Eliminating 2nd mortgage that has been charged off for over 9 years

horseforce

LoanSafe Member
Dec 3, 2018
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0
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My father-in-law originally had an 80/20 mortgage, with the 20% being a 2nd mortgage to avoid PMI when he bought his home. The 1st and 2nd mortgage were with the same lender Nationpoint. He had a loan modification which covered the 1st mortgage, but somewhere along the years, he never received statements for the 2nd. Just recently he started to get statements from a debt collector which showed he was 3486 days delinquent on his 2nd mortgage. We had tried to obtain a HELOC earlier this year, but had no idea that the 2nd mortgage was still on the title because it had been over 9 years since we heard anything about the 2nd. We have not contacted SLS, who is the debt collection company. Should we be trying to request a release of lien from Nationpoint on the 2nd...if they still have the lien. According to the county records on the title search, the trustee is Rockwood Title and Mortgagee is MERS AS A NOMINEE FOR LENDER NATIONPOINT, A DIV. OF FFFC, AN IP. SUB. OF MLBAND T CO., FSB - DOT. What should be our next step?
 

bigfrog

LoanSafe Member
Aug 31, 2011
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Clearly, there are two loans. And they don't just disappear, even if there is no contact. You have to contact the servicer(the collector), or better if you can communicate with the note holder(not easy). Ask them what they want, which obviously is money; all of what you have. You know you have equity, and they know that too, so they would want you to use that equity to pay them out.

More and more people are showing up with the same issue. They kept their home by paying the 1st, and not paying the 2nd. The 2nd is stuck in limbo, and scared to foreclose. Down the line, they have over 50k or even 200k in equity, and thinking its time to cash out the equity by selling or refi. Finding out that the 2nd is stopping them in the process. Eventually, they will figure out it is barely enough money to pay out the 2nd; probably lose a little too. So the whole thing is just a dream.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
www.loansreduced.com
It sounds like your father has had the loan(s) for about 10 years. As bigfrog mentioned, they are not going to go away and there really are three options:

1. Leave them alone, hope they don't come after you
2. Pay them off in full, maybe obtain additional cash out if the equity permits. The reason I have mentioned this as an option is because the 2nd lien has been charged off for longer than 4 years (that is a requirement).
3. Settle with them and pay them off either with cash or through a cash out refinance (again possible because the loan has been charged off for more than 4 years)

If you need any help with refinancing the lien, I would be happy to discuss options with you.

Here is my contact info: [email protected] or 619-379-8999
 

Wisconsin guy

LoanSafe Member
Dec 3, 2009
118
10
18
Great White North
It sounds like your father has had the loan(s) for about 10 years. As bigfrog mentioned, they are not going to go away and there really are three options:

2. Pay them off in full, maybe obtain additional cash out if the equity permits. The reason I have mentioned this as an option is because the 2nd lien has been charged off for longer than 4 years (that is a requirement).
3. Settle with them and pay them off either with cash or through a cash out refinance (again possible because the loan has been charged off for more than 4 years)

If you need any help with refinancing the lien, I would be happy to discuss options with you.

Here is my contact info: [email protected] or 619-379-8999
Hi Erik, I want to make sure I'm following. The second lien must be charged off for 4 years minimum to try and settle or? Sorry if I'm mistaken, also, can and will the 2nd stop you from trying to sell? What would they gain in doing so? I'm thinking of selling and would have enough to pay them off. Thanks...
 

Jzone

LoanSafe Member
Jun 20, 2017
186
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You really have two issues here. The debt and the lien. They are separate issues. You could settle for release of the lien for less than the amount of the debt, which would allow you to refinance. However, you could still be sued for the difference between what you settled for and what was owed.

You can of course, sell at anytime. But both the first and second lien holders would get paid before you do.

My first question would be how do you forget about paying the second mortgage? It doesnt sound like bankruptcy was filed? If so, then your father in law is still liable for the entire debt and the lien will not go away very easily. Can still be negotiated for a release as the debt collection company probably paid 20 cents or less on the dollar for the debt.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,094
174
63
San Diego, California
www.loansreduced.com
In regards to the charged off date, that is just a Fannie Mae & Freddie Mac requirement to be eligible for a conventional loan.

Thanks Jzone for the great explanations! Merry late Christmas to you everyone.