Stuck In Nj. Please Advise

gotham

LoanSafe Member
Jan 20, 2011
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Ive been a lurker on this forum and would just like some advice on my situation.


I purchased a condo in Jersey City, NJ back in 2005 using a Countrywide 80/20 loan (20 being a HELOC). I ran into some hard times during 2008 with job loss and eventually filed for chapter 7 bankruptcy in 2010. I tried off and on to obtain a mortgage modification from BOA without success. They canceled the HELOC and I was issued a 1099 around 2011. I received one threatening letter from a local law farm in NJ threatening foreclosure back in 2012 but nothing came of it. My loan has been transferred to at least 3-4 servicers and now resides with Rushmore Loan management.


I have been receiving letters from their loss mitigation department and was once offered a key for cash offer for 3000, which I did not pursue. I have been renting the unit now and have just been stuck in limbo. Based on the mortgage balance, Im still around 20-30k underwater. My loan was owned by Fannie Mae at one point but I do now know who owns the loan at this point.


What should I do at this point? What is the endpoint for the mortgage servicer what strategy are they pursuing? They are paying a hefty amount of property taxes every year in the amount of 6k/year and I guess just losing money on my unit. The mortgage no longer appears on my credit reports.


1. I would like to keep the unit and try to negotiate a principal reduction and favorable terms. Is this even realistic or doable? The second option is a short sale or deed in lieu without damaging my credit. Is this even possible? I would like to purchase a new home in 2-3 years but Im stuck in this limbo.


2. Should I proactively contact the loss mitigation department at Rushmore or is just opening a door for debt collecting harassment with no progress of the above two outcomes?


3. Is retaining a attorney or other firm to obtain a mortgage mod worth it or just a waste of time and money.



4. I came across some interesting information of how Goldman Sachs has been buying nonperforming loans from Fannie Mae and using servicers like Rushmore to modify the loans to turn them into performing loans they can they flip back again to the market through securization. It costs them nothing as they get a credit in the for consumer relief settlement. How can I figure out if my loan has been purchased by them?


https://www.housingwire.com/articles/41833-goldman-sachs-forgives-71-million-in-mortgage-debt



Thank you for any advice and somewhat rambling presentation. I have been avoiding addressing this for a long time and I need to find some resolution or game plan going forward.
 

Moe Bedard

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Hi Gotham - Sorry for the late reply. There was a fire here in my hometown of Fallbrook, Ca. this past week so it kept me away from the LoanSafe forum.

In any event, welcome to the community and thanks so much for sharing your story. Let me see if I can help you with your questions.

You can negotiate a principal reduction but it will be very difficult so is a short sale and or deed in lieu without damaging your credit. The reason is because you signed a mortgage contract which is a legal obligation to pay. If you do not pay, creditors need to have a penalty for debtors which is set up to negatively affect your credit and finances. They RARELY let any debtors slide on these negative effects.

If you are aggressive in contacting them, this will show that you want to settle and need to settle. This will put you in a weak negotiating position.

An attorney will do you no good. Only cost you money and will most likely be a waste of money.

You can ask your mortgage servicer who own your loan or find out if Fannie Mae or Freddie Mac owns your loan, use their loan look up tools @ https://www.knowyouroptions.com/loanlookup
 

Jzone

LoanSafe Member
Jun 20, 2017
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I'm a little confused here. Im in a similar situation. I filed chapter 7 and both 1st and second mortgage were discharged. I did not reaffirm either mortgage but stayed in the house, making payments on the first.

My second was a HELOC and was discharged. If your mortgage was discharged, you should not have recieved a 1099. The debt is gone. You can only recieve a 1099 if you dont file bankruptcy and the bank "forgives" your debt. That debt is treated as income on a 1099. Discharged debt is not treated as income.

Now, even though the debt is discharged, the bank still has a lien on the property. This means they can foreclose, but cant attempt to collect the debt of the original mortgage. This is where I am at today. Im current on first but second still has a lien. I've been working with them to settle the lein, but havent made payments and they have not attempted to foreclose.

You didnt include both mortgages in your bankruptcy? How can your loan be transferred if it was discharged?
 

despritfreya

LoanSafe Member
Sep 8, 2011
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If your mortgage was discharged, you should not have received a 1099. The debt is gone. You can only receive a 1099 if you don't file bankruptcy and the bank "forgives" your debt. That debt is treated as income on a 1099. Discharged debt is not treated as income.
This is not totally accurate. The debt is not "gone" and the lender can (and many do) issue a 1099. The debt is subject to the discharge. A discharge is an injunction against attempting to collect. The debt is still there. It just cannot be collected upon. In addition, a lender can issue a 1099. If one is issued and the debt is subject to a discharge the taxpayer submits Form 982 to the IRS. The form can be found here - https://www.irs.gov/pub/irs-pdf/f982.pdf - See 1a of the form.

Des.
 

Jzone

LoanSafe Member
Jun 20, 2017
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This is not totally accurate. The debt is not "gone" and the lender can (and many do) issue a 1099. The debt is subject to the discharge. A discharge is an injunction against attempting to collect. The debt is still there. It just cannot be collected upon. In addition, a lender can issue a 1099. If one is issued and the debt is subject to a discharge the taxpayer submits Form 982 to the IRS. The form can be found here - https://www.irs.gov/pub/irs-pdf/f982.pdf - See 1a of the form.

Des.
Yes, you are correct. If you recieve a 1099, you should file form 982 to reduce any taxes.

Bankruptcy is one of the major exclusions to reporting cancelled debt as income. https://www.irs.gov/pub/irs-pdf/p4681.pdf

What is confusing is that the original poster said his HELOC was "cancelled" but he received a 1099. And this loan has been transferred 3-4 times and now is with Rushmore.

Cancelled debt cant be collected on, so why would any debt be transferred or sold to another debt collector and attempts be made to collect?