Hi all. This site is a wealth of information, but I couldn't find anything relevant to my situation.
I had a first & second mortgage with HSBC/Beneficial. Stopped paying on second and they eventually charged it off around 2010/2011. Balance was about $7500. First mortgage was eventually transferred to Fay Servicing collecting for New Rez. That is current and will be paid off in less than 5 years.
A few years ago, started receiving collection notices from Ditech, then Greentree and most recently Shellpoint. The last collection notice from Shellpoint was about 2 years ago. Shellpoint, I understand, is now a part of New Rez. My question is can they foreclose on the second mortgage. I can't figure out if it is with a 'legit' mortgage company or debt collector. Second mortgage is not reporting to any CRAs. Is there a statute of limitations on this (either as a mortgage or debt collection)?
Thanks in advance.
Some good replies so far, and I will give you my experience. Always check your state laws about foreclosure because they are not the same in every state. My experience is in Michigan. I filed Chapter 7 bankruptcy and continue to pay on the first but not the second mortgage. I haven't made payments in 10 years on the second with little to no communication with the current lien holder.
Mortgages are a secured loan. Secured by a lien on the property. The lien will not go away until it is settled/discharged/paid etc. You can check who the lien holder is at your county register of deeds. This is a legal document and is recorded with your county clerk. Fraudulent recordings do happen, but are very rare.
Simply not paying your mortgage/Heloc and having it "written off" means nothing to you. It's an accounting procedure that shows its "uncollectable". This is where state laws vary on what can happen next.
In Michigan, after you stop paying, you are still legally liable for the debt. This is "secured debt" like a home, and not "unsecured debt", like a credit card. In Michigan, there is
no statue of limitations for a debt secured by a mortgage. A lien holder can keep that lien for 20, 30 , 50 years or more and it is still valid. Check your state since some states only allow a secured lien holder 7-15 years to enforce the lien.
Have you filed bankruptcy? In Michigan, this would release you from the debt, but not release the lien. In other words, you could walk away from the home and not owe any money. If you don't file bankruptcy, you can still walk away, but are still liable for the debt.
Even if you haven't filed bankruptcy, the original lien holder can assign, transfer or sell your debt and lien. It's perfectly legal and it will be in your loan documents that you signed.
Most states will allow a second lien holder to foreclose, but unlikely. A second lien holder must also pay off the first lien holder to complete the foreclosure. If you owe $25,000 on a second and $150,000 on a first mortgage, the second would need $175,000 to complete the foreclosure. Unlikely, but could happen if you have enough equity in the home.
In my situation, I filed bankruptcy 9 years ago and continue to pay on the 1st only. My second was sold/transferred. I get a notice probably once or twice a year with a
balance owed to release the lien. The wording is very specific, since it would be illegal for them to attempt to collect on a debt that has been discharged in bankruptcy. They are trying to "enforce a lien', not collect a debt. I respond in writing reminding them of the bankruptcy and make an offer to release the lien. I never get a response back.
Now, if I ever want to sell or refinance the lien will need to be taken care of somehow. But, I'm in no hurry to sell so Im just waiting it out. So, check your state laws on this because it will vary greatly on what can happen after you stop paying. Good luck.