Second Mortgage Charged Off By Chase



Chase did a charged off on my second Mortgage. What comes next?

Chase Mortgage Loan Modification Answer:

by Chase Mortgage Loan Modification Expert - Dan North

The first question that comes to mind is did they charge off the entire 2nd mortgage or was this a principal reduction of the unpaid principal balance? Then depending on why they did the charge off would help to answer the question "What comes next?"

The answer to that question depends on a few things. I assume that you asked Chase to reduce your unpaid principal as part of a loan modification on your 2nd mortgage and this was not a charge off in a bankruptcy proceeding.

If both your 1st and 2nd mortgages are with Chase I would consider this a good indication that they are seriously trying to work out a mortgage loan modification on your 1st mortgage that will work for both you and Chase.

While most of the principal reductions that Chase does are on 2nd mortgages they rarely do principal reductions or charge off entire mortgages even on second mortgages when modifying loans.

If you are now waiting for your loan modification agreement from Chase on your 1st mortgage, give them any paperwork or documentation they ask for as quickly as you can.

If Chase is not your lender on your 1st mortgage, it is possible your lender on your 1st is working out a deal with Chase which could be a HOPE For Homeowners (H4H) principal reduction through a Short Refinance deal. If this is the case definitely let me know about that. This would be the first H4H deal with Chase that I have heard of.

Here Is What Comes Next From The IRS

The amount that Chase charged off is reported by Chase to the IRS on Form 1099‐C as debt forgiveness and is considered income by the IRS.

The amount of debt forgiven must be reported on IRS Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness - this form must be attached to your tax return.

You have grounds to exclude this income from your taxable income since it is debt forgiveness on your principal residence (you should consult IRS Publication 4681 - Canceled Debts, Foreclosures, Repossessions and Abandonments.)

Here is a short list of links for further information:


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Second Mortgage Charged Off By Chase

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I'm current on both my 1st and 2nd mortgages. I owe $225k on my 1st (not through Chase) and $137k on my 2nd (through Chase), but after the market decline my house is worth less than $300k which means I'm unable to refinance to the current low interest rates. What are my chances of getting Chase to do a principal reduction and/or loan modification to a lower interest rate on my 2nd mortgage?
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I don't qualify for the HAMP modification on my 1st mortgage (my DTI is way over 31%), however I need to have my lender, One West Bank, extinguish and charge off my HELOC. Is it possible for me to just have my 2nd charged off and removed from title, without the lender modifying my 1st mortg? Or do they need to occur simultaneously? I can no longer pay on my heloc. What should I do? Thank you.
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starstarstarstarstar 		Second Mortgage Loan With CHASE
by: Anonymous

My first mortgage with Wells Fargo has been modified since 2008.

The second mortgage with Chase went into collections, which I made payments on for a year as agreed through direct deduction at $150/month.

They stopped deducting from my account after a year and when I called the collection agency they said it went back to Chase.

I called Chase recovery and was told I should pay the entire amount up front. I did not argue in-spite of their unreasonable response because they sounded so tough and trained at what they are doing and for sure I'll be at a loosing end.

I asked why they have not called or inform me about this, they said I signed papers that make it illegal to contact me which I never sign any such papers.

I really want to make some reasonable payment arrangement with Chase but what I get is somebody telling me that I owed the money and should pay the $90,000 second loan upfront. Any advice?

Chase Mortgage Loan Modification Answer:

by Chase Mortgage Loan Modification Expert - Dan North


Send in a written request for 2MP if your 1st mortgage modification is an HAMP modification. Send in a copy of the signed 1st mortgage loan modification agreement with the 2MP request. Repest that your 2nd mortgage is extinquished under 2MP. Use the Chase documents and forms that are provided on the website.

If your 1st mortgage modification was not HAMP send a request for a Chase in-house loan modification on your 2nd mortgage. Use the same Chase documents and forms that are provided on the website.

Do not talk to the collections or recovery personnel about mortgage modification. Their job is to collect money not be customer relations, they are not there to help you. When ever you end up talking with collections asked to be transfered to loan modifications.
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starstarstarstarstar 		Forgiven Debt
by: Anonymous

when your second mortgage is extinguished it is reported to the IRS as forgiven debt. However new IRS regulations allow debt forgiven from your primary residence not to be taxed. This page needs to mention that when you say forgiven debt is taxable - my 2 cents.

Mortgage Loan Modification Answer

by Mortgage Loan Modification Expert - Dan North



You are exactly right on that. That information is buried further down the page so I will re-state it here:

If Chase forgives your debt it is considered Imputed Income by the IRS and is reported by your lender to the IRS on Form 1099C as debt forgiveness. In some cases, debt forgiveness could be taxed as income.

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starstarstarstarstar 		Chase 2nd Home Equity Loan on Charge off status?
by: Anonymous

My Chase 1st Home Loan was modified and approved, I have to send in the papers. However, my 2nd Home Equity Loan was sent to the recovery department for charge off...they're BOTH with Chase Bank.

What does this mean?

Do I have a chance to qualify for the 2MP Extinguishment Plan and how does that work?

Chase Mortgage Loan Modification Answer:

by Chase Mortgage Loan Modification Expert - Dan North



Since Chase did modify your 1st they would modify your second under 2MP but have the option to extinguish the second and receive payment from the US Treasury under HAMP 2MP. (This has become common practice for Chase on 2nd mortgages especially when they own the 1st mortgage. It is now almost 100% of the time.)

This means that you will probably receive paperwork from Chase shortly that your 2nd mortgage has been extinguished and the 2nd mortgage lein has been released from your home. At that point you no longer owe the money but will take a hit on your credit and it will be reorted to the IRS as forgiven debt.
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starstarstarstarstar 		Dodd Frank 1099c Bankruptcy
by: Anonymous

We received a Dodd Frank certificate from Chase yesterday, for full extinguishment of the loan, taking the lien off the property and return of loan docs to us

Our second with Chase was included in our Chapter 7 but Chase still put a lien on our home and sent it to a collection law firm.

Will Chase send us a 1099c and do we need to report the money of the extinguishment on our income tax because of the bankruptcy?

Chase Mortgage Loan Modification Answer:

by Chase Mortgage Loan Modification Expert - Dan North


By tax code they are required to send you a 1099c and report the extinguishment to the IRS. So most likely they will so that they can write it off.

You should go over that point with your bankruptcy attorney and/or accountant, at a guess you have some other forgiven debts as well so should go over how to handle that. It might be a good idea to have a professional file for you this year or at least get a consultation on how to handle the forgiven debt.

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starstarstarstarstar 		Extinguish for 2nd Loan
by: Anonymous

I must say that I am very happy chase modified our first loan and they extinguish the second loan in full. So as far as I know once they extinguish the second loan in full it is a done deal we no longer have to pay and we signed the papers and mailed them back in for the full extinguishment I am glad because it was a rip off anyway we bought the home in 2007 and automatically had the second loan as a Home equity loan, which till this day I am still confuse on how you get a Home Equity Loan when you buy your home, I thought you have to live in it to accumulate Equity but anyway they make and break rules everyday I am just glad the Lord saw this matter in our Favor.

Chase Loan Modification Answer:

By Chase Loan Modification Expert - Dan North



Yes you are correct when the 2nd mortgage is extinguished under 2MP it is gone. The lender has accepted the terms of the Making Home Affordable Second Lien Modification Program (2MP) and removes the lien on the property in order to receive reimbursement from the US Treasury.
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starstarstarstarstar 		Extinguishment
by: Anonymous

I read the handbook (dry as a bone). THank you for your answer. From what I understand, if a servicer such as Wells decides to participate in the HAMP and 2MP program - if you received a HAMP modification on your first - they are required to offer you either a modification with an interest rate of 1% or 2% on your second - or - extinguish your 2nd mortgage for a lump sum from the fed. This is right out of the handbook and it appears from the letter they are extinguishing my 2nd in full (believe it when I see it).

Given the comment from the wells over the phone that they will take the lein off but continue to go after the money as unsecured debt concerns me. I am also concerned they will sell the extinguished loan to a collection agency and then I will have to deal with that. I know this is not the spirit of the 2MP program. I fear they have found a loop hole. Enforcing rules on these companies is difficult. I have contacted the House of Representatives in my area and I am attempting to set up a meeting to go over the 2MP program and what Wells said. I hope to do a conference call from their office in fact.

How would I go about repairing my credit should this go through?

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starstarstarstarstar 		Extinguished 2nd lein Mortgage but I still Pay?
by: Anonymous

I was sent a letter offering to extinguish my second mortgage by Wells Fargo. I already had my first modified by Chase.

I sent in the Dodd-Frank Cert. and called them to see if they received it. They did receive it and told me it would take 30 to 45 days to extinguish the 2nd mortgage. The person on the phone in the recovery department then said the balance of 150K would become unsecured debt and I would still have to pay it off and it would stay on my credit report until I do so.

My understanding is that when a participating servicer extinguishes a lien they receive a lump sum from the HAMP program. Therefore, wouldn't this debt be canceled or forgiven? Why would I continue to pay it? Either this guy did not know what I was talking about or Wells is double dipping. Waiting for the next notice from wells showing the release of lien.

Wells Fargo Mortgage Loan Modification Answer:

by Wells Fargo Mortgage Loan Modification Expert - Dan North
If it is only a partial extinguishment under 2MP there is a balance still owed. You would not owe the portion of the 2nd mortgage that was extinguished.

If it is a full extinguishment under 2MP then the debt is gone. Official Making Home Affordable Handbook v3.3 Yes it is very dry reading but there is nothing about changing mortgage debt into unsecured debt. There will be a hit on the credit report though, but that can be handled with credit repair.

Wells Fargo is paid two amounts by the US Treasury, $500 one time payment plus between $0.06 and $0.21 on each dollar fully extinguished on the 2nd mortgage. See HAMP Compensation Matrix
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starstarstarstarstar 		2nd Mortgage Charged Off???
by: Anonymous

I doubt it! But if this is true, you must be very very lucky! What they did with my 2nd loan was to transfer or sell to other lenders and after that deny my first loan. They are heartless, greedy people. I leave justice up to God.
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starstarstarstarstar 		Chase charge off update
by: Anonymous

So it turns out Chase DID charge off my loan in May without my knowledge and just last week a collections agency called me to try to collect payment. I called back Chase and they pulled it out of charge off (for the second time!) and said they will be working on my file to modify my loan. This has been going on over a year and a half! They are so confused...I am so tired of dealing with them.

Mortgage Loan Modification Answer:

by Loan Modification Expert Dan North

Chase is participating in the Making Home Affordable Second Lien Program - 2MP so it is an automatic modification if the investor is participating. If Chase is the owner and not just the servicer of the mortgage then they are required to do the modification since it is already completed on the 1st mortgage lien.
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starstarstarstarstar 		Chase Charged Off My 2nd Mortgage
by: Anonymous

Chase modified and approved modification for First deed of trust extending terms of the loans for 37 years.

The second mortgage was on trail modification payment period and now is in charge off without any notification.

Is Chase going to issue a 1099C, or are they going to send the debt to a collection agency?

Mortgage Loan Modification Answer:

by Loan Modification Expert - Dan North

If Chase just extinguished the second lien on your property as part of the Making Home Affordable Second Lien Program-2MP then you should ask for copies of the canceled loan documents and release of the second lien on your home so you have evidence of the cancellation of debt.

It is not likely that your 2nd mortgage went to collection but you need to follow up on what did happen to know if that debt is going to come back to haunt you.

If Chase has forgiven the debt it is considered Imputed Income by the IRS and is reported by your lender to the IRS on Form 1099C as debt forgiveness. In some cases, debt forgiveness could be taxed as income.

The amount of debt forgiven is reported on IRS Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness - this form must be attached to your tax return.

You may have grounds for exclusion of income realized as a result of debt forgiveness and should consult IRS Publication 4681 - Canceled Debts, Foreclosures, Repossessions and Abandonments.

Here are two IRS links you should read for further information on your question:
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starstarstarstarstar 		Chase Charged Off My 2nd Mortgage
by: Anonymous

Chase charged off my 2nd mortgage in May of this year and I did not find this out until today when I reviewed my credit report. There is nothing in collections and I have not received any phone calls or correspondence by mail. The account shows "closed" but "charged of" with a zero balance. My 1st mortgage is with CitiMortgage and has been modified for 6 months now. Should I expect anything further on this? It seems strange it did not get sent to a collection agency. I had been trying to modify this loan for the past year and a half.

Mortgage Loan Modification Answer:


If your 1st and 2nd mortgages are modified under the Making Home Affordable Program, the 1st mortgage is done under the Home Affordable Modification Program (or HAMP) and the 2nd is done under the Second Lien Modification Program (or 2MP).

Forgiving the entire amount of the 2nd mortgage and extinguishing that lien on your home is one of the options under 2MP. Chase does receive an incentive payment from Treasury for doing this.

It appears like this may have been what occurred but you should have received notices and canceled documents.

Following extinguishment of the 2nd lien under 2MP the servicer must take all necessary action to cancel the indebtedness and release the 2nd lien mortgage loan. Once the note is canceled and the required release and/or satisfaction documents are executed and filed, canceled documents with a cover letter must be sent promptly to the borrower, this is to include: notification of the cancellation with instructions to retain evidence of the cancellation and explanation that the forgiven debt has been reported to the credit bureaus.

I would write to the Chase Loss Mitigation Dept and ask if your second lien was extinguished under 2MP and state that if so you have not received a notification and copies of the canceled documents. Be sure to keep a copy of all correspondence you send to Chase.
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starstarstarstarstar 		Thank you Dan for the comment it really helped
by: Anonymous

Thank you Dan for the comment and yes both of my loans are with chase and the Home Equity Loan occurred when we purchased the home it just seems unrealistic to me how you can accumulate a Home Equity loan with no equity in the home on a New purchased home.
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starstarstarstarstar 		Charge Off
by: Anonymous

I was recently told that my second mortgage had been charged off and that they could not modify my second mortgage but they did modify my first mortgage when I first started with this process I was told that once they modify the first mortgage they would combine the second mortgage with a modification and now I am told they have charged off.

Mortgage Loan Modification Answer:


Sounds like your first and second mortgage was with the same lender. If the entire loan amount on your second mortgage was charged off your financial data indicated that writing off your second mortgage would improve the likelihood of not re-defaulting.

If you do not want the second charged off then do not sign the agreement. I would advise against that. Take the money saved and hire a reputable credit repair agency. If you need a referral contact me and I will set you up with a good firm.

Dan
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starstarstar 		2nd mortgage charge offs
by: Victor

Your mortgage lien will never come off of your title. Does not matter if it was charged off by your lender or whether you filed a chapter 7 bankruptcy and discharged the 2nd mortgage in your bankruptcy. If you refinance your home or sell your home the 2nd mortgage will have to get paid off. You will never get a clear title on your home until the 2nd mortgage is paid off. You may or may not go into collection with your 2nd mortgage lien. If you discharged it in a chapter 7 bankruptcy it could never go into collection because you discharged the debt, but the 2nd mortgage lien will remain a lien on your home and if you want to refi or sell your home, it will have to be paid off.

Respectfully,

Victor

Chase Loan Modification Answer:

By Chase Loan Modification Expert - Dan North



You bring up a good point, but this is not entirely true.

If your 2nd mortgage lien is stripped off in a bankruptcy it is gone.

If your 2nd mortgage is extinguished fully or partially in the Making Home Affordable Second Lien Modification Program (2MP) the lien is removed when a full extinguishment is done and is gone, for a partial extinguishment there is still a 2nd mortgage lien on the property.

If you do a H4H short refinance (if you can get one) the 2nd lien is settled in the transaction.

In a short sale through Home Affordable Foreclosure Alternatives (HAFA) you exit gracefully from the property with $3,000 in relocation assistance, you won't owe any more for the property after leaving and the new owner will have clear title.

In most short sales the 1st mortgage holder will settle with the 2nd so that clear title is transferred to the buyer. If this did not happen the sale would never occur.

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