Can I Get a Mortgage Release for My Second Mortgage if I Settle It? – Patricia

“Dear Steve,

I owe on 1st mortgage more than the assessed value of the home. I had a 2nd mortgage like the HELOs you talk about-revolving credit loans. I defaulted on the 2nd but the company did not foreclose probably because of the value of property. I now received a settlement offer from a collection agency for about 25% of original debt that I want to pay. My question is will I receive a satisfaction letter or a mortgage release to file at the courthouse?

Will I receive a mortgage release or satisfaction letter if I pay a collection agency the settlement monies they are offering me on a 2nd mortgage revolving loan that I defaulted on?


Dear Patricia,

This is really something you need negotiate with the creditor. You are on the right track and thinking it through. Good.

Also make sure that they will forgive the balance of the debt and put in writing they will not legally pursue you for the balance forgiven. I’ve seen it happen.

DO NOT pay anyone, any settlement, unless you get all the terms in writing and you and the creditor mutually agree. On something so important like this it would be prudent for you to consult with a local licensed attorney or real estate attorney to represent you so you can be confident that the deal is properly structured and you will get the release you are looking for.

Be aware, there may be tax consequences to the forgiven debt as well. If you have a tax adviser that handles your taxes for you, have a chat with them.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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Steve Rhode
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