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New Visitor
Posts: 3
Registered: ‎08-11-2009
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Offered Settlement for 2nd Mortgage

Three years ago we were forced to foreclose on a home with an ARM that had adjusted and went through the roof.  The 2nd mortgage was with OCWEN, and because we were so far upside down, they were not paid a penny from the sale of the house.  The first lender was upside down 100K on its own.  OCWEN has been reporting me late ever since June of 2007, which continues to hurt my score.  They have offered to settle the 75K owed for 1K.  My question is, how will this affect my score?  Which is better, to let it fall off in 5 years (from original delinquent date) or settle and pay the $1000. 

Any advise would be much appreciated by a first time poster.

Moderator Emeritus
Posts: 5,267
Registered: ‎03-18-2008
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Re: Offered Settlement for 2nd Mortgage

What are the recourse laws in your state?  Was the second loan purchase money or was it taken out sometime after purchase?

 

If you settle for the $1000 - an excellent deal, but perhaps unnecessary if your second is non-recourse - then the lender will likely report it as "settled for less than the account balance" or something to that effect.  In isolation, that would likely have a serious negative effect on your score.  However, you already have a foreclosure reporting, so your score is already suffering quite a bit.  The impact on your score from this new negative factor will probably not be as great.  The accumulating late payments on the second are also hurting your score.

 

I'm sorry to hear about your troubles.

New Visitor
Posts: 3
Registered: ‎08-11-2009
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Re: Offered Settlement for 2nd Mortgage

I am in California, and yes it was purchase money, non recourse.  However from what I have been able to determine, OCWEN is still aloud to report a balance, and currently showing I have been over 90 days past due 25 times.  I know that the foreclosure showing on the first mortgage is harming my score as well, however we are now 2 years from that date.  OCWEN continues every month to show me late, which isnt allowing time to distance myself from the initial late, which (I think) is hurting my score more.  So if I pay the settlement does it stop as of today or date back to original missed payment?  Any ideas what this would do to my score?

 

New Visitor
Posts: 1
Registered: ‎04-28-2011
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Re: Offered Settlement for 2nd Mortgage

I have a similar issue. Mine is foreclosed on 4/21/2008. 2nd mortgage is 120 days late 41 times. did the you finally settle with any offer?

 

I'm thinking also to make an offer! did you use any lawyer? it might be more effective and how much did you settle? thanks


Mandylee76 wrote:

I am in California, and yes it was purchase money, non recourse.  However from what I have been able to determine, OCWEN is still aloud to report a balance, and currently showing I have been over 90 days past due 25 times.  I know that the foreclosure showing on the first mortgage is harming my score as well, however we are now 2 years from that date.  OCWEN continues every month to show me late, which isnt allowing time to distance myself from the initial late, which (I think) is hurting my score more.  So if I pay the settlement does it stop as of today or date back to original missed payment?  Any ideas what this would do to my score?

 


 

Moderator Emeritus
Posts: 5,267
Registered: ‎03-18-2008
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Re: Offered Settlement for 2nd Mortgage

 


azngurlie83 wrote:

I have a similar issue. Mine is foreclosed on 4/21/2008. 2nd mortgage is 120 days late 41 times. did the you finally settle with any offer?

 

I'm thinking also to make an offer! did you use any lawyer? it might be more effective and how much did you settle? thanks 


 

Hi azngurlie83, and welcome to the FICO Forums.

 

The thread to which you replied is nearly 2 years old, and the original poster has not logged in since this thread was started.  So it's highly unlikely that you are going to get a reply.

 

Is your second lender attempting to collect on your loan?  Was this a purchase money loan?  What are the recourse laws in your state?

New Visitor
Posts: 2
Registered: ‎07-06-2011
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Re: Offered Settlement for 2nd Mortgage

Similar situation - house forclosed Nov. 2008 - first mgt was paid settled by foreclosure (415,000)

Is your second lender attempting to collect on your loan?  Send monthly bill , late fee, and shows on my credit - since June 2008

Was this a purchase money loan? Yes

 What are the recourse laws in your state? VA - Recourse state

 

No other debt no assets, small 401 K and very little savings -

How long will they keep reporting me?  I have credit score now of 675 - would be higher but that $100,000 loan shows on my credit as late.

I am thinking of seeing a lawyer to negotiate, but fear I do not have money to settle.  Maybe 2K - 5K.  If they sue I would most likely have to file BK.

New Visitor
Posts: 2
Registered: ‎07-06-2011
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Re: Offered Settlement for 2nd Mortgage

forgot to add - Second is with OCWEN  -

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