Ditech end of negotions on 2nd Mort - Have ??

[EACO3575]

We are very close to settling with Ditech on our 2nd mort. Owe 15000.00, offered $5000.00.

We have current on EVERYTHING, debt to income ratio, probably fairly high. 700-720 credit ratings for both.

They called today and said the debt would be reported as "settled for less than balance owed"

??'s - any ideas on what this is going to do to our credit report?
Length on?
Big damage to score or maybe not too bad?
Can they collect this at a later time?

I asked to to mark: paid in full. But they said that they would report as I noted above.

ALSO, will I be getting a 1099 for the 10,000 that was written off? Will I have to pay a huge amount in income taxes next year?

Thanks for anyone with any insight or experience on this.

[The Professor]

See if you can have a relative "buy" the debt for the settlement amount. That way Ditech doesn't own it and won't have the obligation of reporting. Just a thought.......