Dil Failed... What Now?

ObsidianBlk

LoanSafe Member
Mar 10, 2016
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Hello,

I hope this is a valid forum for this. Couldn't find another that would be better...

I'll try to keep the story short and expand only if asked.
June 2015 - Owed 125k on a house that, at the time, was only valued at 90k. Had two mortgages on it (80/20 when purchased). House needed (at my estimate) 20k worth of repairs, and I had barely anything in the bank. Decided the house wasn't worth it and attempted a short sale.

February 2016 - Short sale failed. Second mortgage company went to debt collector. Started DIL process with primary mortgage company.

June 2016 - Settled on my second mortgage for 5k. Lien gone, debt settled. Still working on primary DIL.
NOTE: Told primary that secondary was settled. Amazingly, within a couple weeks a new valuation came on my house putting it's estimated value at $45k.

September 2016 - Was told a lien (old judgement lien) was still on the house. Settled the lien in two weeks. Primary told me (on sept 26th) that I needed to resubmit my information.

Two weeks later - DIL denied. Asked why and was told the loan was discharged (to a collector, I assume). Asked when the discharge took place. They said Sept 20th... six days before I was asked for renewed DIL documents.

So... This is where I sit. I have no idea what's next. I don't know if the discharge is an actual foreclosure. If it is, then my big question is, what's the foreclosure process when you DON'T want to keep the house? Everywhere I look gives suggestions for trying to keep the home, but I don't want it. I'm sure just ignoring the foreclosure is still not the best solution, but what happens when you tell the judge "they can have it!"???

I should also note... back in early September, before I was told about the lien, I was given the impression that the DIL process was going to end very soon and that, upon signing papers, I would need to leave the house. As such, I obtained an apartment and am now splitting my time between the apartment and the house (bare minimum utilities at the house to keep it from totally being abandoned). As such, I'm not for lack of anywhere to live when I do loose the house.

I'm really just looking for an idea on what I should be doing. I'm still trying to exit as gracefully as possible, but... Short sale and deed-in-lieu failed. Foreclosure? Bankruptcy? I have no ideas here. :(

Thank you
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,851
466
1,000
49
Southern California
www.loansafe.org
Hello,

If they discharged the debt, that means it is no longer a secured debt and it has become unsecured and a personal debt meaning that they can go after you personally for this debt. However, the lien will still remain and they cannot even foreclose now.

Al you and do is sell the home or move back in.
 

ObsidianBlk

LoanSafe Member
Mar 10, 2016
4
0
1
40
Hello,

If they discharged the debt, that means it is no longer a secured debt and it has become unsecured and a personal debt meaning that they can go after you personally for this debt. However, the lien will still remain and they cannot even foreclose now.

Al you and do is sell the home or move back in.
Thank you for that, but I'm confused... I would definitely sell the home if that's possible, but how do I do that if there's still a lien on it? Doesn't the property have to be lien free to sell it? I'm confused by this, sorry.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,851
466
1,000
49
Southern California
www.loansafe.org
You are welcome. I understand this can be confusing.

When your mortgage servicer charged off the loan, that just means they had written off the debt portion of your mortgage loan as uncollectible for tax purposes. They can still try to collect on the debt.

The lien is a separate legal entity and will remain on the home. To sell your home with free and clear title, you will have to negotiate a settlement with your mortgage servicer who services the lien.
 

ObsidianBlk

LoanSafe Member
Mar 10, 2016
4
0
1
40
You are welcome. I understand this can be confusing.

When your mortgage servicer charged off the loan, that just means they had written off the debt portion of your mortgage loan as uncollectible for tax purposes. They can still try to collect on the debt.

The lien is a separate legal entity and will remain on the home. To sell your home with free and clear title, you will have to negotiate a settlement with your mortgage servicer who services the lien.
Thank you again. I mostly figured this was going to be the case.