Posted on: 07th Dec, 2006 03:49pm
If you haven't paid your mortgage for 6 months or you've been through a foreclosure or short sale wherein you couldn't pay off the second loan after getting rid of the first, your lender is likely to issue a second mortgage charge-off.
What is second mortgage charge-off all about?
If your second mtg lender intends to charge off the loan, it means he's declaring the debt as uncollectible. So, the lender will no longer collect payments from you. But this doesn't mean that you don't owe the money. The lender reports the debt as a loss when he files a Profit and Loss Statement (for his company) with the Internal Revenue Service. He sells off or assigns the debt to a collection agency that'll collect the payments on his behalf. So, your debt hasn't been canceled or forgiven.
When a second loan is charged off after a foreclosure/short sale on the property, the mortgage is considered as an unsecured debt since the collateral has been sold off already.
When a second loan is charged off after a foreclosure/short sale on the property, the mortgage is considered as an unsecured debt since the collateral has been sold off already.
What happens after a second loan charge-off?
When a second loan is charged off and sold to a collection agency (CA), it's essential that you negotiate an alternative payment plan with the CA. In case you can't meet up with the monthly loan payments, you may settle the debt for an amount less than what you owe to the CA. Otherwise, you may face any of the consequences explained below:
However, when the second mtg debt is settled, you may have to pay tax on the balance forgiven by the lender. This is because the balance forgiven or canceled debt is considered as your income. But you can avoid paying the tax provided you qualify for mortgage debt forgiveness.
- CA may sue you: If you don't make any payment towards the mortgage, the CA may file a lawsuit against you during the SOL (Statute of Limitation) period. Once you decide to settle the debt, make sure you get a settlement agreement in writing from the CA.
- Property retains the 2nd lien: The charge-off does not remove the second lien from your property unless you pay it off.
However, when the second mtg debt is settled, you may have to pay tax on the balance forgiven by the lender. This is because the balance forgiven or canceled debt is considered as your income. But you can avoid paying the tax provided you qualify for mortgage debt forgiveness.
Will I get 1099-C Form after a second loan charge-off?
Since a charge-off doesn't imply cancellation of debt, therefore the lender won't send you a 1099-C Form. Such a form is sent only when a lender cancels your debt and reports it to the IRS as a tax loss.
Can I remove second loan charge-off from credit report?
You can have the charge-off removed from your report only when you settle or pay off the account in full. Unless you make payments towards the account, the negative item will reflect on your credit report for 7 years. After you settle or pay the charged-off account in full, request the collection agency to update the account status as "Settled charge-off" or "Paid in full" respectively. However, a "Paid in full" is certainly better than a "Settled charge-off" status on your credit report. Know more on how to remove charge-off from credit report.
When a second mortgage is charged off, it brings down your credit score by 50 points or more depending upon the other negative items you may have on your report. The best way to get rid of this negative item is to pay down the debt asap and negotiate with the CA to update your account status accordingly.
When a second mortgage is charged off, it brings down your credit score by 50 points or more depending upon the other negative items you may have on your report. The best way to get rid of this negative item is to pay down the debt asap and negotiate with the CA to update your account status accordingly.
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
Hi infremont!
Welcome to forums!
As you have the required docs which states that you have short sold and settled with Greentree, you should contact the credit bureaus and dispute the item with them. If needed you can even fax them the copy of the letter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As you have the required docs which states that you have short sold and settled with Greentree, you should contact the credit bureaus and dispute the item with them. If needed you can even fax them the copy of the letter.
Feel free to ask if you've further queries.
Sussane
I am current on my frist morgage. my second is set to be charged off at the end of nov. 2012. i owe 40000 dollars and made offer for 10000 to settle on second. recieved a no answer. i owe 40000 on frist also.im just woundering if i stic tko my guns and let them charge this off can i settle later with collection agency. also if the ststue of limitations runs out aftre charge off. do i retain deed at no charge.
Welcome mlloftis,
It will depend upon the collection agency as to whether or not the collection agency will be ready to negotiate the amount with you. If the statute of limitations get over, then they can't take any legal actions against you.
It will depend upon the collection agency as to whether or not the collection agency will be ready to negotiate the amount with you. If the statute of limitations get over, then they can't take any legal actions against you.
i need loan against my property in india can i get details about this is it foreign bank or lender give loan in india ,if yes send me those details also
thanks
thanks
Requested a settlement from my 2nd mortgage 2 months ago, with clear intent to pursue a deed in lieu on my 1st. Filled out the hardship package (bank statements, letters, etc.). Paperwork bounced around in different departments - I followed up regularly. 1st Mortgage company has placed loan in a 'hold' pattern while we waited on settlement from 2nd. Was just notified today that the 2nd mortgage passed 180 and was charged off.
What will happen at this point with the 1st? Are they notified right away that this has happened?
2nd has now gone from Loss Mitigation to the Recovery Department - which is willing to settle, but for a much higher % than I was originally told. I honestly don't have the money right now, but could in a few weeks.
I feel like Green Tree (2nd) drug their feet on reviewing my settlement, so this would hit 180 - and they could charge it off.
Now that the 2nd is charged off, is this still a lien against my 1st?
My primary objective is and has always been to do the deed in lieu - and avoid the foreclosure.
Any feedback / recommendations would be great.
What will happen at this point with the 1st? Are they notified right away that this has happened?
2nd has now gone from Loss Mitigation to the Recovery Department - which is willing to settle, but for a much higher % than I was originally told. I honestly don't have the money right now, but could in a few weeks.
I feel like Green Tree (2nd) drug their feet on reviewing my settlement, so this would hit 180 - and they could charge it off.
Now that the 2nd is charged off, is this still a lien against my 1st?
My primary objective is and has always been to do the deed in lieu - and avoid the foreclosure.
Any feedback / recommendations would be great.
hi hanmanth,
you will have to contact your local banks in india in order to find out what eligibility criteria you need to fulfil in order to get a loan.
welcome mile,
it is up to the second lender whether or not he will notify the first about the charge off. you should negotiate with the first lender and check out if the first lender is ready to go for a deed in lieu of foreclosure. though the second mortgage has been charged off, you will be liable to pay it.
you will have to contact your local banks in india in order to find out what eligibility criteria you need to fulfil in order to get a loan.
welcome mile,
it is up to the second lender whether or not he will notify the first about the charge off. you should negotiate with the first lender and check out if the first lender is ready to go for a deed in lieu of foreclosure. though the second mortgage has been charged off, you will be liable to pay it.
13 years ago I took out a second mortgage. A year later, my payments kept coming back to me. The company disappeared and was taken over many times. A year later I filed for bankruptcy Chapter 7 and my lawyer advised us to throw in the second mortgage in there. The bankruptcy went through. We have never heard from the company and no ones seems to know where or who has the loan. This has stopped me from refinancing or doing anything involving my home. I have hired "title" lawyers, they state they can clear this but they always come to a wall- stating they don't know who or where the loan is. Searches and everything have been futile. It has never shown up on my credit or anything. How can I fix this problem- it shows up on my title. The store was the "Money Store".
Hi JFIG!
Welcome to forums!
Well, you are in a tough situation. The attorney's were the best to help you in this regard. If they are unable to do so, then I don't think anyone else can help you with this loan.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Well, you are in a tough situation. The attorney's were the best to help you in this regard. If they are unable to do so, then I don't think anyone else can help you with this loan.
Feel free to ask if you've further queries.
Sussane
I had a 80/20 loan with Litton loan servecing and my home went into forclousure in 2009. On my credit report it showed that he 80% loan was a forclousure and the 20 % was a charge off for almost 3 years and now it was open again by Ocwen .Last year my credit had already started to get better in the 640-675 area and now its in 540-560 because its showing the 20% loan as being collected on by Ocwen now.Its 120 days late according to my credit report. After being 180 late will it stop taking points off my credit score?and does my credit report get affected every time the debt gets sold or just for 7 years from the actual forclousure and chage off?Inever got any documentation from the original lender on how much the home sold for and is ther any way of me to get a hold of that info . because they do not exsit anymore?? Thank you
If my charged off loan is being collected on and it shows that its 120 days late and i start making payments on it will it stop taking points off my credit score and show in good standing on my credit report ????Again my home was forclosed on 4 years ago but only the 80% loan shows as forclosed and the 20% as a charge off and now being collected by a 3rd party ! Tahnk you....
Hi MIKE,
As far as I know, everytime the new loan gets sold off to someone else, the new creditor will have the rights to report it. Once the SOL gets past, then he may not report it. If the property has been really sold off, then you can get in touch with the county recorder's office and get to know the information about home sale.
As far as I know, everytime the new loan gets sold off to someone else, the new creditor will have the rights to report it. Once the SOL gets past, then he may not report it. If the property has been really sold off, then you can get in touch with the county recorder's office and get to know the information about home sale.
where do i start to try to get my deed to my house. the bank decided to charge it off i want to make them an offer but i dont know where to start. at the time of the charge off i was battl;ing cancer and had no insurtance
Hi foxxyone!
Welcome to forums!
You should contact the lender and negotiate with him to take back the account from collections. If he agrees to do so, then you can pay off the debts and get back your property deed from them.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
You should contact the lender and negotiate with him to take back the account from collections. If he agrees to do so, then you can pay off the debts and get back your property deed from them.
Feel free to ask if you've further queries.
Sussane
Two years after bankruptcy filed our 2nd mortgage Company charged off our loan. We never missed a payment and said they had to protect themselves. What does this mean for us? They won't send us anything in writing and just gave us an address to keep sending our payments. We have been on time and never missed a payment with them. They were not part of our bankruptcy. What can we do to get something in writing?
Hi Guest,
If the loan was included in your bankruptcy filing and if you have got it discharged, then you wont be liable for making any kind of payments. But as the loan was not included in your bankruptcy, then yore still liable for the payments. Convince them to give everything in writing so that you can start making the payments.
If the loan was included in your bankruptcy filing and if you have got it discharged, then you wont be liable for making any kind of payments. But as the loan was not included in your bankruptcy, then yore still liable for the payments. Convince them to give everything in writing so that you can start making the payments.