We have a 200k PNC 2nd that we stopped making payments on in late 2014. We were experiencing financial hardship at that time. We recently reached out to them to see if we could come to a lump sum settlement agreement. They told us that the file had been charged off in 2015, stopping all fees and interest from accruing. They also told us that as of February of 2019 we are past the SOL and that they cannot collect on the account. They had us fill out a hardship request which we sent in with two months of bank statements. They sent us a letter stating we do not qualify for hardship assistance and we have received the maximum number of foreclosure alternative options. It also states that the servicing of our loan will continue per the terms of our note and mortgage including foreclosure proceedings, if applicable. If foreclosure activity was previously suspended in our loan it may now resume. No foreclosure proceedings were ever started in our property that I know of.
At this point, does anyone have any ideas on our next move? Should we still try to negotiate with them to work out a payment plan as they were unresponsive to a lump sum offer? Due to Covid it looks like there is a moratorium on foreclosures in California. We are not sure how to handle at this point but would like to get this resolved with an affordable solution. Thanks for any ideas!
There is plenty of information on this site about what to do next, but I'll give you my perspective. Since this is a second mortgage, I'm assuming that you are current on your first mortgage?
1. PNC has no obligation to respond to your lump sum offer. You signed a mortgage and agreed to pay. You havent paid for 6 years and now want to settle. If your area has rising home prices, there really is no need for PNC to consider making a deal.
2. What have you done between your financial hardship of 2014 and now to make any payments?
3. What is the equity in your home? Your bank has even less reason to settle this if you have equity. They could foreclose and sell to make a profit.
4. Charged off means nothing to you. Its an accounting term used by the bank to show the debt is uncollectable. It sounds like they still hold the lien since you have been in contact with them. If they had sold the debt, you would be hearing from a debt collector.
5. The SOL in California may have passed but that doesnt mean you don't owe the debt and there is still a lien on the property.
Most states allow foreclosure on a 2nd mortgage, but must also pay off the 1st mortgage. Unlikely but it does happen.
At this point, I would check and
verify your states SOL on mortgage debt. Debt secured by mortgage is treated differently than debt such as a credit cards or car loan. Also verify who actually holds the lien to your property. You can do this at your county clerks office and many counties let you do this online for free. Find a property lawyer and pay them $300-$400 to give you the facts. Don't rely on the internet for your answers.
The problem you will more than likely have is that the property lien will not go away without you paying the debt or the bank foreclosing. With the pandemic still not under control, foreclosure is probably at least a year away. Remember, banks are in the business of loaning money, not buying and selling homes. They would much rather get your payments than to go to foreclosure. But they will if they can make money from the sale.
Finally ask yourself how badly do you want to stay in this house? Is it a good neighborhood, kids in school, close to work? Since the bank hasnt foreclosed in 6 years, that is a good sign. But they also have told you that you dont qualify for any hardship programs. How long would it take you to make up 6 years of payments to get current? You still have options on the table if you want to stay, but if you dont have a really good reason to stay in the house just move on.
