Do mortgage charge offs attach to new property deed?

6 Replies

Hello everyone I'm so glad I found this website!

My wife and I have saved a substantial amount of money and ready to start investing in real estate, we are looking to do a cash purchase deal on a home or two flat and use as a rental or potential flip. 

The potential problem: We purchased our current home with a primary and secondary mortgage in 2008, our home is now underwater significantly and a couple of years ago we decided to stop paying the second mortgage. The second mortgage shows off as a charge off in our records but the second mortgage never took further auction such as foreclosure or did a judgment against us. 

The question that we have is: when we close on our new investment home (cash purchase), would the closing title company automatically attach the charge off to the new property? 

I have read this website but have not found a clear answer, from what I understand is that Liens and Judgments on a person do attached to any new purchased property by that person but what about charge offs? this charge off does not appear in the record of deeds because the mortgage company has not foreclose on it. 

Thanks!

Would love to hear what experts have to say in this situation.

Bump, curious about this too.

No. A "charge off" is just a credit reporting entry.  It is not a judgment and would not "attach" to anything.  Now, if they got a court judgment I assume it would attach, but that would be state specific.

Wayne is absolutely right.  The charge off is their internal situation.  For them to go through the process of collecting or enforcing their collections (I.E. placing a judgement on you that attaches to other properties etc.) they would have to go through the due process to enforce their note.

Actually, the fact that they have internally charged off your debt may open an opportunity to negotiate a payoff for absolute pennies on the dollar.

As with all things like that, it's always best to get representation for that process. 

Hope this helps

Wow, I'm impressed!  I would love to be able to buy another property, for cash. I wonder what you're doing that I'm not? Oh right, not paying your creditors. 

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