My ex and I owned a house in CA that was financed by two Chase loans, a first mortgage and a HELOC. About 1 1/2 years before we separated, we attempted to sell the house, but the housing market crashed right as we listed the house. We were able to find renters, but the rent did not cover the cost of the two mortgages, so we were making up the difference and hoping the market would improve. It didn't. When we separated, we needed to sell the house. The best offer we received covered the cost of both the primary and the HELOC, but would not cover closing costs. We were told by Chase that we could not submit a short sale offer unless we had missed payments, so we stopped paying the mortgage and HELOC and submitted the offer with all of our supporting paperwork. If Chase had acted on the short sale offer, both of the Chase loans would have been paid in their entirety.
Chase ignored our file for several months. Our realtor and I both called regularly to try to get them to act on the short sale offer. About 3-4 months after we submitted the file in February 2009 (April or May), I received an email from Chase telling me that they were closing the file because we hadn't submitted the required backup information (we had). I called my realtor, who immediately called the Chase short sale guy and re-faxed our entire application, including all of the backup documents regarding our finances, divorce, etc. They re-opened the file, but again refused to deal with us and the file sat there without action from Chase.
In July, I received a letter from Chase (no email this time) informing me that the property was being foreclosed. The Short Sale offer was still sitting in their hands, but by now five months or so of interest, late fees, and unpaid monthly payments had accrued due to Chase's inaction. I called my realtor, my realtor called them (she had been calling regularly to no avail). The short sale guy pulled the property back from foreclosure on the first mortgage, but Chase charged off the HELOC. Chase sold the charged off HELOC to a third party debt collection agency. Again, the file sat there without action by Chase.
In August, the buyer backed out. We quickly relisted the property and got three more offers, but none came close to the original offer. We now had a lower offer plus six months' unpaid mortgage payment and fees so that there was no chance of the short sale covering the costs of the two mortgages (both Chase loans).
In September or October, with the second short sale offer still sitting at Chase, Chase again initiated foreclosure proceedings. My realtor again called and called to get the short sale moving. Chase finally approved the short sale for the first mortgage in December (11 months after we submitted the short sale offer). The proceeds were to be used to pay off the first mortgage in its entirety and to pay closing costs. Because Chase had sat on the short sale for so long and we could not make any payments or risk having them close our file again, there were no funds put toward the payment of the HELOC that had been charged off to a debt collection agency (not Chase's recovery department).
The HELOC was noted on our credit reports as "charged off" as of July 2009. The debt collection agency agreed to allow us to pay back the loan interest-free for the life of the loan at low monthly payments. As long as we made payments, the loan would continue to be paid interest-free. We made payments for two years to the debt collection agency. They authorized automatic withdrawal of another six months' payments (we had made the arrangements for automatic payments on a yearly basis). Then during the last week of December, the debt collection agency called again (which was weird because we had already set up the next year's payments). They relayed an offer from Chase to settle the HELOC debt. I told them I didn't have the money personally, but would check with my ex. When I called back, I was informed that the debt collection agency actually was (a) part of Chase and (b) the loan was no longer in their control. When I called the number they gave me for Chase Recovery Department, I spoke to a woman named Dahlia, who told me that no such offer had ever been made, and that the only "settlement" they would accept was full repayment of a loan they had charged off in July 2009 and that was only outstanding because Chase had failed to respond to our short sale offer in a timely fashion.
Now I'm not sure what to do. That HELOC right now is unsecured because the property has been sold at short sale. I don't own a home anymore (not surprisingly, funds have been a little short and I can't qualify for a mortgage). I can't afford to pay back a mortgage, especially when it is for a house I don't even own or live in.
Has anyone experienced Chase's attempt to recover a HELOC after a short sale? We bent over backward to make the short sale work, based on promises made by Chase. Now I'm wishing I had let the damn thing go to foreclosure. I have no idea where to go from here, or how to work this out (or even if I should).
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