Credit Report after Settling 2nd Mortgage

Haven't been here a while so not sure if this is the way to start a new thread...

I completed short sale with second loan at BofA - balance of 2nd was $38K which they accepted $5K to settle at closing ($3K from 1st and $2K from me). This happened in January 2011.

My credit report from all 3 agencies still report "charged off" with balance of $33K. I have sent disputes to all of the credit bureaus and each time BofA continues to verify the balance as correct - now they are not allowing me to send new disputes. I have logged no less than 30 phone calls to customer service over the last 10 months about getting it updated and just shipped from dept to dept (transferred 6 times the last call).

Now they are telling me to contact their Recovery department. This does not make any sense to me because I don't believe I owe them any more money. Should I call Recovery or just wait it out?

So you settled the 38K for 5K and they're reporting the difference (33K) as a charge off on your report?

Sounds to me like they are reporting correctly. They charged off 33K and settled for less than the balance owed.

If that is reporting correctly, does that mean the balance of $33K will be on the account indefinitely? well, i guess it will drop off in 7 years then.

Anybody have experience with this?

It should stay there for 7 years and you should get a 1099C to report that 33K as income for 2011. It's likely that won't be an issue for you because I'm assuming if you qualified for the short sale, you can likely prove insolvency.

On a short sale WITHOUT a waiver of the deficiency, there remains a balance which will be reported on cr's.

Once you actually settle the deficiency, it will show settled.

There is much confusion about this because often they will NOT give a waiver. Rather, they collect some money at closing and you still have the balance until such time as you successfully negotiate with recovery dept.

You and the first contributed for the purpose of closing the short sale. This is a common arrangement and does not forgive the debt. That is a seperate negotiation you still need to address. Typically, 25-30% will settle the debt.

You should NOT receive a 1099. I do not believe that is accurate info from another poster. You ONLY receive 1099 once it is settled, because at this point you still owe it.

Many people opt not to settle these, in the hopes that they will just drop off the radar in 10-20 years or whatever your sol is. The risk is that they sue for the entire amount due. Additionally, you will be hard-pressed to borrow again with an unsettled amount like that on your cr.

The act of the charge-off in their accounting books is covered, once reported to a CRA, by FCRA 605(a)(4) and 605(c).

Find the first date that you were delinquent on the debt with the OC and never caught back up before they did the charge-off. That is your DOFD on the OC account. The charge-off can only continue to be included in your CR for 7 years plus 180-days from that date. FCRA 605(c).

That is one single, date-certain, regardless of the other issues raised.