I owned a home in Arizona but had to move due to a job change. I continued to pay for 2 years in hopes that the market would turn and I could sell it, after which I turned to a short sale to be free of it.
The primary bank accepted the sale but the second wanted something (we owed about $13889 on the second. The primary agreed to move 3k to the second and we added another 2k for a total of $5,000. The second agreed to settle and the sale went through.
Now on my credit report I am seeing something from the second that I am not sure is valid.
This on the primary:
“Freddie Mac account, Account paid for less than full balance”
And a zero balance.
But on the second I see this:
“Charged off account” and it still shows a balance
I thought this debt was ‘settled’,
Is the second reported correctly?
Do I have any case to have it say otherwise?
Note: Since this is in AZ, they cannot come after me for the balance since the entire amount was purchase money (I had originally got both first and second with the primary bank (citi), but then moved the second to the credit union for a better interest rate but did do nothing but move it.
I have attached the closing letter on the second as well as a notarized document we created when the second asked for a document saying we would pay the 2k.
Thanx so much, I am at a loss here and dont know if there is anything I can do.
Thank you for providing me with your supporting documentation on this including the letter from the credit union which appears to have been the second mortgage holder.
What concerns me in their settlement agreement is they say “Please de advised [credit union] reserves the right to pursue any deficiency in relation to this Short Sale and will not waive any rights, recourse or remedies in pursuit of the same.” This is part of their agreement they generated for you on December 2 and appears to be in response to your offer on November 17 in which you proposed they waive their rights to pursue deficiency judgments. It appears they did not agree with that proposal.
So what it appears to me to be is that the credit union has charged off the remaining balance and has reserved the right to go after you for the balance due. When a debt has charged off it does not mean the debt is forgiven. Charging off is merely an accounting function to report bad debts. In fact, even if the credit union issued you a 1099 to report the forgiven debt to the IRS it does not waive their right to collect the balance and forgiven debt at a latter time.
I think the best thing you can do now is to contact the credit union and ask them for some written statement they will not pursue you for the balance due and correct the credit report to reflect a $0 balance. If they won’t give that to you then at least you know what may be coming and can deal with it then.
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