Posted on: 26th May, 2010 11:59 am
i had an 80/20 loan on my mortgage, where my first mortgage held the deed. it is my understanding that the 20% mortgage holder is considered unsecured. i have lost my job, and am struggling just to pay my first mortgage, so i am behind on my second mortgage and they are about to charge it off. i understand it will go to a collection agency, but i am unable to pay them as well. so what happens? they will try to collect for the next seven years? my loan on my first mortgage is $280,000, and my house is worth 175,000. so even if i end up defaulting on my first morgtgage, they would never get enough to pay the second mortgage back, which has a balance of about 68,000. so basically my question is: what will happen over the next seven years that it stays on my credit report?
Hi ranstr,
When second mortgage gets charged off, the mortgage becomes an unsecured debt. However, until you pay off the mortgage, the second lien on your house cannot be removed. When mortgage gets charged off, you no longer owe to the mortgage company. Now, you will have to pay the dues to the collection agency.
This charge-off is going to hurt your credit negatively. However, you can remove the charge-off only when you pay off the mortgage. For that you need to first request the mortgage company to pull back the mortgage from the collection agency. Only when the mortgage company pulls back the account, and you pay off the dues, can the charge-off be removed by the mortgage company.
Thanks,
Sandra
When second mortgage gets charged off, the mortgage becomes an unsecured debt. However, until you pay off the mortgage, the second lien on your house cannot be removed. When mortgage gets charged off, you no longer owe to the mortgage company. Now, you will have to pay the dues to the collection agency.
This charge-off is going to hurt your credit negatively. However, you can remove the charge-off only when you pay off the mortgage. For that you need to first request the mortgage company to pull back the mortgage from the collection agency. Only when the mortgage company pulls back the account, and you pay off the dues, can the charge-off be removed by the mortgage company.
Thanks,
Sandra
I foreclosed on a home I purchased in California with an 80/20 loan, same company. I just noticed on my credit report that the lender "charged-off" the 2nd mortgage. Since California is a purchase money loan state, can the lender still sell this dedt to a collection agency? Would I still have to pay?
Thank You,
Thank You,
Welcome Philip,
The lender will be able to sell off the debt to a collection agency. However, as it's a purchase money mortgage, you may not have to pay off the dues to the collection agency.
The lender will be able to sell off the debt to a collection agency. However, as it's a purchase money mortgage, you may not have to pay off the dues to the collection agency.