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After foreclosure - 2nd Lien

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So, here is my situation:

- Foreclosed in 2007 (state of Texas)… I spent hours on the phone with Countrywide begging them to help us find options to save the house. Begged them for a loan modification; they refused to send me to the department who handles that (wish I knew the things I know now). We put the house on the market (short sale), got an offer, submitted that offer to Countrywide and they said they decided to move forward with foreclosure

- Purchase money note for second lien. 2nd originally held by CW them transferred to Litton Loans (also spent hours on the phone with them). Proceeds from foreclosure only covered maybe $1000 (assuming CW even sent that to Litton).

- Now, credit report shows “charge-off” for Litton.

- However, in January of this year some junk debt group (Dyck O’Neal) reported on my CR claiming the amount from Litton

Questions:

- How the heck can I get both Litton and Dyck off of my CR? I sent a validation letter (via certified mail with signature) to Dyck in December and have not gotten a response. I am planning on sending the 2nd notice tomorrow. I am also planning on sending the credit bureaus the no response/removal letter.

- I was under the assumption that Litton should be listed like CW is – “foreclosure”. Is that not the case?

- I received a payment in that Countrywide Settlement last year. Is there anything from that case that would protect me with Litton or Dyck for that matter?

On a side note: I cannot, for the life of me, get my score to increase. I already got a secured card through Applied Bank. What else can I do?

I’ve been doing a ton of research on this and I think my mind is in overload and can’t think right – I could use some help if anyone is willing.

THANK YOU SO MUCH!!

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It sounds like the first one charged it off and sold your debt, but the blemish will be there for seven years, and the debt buyer might get a new 7 year clock. I'm not a professional, so I could be wrong about that.

For some good advice, start by reading this, some of these articles sound like they might help you somewhat. Good luck, don't panic.

http://ezinearticles.com/?First-Advice&id=4107976

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I was under the assumption that Litton should be listed like CW is – “foreclosure”. Is that not the case?

No. Once CW foreclosed, and Litton gave up rights to the collateral, that loan became unsecured.

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No. Once CW foreclosed, and Litton gave up rights to the collateral, that loan became unsecured.

Does this mean that collection agency's can come after you for the outstanding balance or does the 2nd die when the property is foreclosed on. We are getting phone calls from debt collectors saying that now it is a personal debt and we owe them the money.We have sent DV letters to them but they just keep calling.

will this ever end.

Regards.

FR

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It sounds like the first one charged it off and sold your debt, but the blemish will be there for seven years, and the debt buyer might get a new 7 year clock. I'm not a professional, so I could be wrong about that.

For some good advice, start by reading this, some of these articles sound like they might help you somewhat. Good luck, don't panic.

The clock does not reset. Charge off will be there 7 years + 6mnths(180-days) from the date of last late.

Read FCRA Staff Opinion giving clarity to the matter...

www(.)ftc(.)gov/os/statutes/fcra/amason.shtm

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The 2nd doesn't die. Several options for them...They can forgive the debt and 1099-C you, start collection activity(sounds like that's what's going on), or charge-off, write off P and L loss, sell debt, etc.

Edited by Maestro12

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Does this mean that collection agency's can come after you for the outstanding balance or does the 2nd die when the property is foreclosed on. We are getting phone calls from debt collectors saying that now it is a personal debt and we owe them the money.We have sent DV letters to them but they just keep calling.

will this ever end.

Regards.

FR

No, the second does not die. Because the first foreclosed, the lien for the second was wiped out in the F/C. The second became unsecured like nascar pointed out. This type of defaulted debt is sold all day long. :(

You could negotiate the debt if you want to stop the chain of sales. I have seen figures in the 10% range, 10% of the original balance to pay off the debt. Of course, you would want it in writing that the remaining debt will not be sold.

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No, the second does not die. Because the first foreclosed, the lien for the second was wiped out in the F/C. The second became unsecured like nascar pointed out. This type of defaulted debt is sold all day long. :(

You could negotiate the debt if you want to stop the chain of sales. I have seen figures in the 10% range, 10% of the original balance to pay off the debt. Of course, you would want it in writing that the remaining debt will not be sold.

I agree. the fact that the loan was secured does not mean they can't try to collect when the "security" is not longer there to collect.

the 2nd mortgage took a risk by being in 2nd position...but they can still try to collect in other ways.

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Just a sidenote- as far as lawsuits by banks post-foreclosure, most states have very tight timelines for the lawsuits to be initiated. Check your state's anti-deficiency statute (very misleading name for these statutes). In my state, lenders have 180 days from the time of foreclosure to initiate suit for any deficiency.

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However, in January of this year some junk debt group (Dyck O’Neal) reported on my CR claiming the amount from Litton

I am also from the state of Texas and my second lien is held by Dyck O'Neal. The amount is so small but I am paying off other bills first before I get to it.

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The 2nd doesn't die. Several options for them...They can forgive the debt and 1099-C you, start collection activity(sounds like that's what's going on), or charge-off, write off P and L loss, sell debt, etc.

FYI if they do forgive the debt and 1099 you that doesn't mean that counts as taxable income since The Mortgage Forgiveness Debt Relief Act and Debt Cancellation was passed. Of course it sounds like they already sold it so forgiveness won't happen. My worry is the Act is in affect till 2012. I wonder how may holders of seconds are going to wait till 2013 to forgive and 1099 people just out of spite.

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