No Payment On 2nd In 4 1/2 Years

drowning in oc

LoanSafe Member
Jun 20, 2012
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0
1
Hi! It's been a few years since I've posted anything but here I go.

5 years ago our home was severely under water like many. We stopped making payments on our 2nd 4 1/2 years ago. We at the time were 200,0000 underwater and owed 150,000 on the 2nd. After 6 months it was written off and collectors made 1 offer which we did not agree on.

Haven't heard a thing since! What happened to the loan? We are above water now and am worried that collectors will try to foreclose on us. Does the collector have to try to contact us about the money owed first or can they start foreclosure without us knowing.

The silence is starting to scare me!
 
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Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,828
466
1,000
48
Southern California
www.loansafe.org
Hey drowning in OC. Welcome back to the LoanSafe community!

In my experience, 2nd mortgage rarely ever foreclose. Out of thousands of foreclosure that I have witnessed, maybe 10-20 were by a 2nd mortgage and most of the time there was sufficient equity for it to make sense for the 2nd to do so.

That is what it all comes down to. Can they make more money by foreclosing and then collecting or by simply charging off the loan and go after you personally, which I think is the deal in your case.

In the state of California, there is a four (4) year statute of limitations (SOL) pursuant to California Code of Civil Procedure section 337 from breach or last payment, whichever is later. Promissory notes secured by real property can have an SOL up to 6 years, under certain circumstances, pursuant to California Commercial Code 3118 & 3304. Also, my understanding is that a secured junior lender is legally barred from suing the debtor when the debt is unsecured, pursuant to CCP Section 726.
 

drowning in oc

LoanSafe Member
Jun 20, 2012
8
0
1
Hey drowning in OC. Welcome back to the LoanSafe community!

In my experience, 2nd mortgage rarely ever foreclose. Out of thousands of foreclosure that I have witnessed, maybe 10-20 were by a 2nd mortgage and most of the time there was sufficient equity for it to make sense for the 2nd to do so.

That is what it all comes down to. Can they make more money by foreclosing and then collecting or by simply charging off the loan and go after you personally, which I think is the deal in your case.

In the state of California, there is a four (4) year statute of limitations (SOL) pursuant to California Code of Civil Procedure section 337 from breach or last payment, whichever is later. Promissory notes secured by real property can have an SOL up to 6 years, under certain circumstances, pursuant to California Commercial Code 3118 & 3304. Also, my understanding is that a secured junior lender is legally barred from suing the debtor when the debt is unsecured, pursuant to CCP Section 726.
Mo, thank you for the quick reply. Forgive me, but I'm a little behind in my RE legal jargon. How long are you saying do they have to collect on the loan? More specifically, we made our last payment June 2012. Went to collections. Jan. 2013 and made an offer to settle Aug. 2013. No settlement made. Made one more attempt Jan. 2015 to start a conversation. That was it! What other options do we have at this poit? Thanks in advance!
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,828
466
1,000
48
Southern California
www.loansafe.org
You are welcome!

I'm not a lawyer, but my understanding is that you have 6 years from the last payment for the SOL to expire. But you can restart that clock at any time and you contacting them in 2015 may have done that.

Also, the lien still remains. If you ever want to refinance and or sell, you will have to settle the HELOC debt for them to agree to release it.

With that said, you might be free from collections provided the SOL did not restart, but you still owe the debt if you want to refi or sell.