2nd mortgage charged off by original creditor/can debt collector foreclose

[Erik Sandstrom]

Hi Cookiemom,
It's very difficult to tell you what actually happened without reviewing the loan modification documents. Loan modifications usually entailed interest rate reductions, term extensions or even principal forbearance or forgiveness. When you apply for a modification they used to tell you "Miss 3 payments and call us back" - essentially saying they won't help you without the loan being delinquent. Those payments that you missed as well as any fees associated with that occurring could have been tacked onto your balance or put at the end of the term of the loan. This was very common practice during those days to do one of those actions.

The 2nd lien shouldn't have anything to do with the 1st lien even if it is serviced (or even the investor) by the same entity.

Regarding the 2nd and the balance increasing by the interest from the missed payments, you can usually request something from the servicer of that lien that would show amounts accrued from that. Personally I haven't requested anything of this nature but I'm almost positive it can be provided along with a ledger of fee's assessed (if any).

If you have any other questions please don't hesitate to reach out. I hope this answers your questions.

 

[cookiemom]

Hi Cookiemom,
It's very difficult to tell you what actually happened without reviewing the loan modification documents. Loan modifications usually entailed interest rate reductions, term extensions or even principal forbearance or forgiveness. When you apply for a modification they used to tell you "Miss 3 payments and call us back" - essentially saying they won't help you without the loan being delinquent. Those payments that you missed as well as any fees associated with that occurring could have been tacked onto your balance or put at the end of the term of the loan. This was very common practice during those days to do one of those actions.

The 2nd lien shouldn't have anything to do with the 1st lien even if it is serviced (or even the investor) by the same entity.

Regarding the 2nd and the balance increasing by the interest from the missed payments, you can usually request something from the servicer of that lien that would show amounts accrued from that. Personally I haven't requested anything of this nature but I'm almost positive it can be provided along with a ledger of fee's assessed (if any).

If you have any other questions please don't hesitate to reach out. I hope this answers your questions.

Thanks! I actually have requested a payment history QWR and it's complete garbage...shows nothing other than the original loan amount and a few late fees. Nothing itemized to show historical accrued.

 

[Erik Sandstrom]

From what I’ve seen they use the same amortization schedule from the original loan. Who currently services your liens?

 

[Survivor_IN]

Eric, on a purchase loan "product," the second is always 20 percent value to meet the down payment. I can't say what happens on a HELOC style second. Mine was 10 or 15 year loan, not amortizing the same way the predatory first but at very high interest rate. Just an FYI, the second lien program WAS in effect in 2010. Lenders simply passed it over declaring they had to complete the first, first. Given all the misinterpretations, highly possible unscrupulous lenders took advantage. They knew that properties were underwater and that the second lien could be wiped out in exchange for government payments of a certain percentage. They also knew that after modification, both first and second payments together, existing "as is, " were not affordable. No one sued because it was super difficult to get lender compliance on the first loan modification. So now... we have a lot of seconds... hanging. Good luck getting accurate information and records for a refinance. These delays cause even more interest to accrue.

 

[Erik Sandstrom]

Hi Survivor, I don't necessarily need amortization schedules, QWR's or anything of that nature to complete a refinance. There is however special documentation that I do have to obtain that many other lenders have problems getting which ultimately result in a denial when I've figured out how to circumvent the issue. I guess you can call it my niche that I've worked so hard to ensure a smooth process on because I care so much about these situations.

What you're mentioning regarding the 2nd and their practices is actually something that I mention myself but have no way of proving that these lien holders did actually receive bailout funds whether it be from TARP or other. Have you dug deep into that and know for a fact they were paid based on these non performing notes or is it just speculation?

 

[Survivor_IN]

Have you dug deep into that and know for a fact they were paid based on these non performing notes or is it just speculation?

I'm finding that these records can be altered or revised and the servicing accountings don't accurately reflect events, in particular with government reporting of HAMP. Leaves the door open to make multiple (even contradictory) claims to multiple parties. Just a word of caution. One would think an amortization schedule is easy enough? but you are not going to get that if it means admitting certain actions and adjustments were taken that were deceptive

 

[Erik Sandstrom]

I apologize but I'm having a really hard time deciphering what you're trying to say. My knowledge lies with the hundreds of homeowners I've refinanced in this situation that I've seen almost get foreclosed on. When it comes to litigation, contradictory claims I haven't seen that personally. The head counsel that I work with over at RTR for example is more than willing to provide whatever is needed to validate the debt whether it be through a QWR or breakdown of interest accrued from the point of not paying. Of course I know that the regular person answering the phones over there you may have a bit more challenging time getting anything out of them.

We also talk to on average about 50-100 people a week in this situation and most are either planning to sell their home (or have already listed) or believe they don't owe the 2nd lien holder anything/wont give them a dime. Those same people usually call us back when they get a NOD or NOS on their door when they could have been a bit more proactive and taken care of it sooner.

Ultimately there's different ways to fight these battles, but what is actually effective. Has anyone been able to successfully get them to forgive these liens? If I'm not mistaken awhile ago BigFrog said that he was able to do that but never provided any proof of it.

 

[cookiemom]

I apologize but I'm having a really hard time deciphering what you're trying to say. My knowledge lies with the hundreds of homeowners I've refinanced in this situation that I've seen almost get foreclosed on. When it comes to litigation, contradictory claims I haven't seen that personally. The head counsel that I work with over at RTR for example is more than willing to provide whatever is needed to validate the debt whether it be through a QWR or breakdown of interest accrued from the point of not paying. Of course I know that the regular person answering the phones over there you may have a bit more challenging time getting anything out of them.

We also talk to on average about 50-100 people a week in this situation and most are either planning to sell their home (or have already listed) or believe they don't owe the 2nd lien holder anything/wont give them a dime. Those same people usually call us back when they get a NOD or NOS on their door when they could have been a bit more proactive and taken care of it sooner.

Ultimately there's different ways to fight these battles, but what is actually effective. Has anyone been able to successfully get them to forgive these liens? If I'm not mistaken awhile ago BigFrog said that he was able to do that but never provided any proof of it.

More the reason to validate the debt, get them to show the amortization of how they are arriving at the final amount due. I'm not just going to say ok.. here's the $. Show me the books. If they received the TARP bailout it should show a credit on there. If this was an official exchange, they should ALL records not just since their servicing date to current. These have also been included in PSA and some of their actions could be a violation or deem non-transferable.

 

[Survivor_IN]

More the reason to validate the debt, get them to show the amortization of how they are arriving at the final amount due. I'm not just going to say ok..

This may appear more viable in litigation. (or not, it's is a bone of contention for some) I'm trying to express that lender's calculations should be verified as a course of conduct and to scrutinize payoff requests for refinance. Maybe they share such information freely with non-litigant parties and outside of the courthouse? I just find it a red flag that my particular lender is saying an amortization schedule does not exist. How else can I verify an accounting method or balance?

 

[cookiemom]

The schedule does not exist because the is no debt to record after this has passed along and buried in PSA, Fintech. These servicers are acting under which the bookrunner investment bank coerces either payment or property.

Before you use the word "Default" know this: - LivingLies

Upon reflection, I think part of the problem is that most people including judges, don't truly understand the meaning of the word "default."

livinglies.me

Those certificates did not transfer any financial or legal interest in your underlying obligation, legal debt, note or mortgage to anyone. The assignment is therefore most likely completely bogus having been fabricated strictly for the purpose of enforcement, containing false information (sale of the underlying obligation) and forged by robosignors.

The investor is not managing the affairs of any trust that owns any right to administer, collect or enforce an obligation from you. Therefore any company claiming authority from someone such as BNY Mellon is citing to authority that does not exist. Otherwise clean records should be kept and provided upon request.

 

[dksnj]

Hello,

I'm the OP on this thread (username changed). As mentioned in my original post, my 2nd mortgage was bounced around from HSBC, Beneficial, Ditech and lastly Shellpoint. I haven't received any bills, etc from them since around 2017/2018. I did just receive their annual privacy notice they send yearly to everyone (how customer's personal data will be collected and processed, etc). Last payment on this account was over 11 years ago.

My first mortgage is current and has a balance of $5K, which I plan to pay off over next few months. Of course, receiving even the privacy notice has me a bit nervous about that 2nd mortgage coming back to haunt me so I did some research.

I'm located in NJ and am wonder if statute applies to my situation:

Statute of Limitations For Collecting on Old Second Mortgages, HELOCs and Lines of Credit in New Jersey. New Jersey statute N.J.S.A. 12A:3-118(b) states that if there have not been any payments made for more than 10 years and there has been no demand for payment in 6 years, the lender cannot collect from the borrower.

I know I am not quite at the 6 yr mark for demand of payment yet
Also, does anyone know of a way I can find out the exact amount owed without 'poking the bear'? I don't want to reach out to them and reset the clock on receiving a demand for payment.

 

[Survivor_IN]

I would start saving the funds and be refi ready on the second for "just in case." It couldn't hurt to pay as much cash as possible if/when they try to collect. Otherwise, they will refuse to release the lien when you try to sell or may start reviewing the files for potential foreclosure given increases in real estate. I have no clue how to get the information without poking the bear other to calculate the annual interest and do the math on it. If it's a fixed rate then see if you have the "interest paid" on a year end statement or tax statement from the last full year of payment.

 

[Survivor_IN]

I'm located in NJ and am wonder if statute applies to my situation:

Statute of Limitations For Collecting on Old Second Mortgages, HELOCs and Lines of Credit in New Jersey. New Jersey statute N.J.S.A. 12A:3-118(b) states that if there have not been any payments made for more than 10 years and there has been no demand for payment in 6 years, the lender cannot collect from the borrower.

I know I am not quite at the 6 yr mark for demand of payment yet
....I don't want to reach out to them and reset the clock on receiving a demand for payment.

One more thing... I think a "demand" is going to be the NOD (Notice of Default Letter) with a definitive date saying pay up by this date or an actual filing of the foreclosure lawsuit since you are in a judicial state.

(I also really don't think the letter counts but could be wrong so if anyone want to chime in.)

 

[dksnj]

Update from OP - received the attached letter from Shellpoint today. The amount owed is under $8K (which is the same amount from the letter they sent over 10 years ago - I read that if a mortgage charges off and doesn't send regular statements, they cannot charge interest or fees). I do not plan on refinancing or selling, as I expect this to be my 'forever' home. I'm guessing the best action to take would be to wait until I have the entire balance due and pay in one lump sum due to the part of the letter I circled below:

"Please be advised that we cannot bring legal action to collect this debt or threaten to do so in the state of New Jersey because the statute of limitations has expired. If you do make a payment, we may later be able to bring an action to collect this debt in the state of New Jersey because the payment may start a new statute of limitations"

I'm assuming this is the only way to get the lien released. I'm somewhat relieved to receive this because I've been waiting for the day to hear from them, but i thought it would have been a foreclosure notice.

 

[Survivor_IN]

Thanks for the update! I don't see a problem with this,

Technically you could file papers to remove the lien but if you are willing to pay this off when you have funds available, and at zero interest, that sounds doable and fair. Definitely keep that paper. In most cases you automatically pay off the lien when you sell (incorporated into sale and closing) and you could wait for that too. I mean you could wait another 20 years or never sell. As long as it remains 8k.

 

[dksnj]

Thanks for the update! I don't see a problem with this,

Technically you could file papers to remove the lien but if you are willing to pay this off when you have funds available, and at zero interest, that sounds doable and fair. Definitely keep that paper. In most cases you automatically pay off the lien when you sell (incorporated into sale and closing) and you could wait for that too. I mean you could wait another 20 years or never sell. As long as it remains 8k.

I'm curious what papers I could file to remove the lien? From what I understand (and I may be incorrect) property liens are good for 20 years in NJ, but can be renewed. I'm not sure when Shellpoint put the lien on as the letter I posted is the first I've heard from them in over 10 years.