Settling My Second With Sls - Deferred Principal Disappeared?

hecrec174

LoanSafe Member
Feb 16, 2010
154
19
18
Okay, I think I am almost there folks. So, we bought our home in 2006 for $490,000 (a big mortgage of $394,000 and small of $96,500). the house is now worth $380,000 . I have been following the strategy for settling for about 3 years. The mortgages went from Nationpoint to Bank of America then to SPS, the small one then to Carrington and now to SLS.

Here is the interesting part. Right before we stopped paying on the second, we modified with BOA's in house (non HAMP) mods. For the second mortgage BOA deferred $80,000 of the principal , so we were only to pay for $16,000 of the $96,000 loan for 10 years (really lowered our payments) . Anyway, BOA then sold it to Carrington after we started following the strategy and we tried to settle with them. We got them down to $15,000. They would not go lower ($10,000 was our number) and in Dec 2014 sold it to SLS.

So I just got the paper work from SLS. They say we only owe $16,500 on the second loan in total (not $96,500!!!) . They show on the payoff paper I had them fax me that the loan was originally $96,500 but that the remaining principal is just the $16,500. The number for Deferred Princip0al is $0! There is another 2600 in interest but that is a lot less than $96,500!

So I asked them: "if I pay this $16500 the lien is released?" They said yes. I'm excited cause it seems that the deferred principal has been forgiven? But I never received anything saying that? Am I possibly missing something? Could they have sold the Deferred Principal to a third party? Is there a way for me to check (maybe county clerks)?

I offered SLS a settlement of $7500 and hope they take it so I can get the lien released. For the settlement terms, I wanted them to confirm that the lien would be released, the remainder of the debt will be forgiven and it will be reported as account settled to the credit reporting agencies (if it can be removed entirely that would be great!). Let see what they come up with. I'm willing to pay up to 10K. I'm kind of excited!:)
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,850
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Southern California
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That is great news! I would be excited as well.

After all the hoops, and time everything seems to be working out in your favor.

I hope it all works out for you and please let us know how the final conclusion of your story.
 

hecrec174

LoanSafe Member
Feb 16, 2010
154
19
18
All,
So I got a reply from SLS. But they want the money by Jan 31! That is 4 days. I can't do it. Will be able to do it after I get my tax returns in Feb/March. That is the bad news. the good news is they agreed to $8000 settlement.

One question. Here was the wording. Does this sound legit? The term Short Payoff was new to me.:
" SLS has been authorized by the Investor to accept a "short payoff" in connection with the above referenced property, release the lien secured by it's Deed of Trust or Mortgage, and release you from liability under your promissory note."

Does that sound correct? From what the negotiator stated , it will show as "Paid in Full" on my credit report. Am hoping I can get a new approval letter in Febrary/March under similar terms.

Any comments/suggestions?
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,850
466
1,000
49
Southern California
www.loansafe.org
Yes, that sounds correct because that is exactly what it is.

All you can do is ask for an extension to pay this by March or borrow the cash from family or friends...
 

Kary

LoanSafe Member
Jul 6, 2015
5
0
1
47
Yes, that sounds correct because that is exactly what it is.

All you can do is ask for an extension to pay this by March or borrow the cash from family or friends...
Moe, specifically in this case, if he paid what SLS ask ($8000), Does SLS send a 1099-C (Cancellation of Debt) or not?

Thank you in advance,
Kary
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,850
466
1,000
49
Southern California
www.loansafe.org
Hi Kary - Yes they most likely would and if they do not, you would still have to report it to the IRS.
 

custombuilder

LoanSafe Member
Jul 25, 2013
47
6
8
Northern CA
Maybe I missed this but can you share who the investor on the note was? SLS services my 2nd which is owned by BONY I believe and I've never read anything about a settlement with them. (Countrywide to BOA to SLS and apparently the note was sold somewhere along the line in a pool of mortgages). I keep hoping to have something positive happen. I haven't paid nor talked to them in over 4 years and my 1st starts amortizing in Dec 2016 and I don't want my principal payments to encourage SLS to hang on until I've paid down the principal so they are not underwater any more.
 

Preparingfordefault

LoanSafe Member
Apr 17, 2011
293
7
18
All,
So I got a reply from SLS. But they want the money by Jan 31! That is 4 days. I can't do it. Will be able to do it after I get my tax returns in Feb/March. That is the bad news. the good news is they agreed to $8000 settlement.

One question. Here was the wording. Does this sound legit? The term Short Payoff was new to me.:
" SLS has been authorized by the Investor to accept a "short payoff" in connection with the above referenced property, release the lien secured by it's Deed of Trust or Mortgage, and release you from liability under your promissory note."

Does that sound correct? From what the negotiator stated , it will show as "Paid in Full" on my credit report. Am hoping I can get a new approval letter in Febrary/March under similar terms.

Any comments/suggestions?
Hecrec if you are still around - Can you please let us know how it was reported on your credit report? Also- What was the affect on your score once reported.
 
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hecrec174

LoanSafe Member
Feb 16, 2010
154
19
18
Hello.
It's a very odd story. the loan had gone from Bank of America. to HLS, to Carrington and then to SLS. I paid off SLS in a settlement but it seems some paper work was in transit between Carrington and SLS.

On the credit report the loan shows as $0 and the cause says Transferred for Bank of America, SLS, and Carrington. There is NO entry at all for SLS. It did not affect my credit at all. I have the paper work for the extinguishment of the loan and received a tax statement about it the following year for settled income. But ithas not appeared or affected my credit rating at all.
 

Gadget

LoanSafe Member
Dec 23, 2009
2
0
1
I am interested in your outcome too. I too had an FHA loan with B of A in which we did a modification with a deferred (I'm pretty sure it was deferred and not a reduction) $75k that they called an "Invisible Second". We had a Ch7 and the loan was sold to Carrington Mtg (who still owns the loan). I contacted a real estate agent about selling our home but he cannot find any information on this "invisible second". Where does one look for this info?
 

bkakca

LoanSafe Member
Jul 5, 2013
189
20
18
I am interested in your outcome too. I too had an FHA loan with B of A in which we did a modification with a deferred (I'm pretty sure it was deferred and not a reduction) $75k that they called an "Invisible Second". We had a Ch7 and the loan was sold to Carrington Mtg (who still owns the loan). I contacted a real estate agent about selling our home but he cannot find any information on this "invisible second". Where does one look for this info?

Gadget, depending on what state you are in, a Title Company or Real Estate Attorney should be able to do a title search for you and tell you what liens are showing up against the property.
 

Gadget

LoanSafe Member
Dec 23, 2009
2
0
1
Thanks bkakca. I looked back at some old emails, and in 6/2012 B of A offered the $74k invisible second, then our CH7 happened, then the loan was sold to Carrington Mtg, THEN we did a HAMP mod in 4/2015. A couple weeks ago, we had a real estate mortgage broker pull our info and only the standard real estate info shows. No lien that he could find. Is that good news? He thought it was good news... {Here's to hoping}
 

bkakca

LoanSafe Member
Jul 5, 2013
189
20
18
Thanks bkakca. I looked back at some old emails, and in 6/2012 B of A offered the $74k invisible second, then our CH7 happened, then the loan was sold to Carrington Mtg, THEN we did a HAMP mod in 4/2015. A couple weeks ago, we had a real estate mortgage broker pull our info and only the standard real estate info shows. No lien that he could find. Is that good news? He thought it was good news... {Here's to hoping}

It depends what the mortgage broker "pulled" . If he only pulled your credit report, that won't do it. If the lien was included in a BK, the lenders may stop reporting on it to the credit bureaus, so it won't show up. I've even seen legitimate intact loans that lenders are not reporting on, that they've just missed.

If the broker has a title report, that would be more definitive. Mortgage brokers usually have a title company or attorney's office they use for this.

We asked a local title company for a preliminary title report, aka a title commitment, to make sure our settled 2nd mortgage was no longer showing up, so we could sell, and it was gone. We didn't have any BK though...

Hopefully yours is released and gone as well. :)