Settling a long ago discharged HELOC?

Rc3

LoanSafe Member
Nov 19, 2015
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So I was a success story a while back on a loan mod. Short version, back in 2010 we declared Chap 7 and everything was discharged. I have not made a payment on my HELOC in about 9 years and have never heard from them as they can not contact me on the debt but never tried to foreclose. So every once in a while I think about the HELOC mainly because 1. I would like to clear it from hanging over my head, 2. I'd like to refinance but I tried several years ago and could not as the HELOC would not allow, 3. I'd like to have access to my equity.

I do have equity in my home at this point, owe maybe 155k on 1st (not reaffirmed) and about 30k on HELOC with the home maybe worth 210k. I do not have 30k to pay off the HELOC so I have hesitated contacting as I dont want them to try to foreclose and want to keep the home. I could pay maybe 10k to clear this up. Is it likely after 9 years they would try to foreclose if I contact? If I do try do I do it in writing or try to talk to someone on the phone? Any advice?
 

Rc3

LoanSafe Member
Nov 19, 2015
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Oh and 1st while never reaffirmed I had a loan mod like 4 years ago and never late since.
 

Jzone

LoanSafe Member
Jun 20, 2017
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Im in a similiar situation. Five years ago, filed bankrupty chapter 7 and discharged first and second mortgage. Not reaffirmed. Kept paying the first, but stopped paying the second. The debt/lien was sold by Citibank to a collection agency. They cant collect on the debt, but still hold the lien.
I hear from them about once a year and I respond with standard offer of 10% settlement. I never hear back from them. I only correspond in writing, never on the phone or email. I also never contact them first to talk about a settlement, I just respond to their letters.

I just follow the advice given in this forum, which is basically wait it out and don't poke a sleeping bear. Sure they have a right to foreclose, but seldom do HELOC/2nds do that because they have to pay off the 1st also to foreclose.

Im starting to slowly build equity in my home also, so I know it wont be long and they will probably get more aggressive. However, I have no need to sell or refinance so I dont really need to initiate any settlement discussions at this point. Sure, I would like to settle this and get the lien released, but so far, their offers have been 60%-90% of the bankruptcy balance.
 

Rc3

LoanSafe Member
Nov 19, 2015
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Yeah, I also worry about poking the bear too but it has been 9 years and no one has ever attempted to settle with me. I'm not even sure if the loan was sold off or anything. I also worry about getting a foreclosure notice demanding the full 30K I owe which I couldnt pay. I feel like after 9 years I may never get an offer to settle unless I initiate it. if they offered 60% that might be a little more than I could swing but 40% maybe and I'd be thrilled with 20%.
 

Jzone

LoanSafe Member
Jun 20, 2017
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Yeah, I also worry about poking the bear too but it has been 9 years and no one has ever attempted to settle with me. I'm not even sure if the loan was sold off or anything. I also worry about getting a foreclosure notice demanding the full 30K I owe which I couldnt pay. I feel like after 9 years I may never get an offer to settle unless I initiate it. if they offered 60% that might be a little more than I could swing but 40% maybe and I'd be thrilled with 20%.
First, go to your county register of deeds and see who holds the lien for the property. It may still be the original lender, but could of been sold or assigned. That's your starting point. A few people on here have been surprised to find out that when they went to the county register of deeds, the liens had been released years earlier with no explanation. Unlikely, but it has happened.
 

OneHugeMess

LoanSafe Member
May 30, 2016
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I'm actually in a somewhat similar situation. Had a HELOC with Countrywide. Loan Servicing was transferred to BofA and haven't paid since 2008. BofA was sending monthly statements to me, up until 2014 or so, and has stopped since. The loan charged off in 2009, and wasn't forgiven in the DOD or AG Settlements.

I assume BofA or Real Time Resolutions is servicing mine in some capacity still, but I haven't bothered to call or write them.
 

Rc3

LoanSafe Member
Nov 19, 2015
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Last company I received a statement from was USAA the issuer but that was around the time of my BK so about 9 years ago. I actually called them the Jan after my BK asking about my interest tax statement and was informed that the HELOC was discharged and while the lien still existed it was not accruing any interest or fees. I stopped worrying about it then until the past 2 years when I wanted to refi. Everything I heard says USAA isnt easy to deal with and I doubt they just released the lien but I will check. I know it was on there 3 years ago when I tried to refi
 

OneHugeMess

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May 30, 2016
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@Rc3, if the loan was "discharged"... than there would no longer be a lien against the home, allowing you to refinance or sale the home. I feel as though an agent, may have misspoke and meant "charged off" instead.

After six months, or a year in some cases, some servicers "charge off" home equity lines as "uncollectible", and interest stops occurring. The lien still exists against the property, but, it allows the bank to mark down the debt -- no longer as a "asset" on the books, and collect a tax write off. The money is still owed, but no more interest, or fees accrue.

I would go online to your County, and see if you can pull up property records. There's a chance that the lien has been released. If you are unable to to get them online, I would go to the local recorder or... find a realtor (friend, or family) and ask them nicely to see if they can look up the property records for your home.

If the lien is still outstanding - I would begin settlement talks with USAA at 15 - 20% of the last balance. If it's no longer oustanding, I would refinance into one of these cheap Fixed Rate Loans :)
 

Jzone

LoanSafe Member
Jun 20, 2017
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@Rc3, if the loan was "discharged"... than there would no longer be a lien against the home, allowing you to refinance or sale the home. I feel as though an agent, may have misspoke and meant "charged off" instead.

After six months, or a year in some cases, some servicers "charge off" home equity lines as "uncollectible", and interest stops occurring. The lien still exists against the property, but, it allows the bank to mark down the debt -- no longer as a "asset" on the books, and collect a tax write off. The money is still owed, but no more interest, or fees accrue.
Not all the time. My second mortgage loan was discharged in chapter 7 and there is still a lien against the property. Citimortgage was the original note holder and simply assigned the lien after bankruptcy.
 

troubleinriverside

LoanSafe Member
Nov 30, 2008
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It’s been a while since I visited this site. Interesting topic since I’m right in the middle of this
So my Chapter 7 discharged in May 2010 and I had a 240K HELOC that was discharged by HSBC. A couple years back I read about some members here getting Lein releases from HSBC . I tried but my loan was not with those divisions. So I sat and waited. Friday I got brave and called the recovery division in New York that had my loan. I was told it was so old it would take 24 hours to reactivate the data. So I called again today. They found the loan information. So I asked for a lein release. I was told I would have to negotiate a settlement and the amount would start at 50% of the loan balance about 120k. And that the bankruptcy dident matter they won’t release the lein . So now I have to sit this out. I still owe $350K on the 1st mortgage. I was planning on retiring next year and selling and down sizing and buying with the equity. If I have to pay them off then there will be little equity. So I may just walk and let the 1st forclose then HSBC will get little or nothing
 

OneHugeMess

LoanSafe Member
May 30, 2016
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It’s been a while since I visited this site. Interesting topic since I’m right in the middle of this
So my Chapter 7 discharged in May 2010 and I had a 240K HELOC that was discharged by HSBC. A couple years back I read about some members here getting Lein releases from HSBC . I tried but my loan was not with those divisions. So I sat and waited. Friday I got brave and called the recovery division in New York that had my loan. I was told it was so old it would take 24 hours to reactivate the data. So I called again today. They found the loan information. So I asked for a lein release. I was told I would have to negotiate a settlement and the amount would start at 50% of the loan balance about 120k. And that the bankruptcy dident matter they won’t release the lein . So now I have to sit this out. I still owe $350K on the 1st mortgage. I was planning on retiring next year and selling and down sizing and buying with the equity. If I have to pay them off then there will be little equity. So I may just walk and let the 1st forclose then HSBC will get little or nothing
I actually remember your posts! You were really active before. Anyway, it's intriguing that HSBC had to "reactivate" and pull the old application from the file. I guess after a long period of time, they account just become so dormant they take these accounts completely out of servicing.

If you want my advice - I wouldn't pay them off, or walk away. I would place the House in a LLC, and rent it out. Surely you can make a little bit of $$$ after paying the 1st Loan & Taxes.