2nd mortagage still owed house was sold

[cig610]

My name is Ivette, I live in New York. This past May I closed on a house that I almost foreclosed on. I went through a short sale and sold the house. The house originally had two mortgages, at the time of sale only one loan was satisfied the 2nd loan was released to collections agency and now 5 moths later the collections agency is trying to collect on a 135K mortgage on a house that has already been sold. The first thought in my mind was bankruptcy, but does anyone have any other suggestions. What options do i have if any. I can not pay 135k and pay for my daily expenses , student and credit card debt of 12k..

[FlyingRon]

You do not foreclose, the bank forecloses.
Something bizarre happened here. Did the second mortgage holder agree to the short sale? If not how did the security get released for the buyer?

[nextwife]

I agree, this makes no sense. How did the title company who was insuring the conveyance "clear" the 2nd mortgage at closing? Did they not have a release letter from the jr mortgage holder? Did the closing comply with the second mortgage lender's requirements? A mortgage doesn't just go away, until it is released by that lender, even if it had been referred to a collection agency.

[cig610]

I am here seeking advice because I understand much less what happened when I sold this house. I will write word for word the letter given to me by chase and the basics from the letter of the collections agency.


The letter for the second loan states as follows- This letter is to confirm that Chase Home Finance LLC (hereafter referred to as Chase) will agree to accept a SHORT SALE on the above account upon manager approval. Chase will agree to release its security interests in the above collateral upon receipt of $1,000 in certified US funds. Chase requires that we approve the final settlement statement prior to closing and further supplies that no more than 0 be given to seller. This amount is for the release of Chase security interest only. The customer will still be responsible for all deficiency balances per the terms of the original loan documents.

The money was then transferred to Chase, the first loan was satisfied with the sell and the lien was released off the 2nd loan once the $1000 was received by Chase. House sold.

six months later. I received a letter from AMO recoveries stating that my account has been referred to their agency for collections. Stating- Our client, Chase Home Equity has authorized us to settle this account for a reduced amount. This letter is from a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.

The balance is 135k and they are willing to negotiate down to 94k. Still not something i can afford.

[Some Random Guy]

OK, that agreement seems pretty clear. For $1000, the second mortgage was converted from a secured mortgage to an unsecured personal loan. You still borrowed $135,000 from them. Did you expect them to not want their money back?

Your options are bankruptcy, a negotiated settlement, or do nothing and wait to get sued. If you are clear with them that bankruptcy is a viable option for you and that you have extensive other debts, then they may be more willing to decrease the settlement. But in return, they will expect that you will actually pay them the money. Do you have any means of paying them, even a fraction of the amount owed?

[cig610]

Right, I understand the load of crap I stepped in here. Thanks for clearing my questions. At closing I questioned the letter and was told very rarely they come after you, after the house is sold. Naive to believe them I know. I called those that delt with the bank at closing they suggested I use a credit repair company, which again seems unrealistic they can help me any more than I can help myself. Thats how I ended up here.

At most I may be able to pay a couple of thousand in installments but it will take a long time even for that. My student loans, monthly expenses and credit card debt won't allow me to pay them off any sooner.

I just wanted to confirm that maybe bankruptcy is my only option at this point.

thanks

[Some Random Guy]

Since you can make only a few thousands in payments over time, and don't have a good history of paying, they will be unlikely to want to deal with you. I would suggest consulting with a bankruptcy attorney and discussing the proper time to file (in relation to the collections actions that your creditors take) and what type of bankruptcy you qualify for.

[nextwife]

Originally Posted by cig610

. . .agree to accept a SHORT SALE on the above account upon manager approval. Chase will agree to release its security interests in the above collateral upon receipt of $1,000 in certified US funds. Chase requires that we approve the final settlement statement prior to closing and further supplies that no more than 0 be given to seller. This amount is for the release of Chase security interest only. The customer will still be responsible for all deficiency balances per the terms of the original loan documents. .

You VERY clearly agreed to accept responsibility for the deficiency. There is nothing ambiguous about the agreement you made with them. Have you attempted to honor your agreement AT ALL?