2nd Lien Release Or Negotiation?

JohnFL

LoanSafe Member
Aug 21, 2010
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Hello, I would like to thank you for this great site, its the best. I am looking at selling my home which has an old 2nd for about 60k that i quit paying in 2009.

It was serviced by SPS and owned by Deutsche, originally GreenTree and a couple others. Last I knew it was Deutsche. I believe it was written off as it is no longer on my credit report. I would like to sell my house and buy another house in one transaction.

I have read here that settling the second or getting the lien released would be viewed as a short sale on my credit and affect my ability to get a VA loan on new purchase loan. Current home is not VA. Is this plausible and what steps would I need to take? Do I need to hire an attorney to settle lien? I am willing to pay a percentage of the 2nd if possible at closing. thanks again
 
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Jzone

LoanSafe Member
Jun 20, 2017
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I am in a similiar situation. Bankruptcy in 2012, discharged but continued to pay 1st and 2nd. Stopped paying 2nd in May.
First thing I did was verify that there actually was a lein with the second. Sure enough, there is.

You can verify at your county register of deeds. Doesnt cost a dime unless you want a copy.

Doesnt sound like you filed bankruptcy, so I wouldnt think you need an attorney. Make sure to read the thread here about "settle your second mortgage". Great advice and I am following the plan.

I am sending a settlement offer letter to CitiMortgage in August. That will be 90 days after stopping to pay. Starting at 5% of balance and will stop at 20%.

You havnt paid since 2009? And no contact from mortgage holder?
 

JohnFL

LoanSafe Member
Aug 21, 2010
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Havent heard or paid anything since 2009. I am assuming that if you reach a settlement you will have to pay the tax on the amount forgiven, does that include interest and fees? that could be a considerable amount to pay taxes on. We are now looking at selling our home and buying another, unless this puts us in a worse financial situation, or we cannot get a loan for new house due to settlement being looked at as short sale. good luck, keep us informed. I wish I would have had finances to settle this years ago.

Good Luck
 

Jzone

LoanSafe Member
Jun 20, 2017
206
28
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Havent heard or paid anything since 2009. I am assuming that if you reach a settlement you will have to pay the tax on the amount forgiven, does that include interest and fees? that could be a considerable amount to pay taxes on. We are now looking at selling our home and buying another, unless this puts us in a worse financial situation, or we cannot get a loan for new house due to settlement being looked at as short sale. good luck, keep us informed. I wish I would have had finances to settle this years ago.

Good Luck
With a bankruptcy, the debt is discharged so there is no tax to pay. Since the debt is discharged in Chapter 7, there is no longer any debt to forgive. However, the lien is still there and thats my biggest problem.

Forgiven debt is a different animal and you will have to pay taxes on that. My plan is to retire in about 5-7 years, so I want to be able to sell this house, take the equity and buy smaller and sit back and enjoy life a little!
 

JohnFL

LoanSafe Member
Aug 21, 2010
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So, the refi company came back and said they could not find 2nd Lien holder. So how does that work? Can I file something in court to remove Lien?

Thanks
 

Jzone

LoanSafe Member
Jun 20, 2017
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They couldnt find the second lien holder? Or couldnt find the second lien?

Are you sure the second lien is recorded with your county?

If there is a second lien, and they just dont know who the holder is, you will probably need a title search.

My second lien actually is held by the third company to hold it. However, the original lien holder is the one that is recorded with the county. There should be some language on the lien that says something like " this lien may be assigned and lien holder has all rights as original"
 

JohnFL

LoanSafe Member
Aug 21, 2010
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It was a Title Search, they came back and said they could not find the owner of the lien. they told me they will continue the search. Thats why I'm asking, what can I do now? Can I do something in court to get a release if I get title company to say they could not find owner? I told them I have not heard anything from anybody for 8 years.
 

Jzone

LoanSafe Member
Jun 20, 2017
206
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It was a Title Search, they came back and said they could not find the owner of the lien. they told me they will continue the search. Thats why I'm asking, what can I do now? Can I do something in court to get a release if I get title company to say they could not find owner? I told them I have not heard anything from anybody for 8 years.
Here's what I would do. Had a relative who went through something similiar about 10 years ago.

You want to get an owners policy title insurance from your title company. Long story, but....my relative bought property that 2 years later a long lost nephew came forward and claimed he was due his dads 1/2 share of the property. Property owner died and was never married, no kids, only one brother alive, one brother already deceased and one nephew (dead brothers son).

Property went through probate. The brother put the property up for sale. But doesnt sell for more than 2 years.

Nephew claims two years later that if his father were alive, the property would of been split between the two brothers, so he is entitled to his dead fathers 1/2 inheritance when the property sells. Probate court agrees and files a lien on property.

Property is sold to my relative. Title company says land is free and clear, no problems. My relative gets an owners policy title insurance, costs him about $600.

Nephew finds out about the sale and makes a claim. Title company says lien was not filed. Court disagrees. Title insurance kicks in and title company pays off the nephew.

Without title insurance, my relative would of had to pay the nephew to get clear title to the property.

Not sure if this would work for you, but I would ask about Title Insurance