I have a got a bit of a strange situation. I had a $12,000 2nd mortgage on my house. I had it paid down to about $2500, but due to hardship I was unable to continue payments. I have recently found out that the loan was insured by a company that paid the balance of the loan and now the insurer holds the note. Now here is where it gets nasty. The insurer has retained the services of DCS to recoup the amount I owe, plus fees of course. So I call DCS to try and arrange a repayment plan and got what after a little research I found to be their normal responses. "You account is due for review in 2 days..." (scared the crap out of me until I read on MANY message boards that nearly EVERYONE get this response) and that I need to put down a large "in faith" payment and THEN they will agree to a monthly payment plan. The amount of the "in faith" payment was about half of what I owe. I told them I did not have over a thousand dollars to just hand over to them, but I was more than willing to make monthly payments. The rep told me that I had obviously already proven I was not trustworthy with monthly payments. Not her exact words, but the gist of it. So my question is, since the amount I still owe on the 2nd is so low, am I in real danger of them beginning foreclosure proceedings? There is a great amount of equity in the property so this is of real concern to me. I really don't want to lose my property over $2500. Or is there any way I can get the insurer to deal with me directly and leave DCS out of it at this point? Any suggestions or advice would be greatly appreciated.

Unfortunately, I do not have an answer for you but we are in a very similar situation.

Our 2nd mortgage was held through Citi. We sent in all of our hardship info for a modification (especially since they got all this bailout money and were supposed to help people). Well, 6 weeks later we get a letter from an insurance company saying they paid our loan in full with Citi and we need to contact them. Not 2 weeks later, DCS collections sends us a letter and starts calling to collect on the debt. This insurance company didn't even give us 30 days before sending it to collections. Is that legal?

Anyway, we do not know what to do. According to Citimortgage, our loan is paid and closed and we are off their books. But can this DCS foreclose on us? Anyone knows how this works? Also, one other bit of info. I was in a Chapter 7 two years ago and we kept our house. Can they now even legally collect on this debt seeing that it is off Citi's books?

If anyone has any info for me and jjanddev, please help!!!

Thank you!!