HELOC updated on Credit Report for first time in 6 years, consequences?

Josie!

LoanSafe Member
Jan 26, 2014
54
3
8
Bottom line: I defaulted on a HELOC with USAA in 2013, written off in May 2014, they updated my credit report yesterday for the first time since June 2014, changing only the comments from: "Charged off as bad debt. Canceled by credit grantor." to "Charged off as bad debt. Collateral Released - Balance Owing". Tanked my credit score by 43 points. Is this an indication that they plan to collect?

I have written my entire story on the site, but long story short, I had a first mortgage with PNC for less than the home was worth, but my HELOC with USAA was for $46k and they refused to settle and I was therefore unable to do a short sale (short sale offer paid off first and would only give USAA around 10%). I made my last payment to PNC in Sept 2013 and last payment to USAA in Oct 2013. In May 2014, USAA wrote off the loan, which I assumed meant they released their lien because PNC ended up buying the property back at auction in August 2014. PNC sold it later that year for around $25k more than I originally owed them.

Oddly, USAA never sent the account to collections, or made any attempt to get the money from me, I never heard from them again and figured they just chalked it up as a loss (I also never got any 1099-c). Both will fall off my credit report at the end of this year. Yesterday, I got a Credit Karma notification that my Transunion score dropped 43 points. All my scores were heading up to the 800 mark for the first time ever, so this was surprising. When I looked, USAA had updated the comments in my credit report file for the first time since June 2014. It previously said "Charged off as bad debt. Canceled by credit grantor." Yesterday they changed it to "Charged off as bad debt. Collateral Released - Balance Owing".

Is this an indication that they plan to try to collect? I live in MD and from what I can tell, the SOL is 3 years, although it looks like real property SOL is 20 years, if that matters. Is a HELOC considered real property debt? It seems odd that they would bother updating my credit report for the first time in almost 6 years. I have since married and moved into a house my husband owns, and I am not on the mortgage or title. I am now hesitant to pursue being added to the title, as I don't want them to put a lien on this property.
 

Jzone

LoanSafe Member
Jun 20, 2017
204
28
28
70
Bottom line: I defaulted on a HELOC with USAA in 2013, written off in May 2014, they updated my credit report yesterday for the first time since June 2014, changing only the comments from: "Charged off as bad debt. Canceled by credit grantor." to "Charged off as bad debt. Collateral Released - Balance Owing". Tanked my credit score by 43 points. Is this an indication that they plan to collect?

I have written my entire story on the site, but long story short, I had a first mortgage with PNC for less than the home was worth, but my HELOC with USAA was for $46k and they refused to settle and I was therefore unable to do a short sale (short sale offer paid off first and would only give USAA around 10%). I made my last payment to PNC in Sept 2013 and last payment to USAA in Oct 2013. In May 2014, USAA wrote off the loan, which I assumed meant they released their lien because PNC ended up buying the property back at auction in August 2014. PNC sold it later that year for around $25k more than I originally owed them.

Oddly, USAA never sent the account to collections, or made any attempt to get the money from me, I never heard from them again and figured they just chalked it up as a loss (I also never got any 1099-c). Both will fall off my credit report at the end of this year. Yesterday, I got a Credit Karma notification that my Transunion score dropped 43 points. All my scores were heading up to the 800 mark for the first time ever, so this was surprising. When I looked, USAA had updated the comments in my credit report file for the first time since June 2014. It previously said "Charged off as bad debt. Canceled by credit grantor." Yesterday they changed it to "Charged off as bad debt. Collateral Released - Balance Owing".

Is this an indication that they plan to try to collect? I live in MD and from what I can tell, the SOL is 3 years, although it looks like real property SOL is 20 years, if that matters. Is a HELOC considered real property debt? It seems odd that they would bother updating my credit report for the first time in almost 6 years. I have since married and moved into a house my husband owns, and I am not on the mortgage or title. I am now hesitant to pursue being added to the title, as I don't want them to put a lien on this property.
You defaulted on the original loan but did not file bankruptcy?

It sounds like from your update that ""Charged off as bad debt. Collateral Released - Balance Owing"" , means the lien is released. The collateral was secured by the lien on the house. No big deal now since you are not living in the house anyway.

However, if you did not file bankruptcy, the debt can still be collected. And HELOC are considered real property debt in most states, but check out your states laws.

Foreclosures generally come off your credit report in 7 years. That may be why it was updated.

I would say that the debt collector probably has a valid claim to the debt. The more common problem I see on this forum is the debt is discharged during bankruptcy, but the lien remains. Then the homeowner is free of the debt, but cant settle the lien.

Unless you hear from the bank or debt collector, I would not contact them. I also would not put your name on your husbands property. If the debt is valid, your husbands house will be considered part of your assets.
 

Josie!

LoanSafe Member
Jan 26, 2014
54
3
8
You defaulted on the original loan but did not file bankruptcy?

It sounds like from your update that ""Charged off as bad debt. Collateral Released - Balance Owing"" , means the lien is released.
Hi, thanks for the response. I did not file bankruptcy. This was a property that I was unable to sell (underwater) when I moved to another part of the state. I rented it out at a loss for 3+ years then I talked to a realtor who convinced me to do a short sale. When USAA refused to budge on the HELOC, the short sale wasn't able to proceed. Then they wrote it off 6 months later and PNC foreclosed a few months after that. I guess I figured the lien was released back then, I thought they couldn't sell it to someone else with a lien on the property?

Is there any way to check for liens? The only info I see on my county property page is the foreclosure notices, not sure where to look for liens. I won't contact the creditor, I just wanted to be prepared, after absolutely no contact for so long, it scared me to have them ding my credit (again). I still have all my other accounts with USAA (auto insurance, life ins) so they definitely know how to contact me.