Wells Fargo HELOC Charge Off No longer own home

[summers9305]

Several years ago both my ex-wife and I were going to be laid off and we chose to walk away from our home in Pennsylvania. The house was sold in May 2015 and today (1/7/16) I received a letter from Wells Fargo, HELOC 2nd mortgage holder that the debt of $49K was charged off and they were trying to collect on the debt. They (Wells Fargo) offered a settlement of approximately $5k or 15% of the debt, and that I had to respond within 15 days of the letters postmark. Since I no longer own the home and have not been in contact with either the originator of the loan (Countrywide) or Wells Fargo for almost 4 years, what are my obligations? Should I dismiss this or take the 15% pay off of the 2nd mortgage/HELOC on a house I no longer own?

 

[TheGeekess]

Several years ago both my ex-wife and I were going to be laid off and we chose to walk away from our home in Pennsylvania. The house was sold in May 2015 and today (1/7/16) I received a letter from Wells Fargo, HELOC 2nd mortgage holder that the debt of $49K was charged off and they were trying to collect on the debt. They (Wells Fargo) offered a settlement of approximately $5k or 15% of the debt, and that I had to respond within 15 days of the letters postmark. Since I no longer own the home and have not been in contact with either the originator of the loan (Countrywide) or Wells Fargo for almost 4 years, what are my obligations? Should I dismiss this or take the 15% pay off of the 2nd mortgage/HELOC on a house I no longer own?

You incurred the debt; you owe the money, whether or not you own the house anymore.

 

[OHRoadwarrior]

You can take the chance they sue you for the full difference plus attorney fees or pay the small fee.

 

[single317dad]

As previously stated, the fact that your home was sold to satisfy the debt does not absolve you of your obligation. In fact, I'd wager that Wells Fargo, as the second mortgage holder, was a named defendant in the foreclosure lawsuit brought by the first mortgage holder. If so, they've received no compensation and have no chance of receiving any proceeds from the home sale.

So, you borrowed ~$49,000, never paid it, and the creditor is trying to collect. Your options are to pay what they're asking, do nothing (in which case they could also do nothing, or they could file a lawsuit which would result in a judgment against you), or file bankruptcy.

While PA has a broad four-year SoL on debt, that does not apply to mortgages (assuming your "second mortgage" was a true mortgage and not a home equity line or similar). The likely SoL on your debt is 20 years from first deficiency, so this will go on for a very long time if you let it.