| Re: negotiated short payoff....????
The term "charge off" has a variety of meanings, but what it doesn't mean is that you are no longer legally liable for the debt.
As to Pooling and Servicing Agreements, you may find the information provided below that I managed to find on the Internet helpful. Having been outside of the business before these Wall Street creatures became so popular, I'm just not familiar with how they work, but I suspect given the amount of foreclosures and how slow the process of how lenders and loan servicers react to mortgage delinquencies, that there isn't the uniformity on these Pooling and Servicing Agreements, meaning each situation differs.
Daniel
The Pooling and Servicing Agreement is the “glue” that binds all of the securitization players together. The PSA is typically filed with the Securities and Exchange Commission, although you might have to dig a bit to find the one that governs the securitized trust that owns your loan.
The PSA is designed to comply with the Internal Revenue Service’s REMIC rules to ensure that the trust enjoys pass-through tax liability. In other words, the investors of the trust (a.k.a. certificateholders) get paid the average rate of return on the thousands of home loans without the U.S. Government getting a cut first.
Of course, the earnings are taxable at the individual taxpayer level, but each individual investor has its own tax strategy, and the pass-through status improves the return on investment. Failure to comply with the PSA will destroy the tax-free status of the trust, causing significant losses to the investors.
As I stated, the PSA is a very long and complex document, but some of its general features need to be understood by the homeowner wishing to combat his or her pending foreclosure:
• The PSA requires that all promissory notes must be endorsed by the originator and delivered to the trustee shortly after the creation of the trust. Similarly, an Assignment of Mortgage must accompany each note. In reality, this NEVER happens, and the consequences of this failure are potentially catastrophic for the trust. I surmise that the mortgage-backed securities market was so white-hot that actual delivery of these critical documents just got in the way of an “efficient” process.
• The PSA requires the servicer to make mortgage payments to the trust regardless of whether it actually receives the payment from the homeowner. The only way to stop paying the monthly payment is to foreclose on the home.
• The pool is static, which means only 5% of the 10,000 mortgages can be modified without destroying the REMIC status. Essentially, this is why a government purchase of troubled loans is impossible. The only way to modify loans pooled together in the securitized trust is to change the bankruptcy code, providing a bankruptcy judge the power to do it.
• Default servicing pays more money. The trust has an escrow account to pay litigation fees to servicers, and the servicer gets to keep all late fees and junk fees paid by the homeowner. This means the servicer is incentivized to default a home loan and its motivation is at odds with its client, the securitized trust.
• The largest default servicer in the country is based in Jacksonville – Fidelity National Default Solutions (now known as LPS Default Title and Closing). This is essentially a shadow company that makes it’s money through both legitimate and nefarious methods. It has been known to fabricate loan data, create falsified court documents and charge illegal fees to homeowners. FNDS hires the foreclosure lawyers on behalf of the securitized trust and does not permit the lawyers to directly communicate with the trust, even though the trust is the actual plaintiff in the case.
This list is just the tip of the iceberg, and it is designed to give the homeowner a start in the right direction. There are other, more in-depth, explanations of a PSA, and this will hopefully provide a foundation for deeper study of this complex document. | 
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I know that if it were recourse the 2nd could still go after you because they haven't had their single action yet by either foreclosure or suing you. But I think I did miss the detail of it being purchase money (always a big deal), and therefore non recourse. So yeah, you're right, I don't think the 2nd has any course of action really. I mean.. they can still sell it to any collection agency dumb enough to buy it, but I really don't think the collection agency would have anything on you legally other than trying to harrass you. I could definitely be wrong still though. I'm not sure what happens to the loan after the 1st forecloses for instance - does one keep getting a credit hit every month showing non-payment?
Professor? 
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