Pay For Delete My Second Mortgages

Hi Paul,

My question is regarding Pay for Delete for 2nd Mortgages.  You site seems to have the most information on them that I’ve found. 

Four years ago I decided I’d make some extra money investing in Real Estate. I met an investor at a REI Meeting and he said he would be willing to be my partner. He would find houses at huge discounts, we would use my 800 credit and good income to secure loans and he would sell the houses Rent to Own. You can imagine where the story goes from here.

It seemed to good to be true and it was. We had terrible tenants, tried to do too much to quickly, and we were hit by the housing market crashing. I spent 40k of my own money trying to keep things going but eventually all of the three houses went into foreclosure.

All three homes had 2nd mortgages which didn’t get paid off by the foreclosure sales.

The first was charged off immediately after the foreclosure. The second two are still open on my credit and will be there until 2012.

My question is, should I try and see if the Mortgage Company and Debt Collector would do a Pay for Delete? 

Would it be worth paying to get these of my credit?  My credit is already terrible because of the three foreclosures.  Is it worth spending money to remove the 2nds? 

To date I have not been hit by any judgements from mortgage companies but I am concerned about this because I still have a good job.  Do I wake sleeping giants or do I just live without credit for the next 7 years?   I’d be glad to pay to get as much removed as possible.

Thanks, love your site.
George

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Hello George,

That’s a tough question that I won’t be able to answer for you, but here are some of my thoughts.

I’ll say that by and large these second mortgages have been discounted to around ten cents on the dollar and a negotiated settlement would be welcomed. 

The original creditor’s tradeline must be zero’d out if the account is sold to a junk debt buyer, so you’re not going to affect the original tradeline credit reporting if it’s been sold but you would be able to pay for delete the junk debt buyer’s tradeline. 

Check the applicable statute of limitations for judgment danger zone and understand that the enforceability of judgments varies by state.  Texas for example does not permit wage garnishment. 

Would I let sleeping giants sleep?  Maybe, but if you’re still within one year from foreclosure then RESPA Section 6 enables you to make written requests of that second mortgage lender.  Let’s see, I want my original loan application, good faith estimate of loan costs, all disclosures including servicing transfer, insurance, ECOA notice, initial TIL, Final TIL, HUD1, adjustable rate rider… and while were at it, I’d like to get a complete mortgage payment history including all disbursements, and my original promissory note.  Thank you and please consider this letter a Qualified Written Request.

Now if you send this certified mail within one year of closing/foreclosure then they have 60 days to respond.  Failure to properly respond to a QWR is actionable for $1,000 plus attorney fees.  Each improperly handled QWR is separate cause of action against the servicer.

Then we have the FCRA, FDCPA, your state’s mini-FDCPA and a whole slew of other consumer statutes/requirements that debt collectors continually violate. 

Would I let sleeping giants sleep? 

Maybe, maybe not.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.