt for an amount less than what is owed on the property. You can also set up a repayment plan and pay off the debt in gradually.

We are trying to settle our $300K HELOC with Wells. Right now Tiburon Financial is willing to take 10% or $32,5K in one lump sum. We only have $25K loaned from a friend. Should we push to have a settlement lower than 10%? And any other suggestions to make this happen?

I am still trying to understand that once the loan is "charged off" and sent to a collection agency, can they foreclose if we are current with our first and there is no settlement on the HELOC?

Hi Bridget!

Welcome to forums!

You can negotiate with the lender so that it agrees to settle the dues for less than 10%. However, it will be completely the lender's discretion whether or not he will agree to it.

Once the loan is charged off, the lender cannot foreclose the property. You will have to settle your dues with the collection agency.

Feel free to ask if you've further queries.

Sussane

I appreciate the rapid response. I am dealing with Tiburon and they are their "consultants and debt collectors". The manager was telling me that they have never "heard of anyone getting 10%" and that we are the lowest of all their 40 clients in that branch. I find it hard to believe they are only dealing with 40 clients and that they can't go back and say that we only have $25K. This is the same group of people 4 months ago trying to collect $45K and said that it's the lowest they would ever go.

I have also heard that if we let them foreclose they would likely only get $5K on the HELOC....

So that being said, I think we should wait and get them to go down......just a gut feeling. They suddenly were willing to "accept" the 10% offer 4 weeks ago. How low will they go?

Welcome Bridget,

It is completely the lender's discretion whether or not they would go below 10%. I would, rather, suggest you that you should pay the required amount that they have agreed to.

So our second was charged off (Chase) and presumably given to a collections agency. But this was purchase money loan, we have NOT refinanced, and we live in CA. As I understand there can be no deficiency judgements against any purchase money loans in CA, is that correct? So the charge off means what then...?

Hi Mr_Mutt!

Welcome to forums!

The lender cannot come after you in order to collect the dues any further as he has charged off the loan. However, if he has sold off your loan account to a collection agency, then they can come after you in order to collect your dues.

Feel free to ask if you've further queries.

Sussane

As per the Lender of my second mortgage and my credit report, my second mortgage was "charged off" one year ago. The comments on my credit report are "charged off as a bad debt" and "Profit and Loss write-off"

I called them this morning, after one year, to ask if they could send me a letter about the "charge-off". The gentleman on the phone, after taking all details from me and gathering information that I was currently under active foreclosure as my Lender has still not modified my loan after several months....the gentleman on the phone became aggressive and threatened to send court notice to me and said "charge off" meant I still owe the debt and it was very active and they would now write a re-payment plan, and that my account was being re-reviewed, and if I didn't pay, would I prefer a court judgement instead etc?

I hung up the phone after the conversation went too long.

Now I am worried. Did I awaken a sleeping dog?

Also, the Bank is the same for both my mortgages, except that the behind the scenes investors are now different as the Bank has "contracted" with another Investor on the first mortgage.

I am confused and very scared. Please help.

BV

Hi BV!

Welcome to forums!

If the debt has been already charged off by the lender, then he won't be able to come after you for it. However, if he has assigned the account to a collection agency, then it can come after you in order to recover the dues until the SOL is over.

Feel free to ask if you've further queries.

Sussane

Thank you very much Sussane. I have another question if it is not too much trouble. I had applied for loan modification. After hanging me for 16 months, first the Lender denied me saying that I did not live in my home. I sent utility bills to prove that I do live here. Now they have degnied me saying that I have 'insufficient income'. My gross income is $4100 and my expenses are approx.3800, out of which 3141 is only mortgage, taxes, insurance and condo association fee. I don't want to lose my home. Are they right? Is there anything I can do to get my loan modified. I am in active foreclosure because even while having my loan mod papers, they started foreclosure proceedings.
Please advise. I have no one to advise me and I am living a nightmare.

Thanks again

BV

Hi BV,

If the lender thinks that you have insufficient income, then he won't agree to a loan modification. You can re-apply once again in order to check out whether or not the lender will consider your request.

Why would Wells Fargo Financial turn over account to collection agency after one missed payment instead of trying to help you find a way do pay back, whether modifiation or second mortgage?

Hi bootsie!

Welcome to forums!

It will be discretion of the lender whether or not they will charge off the account and assign it to a collection agency or keep it with themselves.

Feel free to ask if you've further queries.

Sussane