2nd Mortgage - What To Do

Samsonite

LoanSafe Member
#1
I have a second mortgage originally at 80k on a home in Ohio.

Transunion is reporting:
Opened: 2005
Last payment made: 4/28/2009
Last updated: 5/8/2009
Balance: $0
Payment Received: $0
High Balance: $80k
Pay Status: Current; Paid or paying as agreed
Date Closed: 5/8/2009
Remarks: Transferred to another lender; Transferred to another office.

I haven't made a payment since April of 2009 and haven't heard anything from anyone since 2009. I don't know who owns the note. The loan was originally through Irwin Bank and Trust but it was closed by the Indiana Department of Financial Institutions on 9/18/2009. It appears to have handed over the accounts to First Financial Bank of Hamilton, Ohio.

I checked the county website and it only shows the original document through Irwin. I'm finally in a position where I could refinance/sell based on the current 1st mortgage on my home and its projected market value but I'm not sure what to do about this second mortgage. From what I have read, it didn't simply go away. By attempting to refinance/sell a title company might "wake the sleeping giant" and some collection agency may decide its time to get their money and attempt to foreclose if I cannot pay off the full amount. I have also read that it's possible to settle the debt at a considerable discount but I would have to track down the owner - this was suggested with a bank as a collection agency has little to lose as they typically have a small amount invested in the purchase of the note. It's not showing up as charged off anywhere (I haven't received a 1099-C) and I'm not sure about a statute of limitations since it's been 8 years.

Any thoughts would be appreciated.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
#2
Hello,

Yes, the 2nd mortgage lien will never go away or just disappear into thin air. If you refinance and or sell, a thorough title search would be performed and the 2nd lien would then be notified. As you said, this will awaken the sleeping giant.

The statute of limitation does not apply to a 2nd mortgage default, but only is a "defense" to a lawsuit. Hence, your only issues now are the lien and your credit report.

In your situation, the only ways to get the 2nd lien removed would be to negotiate a settlement for less than what is owed or pay it off in full.
 

Samsonite

LoanSafe Member
#3
Hello,

Yes, the 2nd mortgage lien will never go away or just disappear into thin air. If you refinance and or sell, a thorough title search would be performed and the 2nd lien would then be notified. As you said, this will awaken the sleeping giant.

The statute of limitation does not apply to a 2nd mortgage default, but only is a "defense" to a lawsuit. Hence, your only issues now are the lien and your credit report.

In your situation, the only ways to get the 2nd lien removed would be to negotiate a settlement for less than what is owed or pay it off in full.
Thanks for the reply. How would I go about finding the owner of the note? There hasn’t been any paperwork filed with the county and the original creditor is no longer in business. Would the bank that took over the Irwin accounts know who the current owner would be if the account had been sold?

Once I find them, any suggestions on how to approach a negotiation? Is it possible to negotiate a number and when I sell the house use those the funds to pay off the first and second at the same time or will I have to settle the second lien before a sale can happen?
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
#4
You're welcome!

I'm not sure if you have only checked with your county records online, but you can also review the mortgage deed in person at the county recorder's office.

If that doesn't work, you could hire a title company can run a preliminary title examination that shows who the owner of the mortgage may be.

You could negotiate once you sell the home, but that would put you in a weaker position than if you worked out a settlement offer before you sell. In my experience, most LoanSafe members were able to settle their second mortgages for anywhere from 5%-30% of their loan balances. You start low with your negotiation offer with the goal of meeting them somewhere in the middle.