CU promised to release lien, now refuses!

medo · ‎05-18-2021

I was eyeing a Tesla model 3 to take advantage of a 20% increase in my cars value, which reduced my negative equity by a bit.

I have charge offs at the credit union that serves my auto loan. I called, twice, to confirm that if paid off, will they release the title/lien. They said yes, both times.

I went ahead and bought the Tesla M3. A few days later CarMax is trying to get a payoff amount on the auto loan from the credit union which they state that because there is a charge off they cannot release the title unless the charged off loans are paid off as well.

I'm highly upset since I sold my car already based off their word that they would release the title, and now potentially having to return the car.

Does anyone have any experience with dealing with such situations?

I've asked this to be escalated and for them to honor what they promised. I don't have high hopes that they will do so.

Anonymous · ‎05-18-2021

@medo wrote:
I was eyeing a Tesla model 3 to take advantage of a 20% increase in my cars value, which reduced my negative equity by a bit.

I have charge offs at the credit union that serves my auto loan. I called, twice, to confirm that if paid off, will they release the title/lien. They said yes, both times.

I went ahead and bought the Tesla M3. A few days later CarMax is trying to get a payoff amount on the auto loan from the credit union which they state that because there is a charge off they cannot release the title unless the charged off loans are paid off as well.

I'm highly upset since I sold my car already based off their word that they would release the title, and now potentially having to return the car.

Does anyone have any experience with dealing with such situations?

I've asked this to be escalated and for them to honor what they promised. I don't have high hopes that they will do so.

Cross collateralization. CUs are famous for it. I'm sure you argreed to it as a term/condition at some point when you signed on the dotted line.

I'd start figuring a way out of that mess that doesn't involve them handing over the title without payment of outstanding debts with them.

medo · ‎05-18-2021

Update: they waived their cross collateralization due to being told misinformation twice, depsite my best effort to make sure all would be ok.

Slabenstein · ‎05-18-2021

Glad to hear it worked out for you.

203bravo · ‎05-18-2021

Was there a cross collateralization clause in your original car loan? That's what they are currently doing --- holding the value of the vehicle (via the title) as collateral for any and all loans owed, including the charge offs.

Excellent news Congrats... Hope this can serve as a lesson for others that may not be aware of this process... sometimes not a good idea to borrow where you bank

Anonymous · ‎05-18-2021

@medo wrote:
Update: they waived their cross collateralization due to being told misinformation twice, depsite my best effort to make sure all would be ok.

Just thinking out loud here....how old are these charge offs? Are you making any attempt to repay? Now that the CU doesn't have the vehicle anymore, are they more inclined to begin other collection methods? In my opinion, this was a bad look.

medo · ‎05-18-2021

The charge offs are from early 2019. And you're right, they could be more incentivized to take action, and this was also my thought process.

However, the person I spoke to was senior and he was extremely frank that they don't aggressively pursue charge offs but moreso educate on the effects on your credit. Additionally when I started going delinquent, they made very minimal attempts to collect and when they did, they were extremely relaxed and not aggressive.

That being said, I think the risk of any serious collection action is very low.

Anonymous · ‎05-19-2021

@medo wrote:

That being said, I think the risk of any serious collection action is very low.

Are you willing to bet your credit history for the next seven years on that assumption? I wouldn't. You've shown them that despite having chargeoffs with them, you're willing to throw up the finger and buy a new car that's not cheap, rather than pay them back. They may feel more incentivized to try and get their money now that you're showing a new and large purchase, while getting past their cross-collateralization safeguard and allowing bad debts with them to remain.

I would address the chargeoffs before they become a very real, very large problem. True, you can't know that they will, but you can't know that they won't either.

dunn2500 · ‎05-19-2021

if i lent out money and collateral was all i had for recourse you bet i would use it.......put yourself in their shoes, cant blame them if they do decide to pursue

AllZero · ‎05-19-2021

@medo wrote:
Update: they waived their cross collateralization due to being told misinformation twice, depsite my best effort to make sure all would be ok.

Glad it worked out. Looks like that credit union did you a solid. That would be a credit union I would want to be on good terms with. Just imagine the position you would be in if they enforced the cross collateralization.