rebuilding after foreclosure

[Raensleyar]

Hello.  I am not sure if this is the right forum for this question, but if not perhaps mods can move it to the appropriate location.

Essentially, my wife and I had our home foreclosed approximately 2 years ago.  This is obviously on our credit report.  We had two lenders.  The primary has "closed the case" as the home was foreclosed and sold.  The second lender, however, appears to still show a mortgage due.  The primary concern is that if the second lender continues to show the presence of the mortgage, does that mean that the "7 year" period for having it removed will never start?  Is there a way to get the 2nd mortgage removed givne the how has been foreclosed already?  Also, we live in California and under those laws regarding foreclosures and such, if that makes a difference.

Hopefully this makes sense and thanks in advance.

[ezdriver]

What does the loan note say about your obligation to repay that debt. As it was secured by the property, it is no longer secured. However, with most secured loans, the lender takes possession of the collateral when the debt is not paid ... but this lender was in 2nd position so it now has not collateral to seize. I recommend that you read the loan note for guidance at this point.

[EW800]

I agree with EZRider.  I would be looking through the paperowrk of the 2nd mortgage very carefully if I were you, and if you have not already, run it by an attorney.  My wife and I went through a foreclusre with a first and second mortgage.  We were still on the hook for the second mortgage, if we didn't want the lender to come after us.  Thankfully, it was not that big so we were able to pay it off.  The second mortgage now shows as paid in full as agreed on our credit reports.  

Here is some good news....  I know every situtaion is different, depending on length of credit history and such, however my wife and I have recovered score wise MUICH faster than I ever thought we would.  Our foreclosure was final about 13 months ago.  Needless to say, our scores were in the TANK then from the missed payments and the foreclosure.  At that moment, we made the committment to make sure every payment for everything else would be on time and we worked VERY hard to pay down credit card debts as quickly as possible,.  We have gained about 130 points back from our lowest point by doing this.  We are still not great being a bit under 700, however I think this is pretty good with the foreclosure being just 13 months ago.  

Best wishes.  There is light at the end of the tunnel!  

[mbla]

You need to determine if the Second (Junior Loan), which is now no longer secured by collateral was a recourse or nonrecoruse loan.  As Califonia is a nonrecourse state if the loan is a nonrecourse second the  only option the lender has to collect is from the sale of the collateral.  If they did not recover from the sale they cannot attempt to collect from you or file suit.

They can report the debt as a charge-off and the amount due, but once again cannot persue collection activities.   That being said I was able to get the creditor to change reporting from unpaid charge-off with amount due to paid chargeoff and 0 balance as it they have no collection recourse anyway.

The 7 year (+6 months) DOFD reporting time limit still applies, it should be listed on your hard-copy credit reports on EQ and TU and as a future removal date on EX.

[Raensleyar]

Thanks for the feedback and information. Very helpful.  I think the main thing will be to get them to report it as a paid chargeoff with 9 balance as it is a nonrecourse.