HELOC Charged Off - Refinance Question

Since this is over the cooling period, what will most likely happen at closing?

  • I will need to pay off the second in order to release the lien

  • There's a chance there is no lien on the second

  • The second will become a Jr lien and keep both mortgages

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I am currently in the process of a Cash Out Refinance application. I told the new lender my PNC HELOC was charged off almost 5 years ago, which didn't seem to bother them. What is the most likely outcome of this transaction?

Thank you in advance!

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
Southern California

Even though the mortgage was charged off 5 years ago, it doesn't mean that the debt was satisfied so the lien will always remain a cloud on the title which means you may not be able to refinance or you will have to get a higher interest portfolio product. Hence, whatever offer they may be able to give you might not make sense.

When we do a new loan we have title research any liens associated with the property and that may have been when that came up. The only way to get around it would be to obtain a lien release or satisfaction of lien through a settlement.

When you settle a 2nd mortgage, lenders treat this as a short sale and short sale seasoning periods would apply.

Just FYI - Second Mortgage Settlement/Short Sale seasoning:

Conventional - 4 year seasoning
FHA - 3 year seasoning
VA - 2 year seasoning