2nd Mortgage Charged off


LoanSafe Member

My home was foreclosed back in 2018, satisfying the balance of my mortgage, taxes, and any home owner association fees connected to the residence.

But there was a 2nd mortgage attached (by the same bank) that was charged off, and a "released of lien" was applied prior to my mortgage transfer to a debt collector. Up until this time, no one has reached out to collect this (2nd mortgage) debt, but the amount owed is quite significant -22-26k. I'm looking for advice on the following options:

1. Ignore it- I've been told this loan will fall off my credit by 2021, and that it's unlikely I'll be pursued.

2. Make an offer - How much should I offer to settle this debt. No one wants to pay more than what it is necessary, but it will keep me from looking over my shoulder, or fearful when it's time. to take steps to buy a home again.

Also- I would like to hear how this debt (settled or unsettled) goes on to affect the ability to take out a future mortgage or buy a home.

And/Or hear about how "making an settlement offer" could be done reasonably.

Thank you in advance for any professional advice or anecdotal information you can provide. Apologies if this topic has been addressed before, I'm very new!


LoanSafe Member
Find out what the laws are in your state. In most states, a foreclosure will eliminate any secondary liens. However, your situation seems to be that the second lien has been released and now the debt collector is suing for the balance.

Did you file bankruptcy? That would of discharged the debt if included in the bankruptcy.
Do you have a copy of the release of lien? Or any documents showing satisfaction of the mortgage?
First thing I would do is send a letter disputing the debt and ask for validation of the debt.


LoanSafe Member
Thanks for the response- I will look into the Texas laws around foreclosures and mortgages.

Well the good news is I'm not being sued or pursued by anyone. It just sits on my credit report.

I do/did have the release of lien and presented it to the credit report, but it resulted in a changed status of "release of lien", to "charged off". So I want to ensure I pursue things better going forward to avoid any unnecessary consequences.

I also did NOT go through bankruptcy as the home was my sole debt, and the house sale covered the amount owed.