Mortgage Charge-Off & Foreclosure
- Understand that an account that is charged-off does not mean the debt may not be collected later.
- Negotiate with your lenders, to avoid foreclosure.
Should I negotiate with the banks that are foreclosing on the first and second mortgages on my home?
My home is in the final stages of foreclosure in Nevada. I had a first mortgage on the house with Countrywide/BofA. There is also a second mortgage HELOC with Charter One. I stopped making payments on both about 9 months ago. I continued to receive billing statements from Charter One, but about a month ago they updated my credit report as a Charge Off. I found this strange since the first mortgage holder has still not completed the foreclosure. I am sure that there will be no money available to pay the second lien holder, but found it curious that they would report as a charge off before the foreclosure sale. It has also been strange that I have never received a collection call or piece of mail from them trying to collect on the account in the last 9 months. I continued to receive the regular monthly statement until a couple months ago. How would you recommend that I proceed? Should I contact them to settle or let it ride for a while? The 2nd mortgage is for $37,500 and the first is for $352,000.
A mortgage is a written pledge of property used as security for the repayment of a loan. The property you purchase is the collateral for the mortgage. If you fail to make payments on the loan, the lender can repossess your home. As a result, the lender has some legal rights on your property as you pay off your mortgage.
Unlike a standard loan, the mortgage is used to enforce the lenders rights to the property if the borrower does not repay the home loan. If the borrower does not keep up with his/her monthly mortgage payments, the borrower can obtain the home through what is called foreclosure.
Foreclosure is the forced sale of a home or property that s pledged as security against a mortgage. The property is sold so the lender can recoup its losses on the loan.
There are two types of foreclosure: judicial and non-judicial foreclosure. A judicial foreclosure basically means that the foreclosure is a court-ordered legal process.
Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.
I sense you may not fully understand what "charge-off" means. Charge-off is an accounting term used by creditors when they move a delinquent account from its accounts receivable books to its bad debt ledger. This usually occurs between 180 and 240 days from the date of your last payment. The fact that an account is charged-off does not mean the debt may not be collected later. Charge-off is not required before a creditor initiates foreclosure. To understand more about the concepts of charge-off and why this term and event means almost nothing to debtors, see the Bills.com resource Charge-Off & Credit Report.
Debt distressing you? The Bills.com Debt Coach is a no-cost online tool that will analyze your debts and show you the options available to resolve them and the costs and benefits of each.
You mentioned your home is "in the final stages of foreclosure." You later ask, "Should I contact them to settle or let it ride for a while?" The time to let things ride for a while is over if your goal is to retain your residence. Negotiate with both lenders now.
Regarding resolving the the second mortgage, see the Bills.com resource Second Mortgage Foreclosure to learn your options.
I hope this information helps you Find. Learn & Save.
Request that 1. You only be charged for payments that met the late payment definition that was set out in your agreement. 2. That the credit reporting agencies receive accurate information about the status of your account.
Your letter should be polite but to the point. It is reasonable to state that if your reasonable requests do not receive timely action that you are going to contact a lawyer to assist you.
Are all three credit bureaus showing 'foreclosure'? If your lender agreed to a short sale, it should not be listed as a foreclosure on your report, especially if your short sale took place without your being delinquent on the loan.
Your credit report should show something like "settled as agreed," "account legally paid in full for less than the full balance," or "account settled."
Contact any of the credit bureaus that list 'foreclosure' and dispute the entry. If necessary, provide the bureaus with proof that you sold the house without it ever going into foreclosure.
Whether you continue your ownership of the property depends on the deal you can reach with the recovery department/collection agent. Do you and your spouse have the income to make house payments?