What to do regarding the foreclosure of a house with an 80/20 mortgage loan?

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What to do regarding the foreclosure of a house with an 80/20 mortgage loan?

About 15 years ago, I purchased my house with an 80/20 mortgage. I lost my job and went into foreclosure a whileback. I claimed Chapter 13 about 7 years ago or before and finished that in order to keep my home. When the Making Home Affordable Act was put in place, I did not qualify since my mortgage was not under Fannie Mae or Freddie Mac so I actually had the mortgage modified. The 80% was modified but I came to realize that the 20% as never included in the modification. I have not paid on the 20% in almost 10 years and have been in my home for about 15 years. I keep getting communications from Real Time Resolutions regarding the 20% of the mortgage which is in the amount of $18,793.67. I have a few questions regarding this 20%. Why have they not foreclosed since I have not made a payment on it in almost 10 years? Also, the original creditor is on my title for the house which was Option One Mortgage but it does not list Real Time Resolutions at all. Why is that? I have never received a judgement for the 20%. Additionally, how can I take care of it or does it need to be taken care of if I ever want to sell my home?

Asked on March 20, 2019 under Real Estate Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) Regardging Real Time Resolutions: it is possible that they purchased or otherwise acquired the loan, since mortgages and HELOCs can be sold. More likely, though, they are "servicing" the loan for the mortgagee (the company holding the loan), since Googling them takes you to a website saying that they specialize in servicing and collecting on loans. They are therefore probably working for the lender, trying to get the loan up to date, or taking collectons actions if necessary.
2) Why did no one take action on the 20% loan earlier: there are many possible reasons--oversight or inadvertance (e.g not paying enough attention, especially if this is a smaller loan among many loans for the lender); or due to the bankruptcy, for example, and/or because it was not worthwhile previously. When you buy an 80/20 mortgage, you initially have no equity in the home. It takes time to build equity. Until there is sufficient to equity to both pay off the main (80%) mortgage in the event of foreclosure AND have something for the 20% mortgage, there may not be any real reason to take action, since from the 20% lender's perspective, you could simply walk away from the home leaving them with nothing.
3) If you don't take care of this, they can foreclose. And you cannot sell without paying off the remaining loan at no later than closing (e.g. with the proceeds of closing), since without doing so, you cannot transfer clean title.


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