Citi Bank Mortgage Charged Off

I remembered a few weeks ago that I never posted a final summation of our whole mortgage situation.
Our first giant mortgage was refinanced and our 7.5% interest rate was changed to 2% and is adjusting up to a set 5% for the remainder of the term.

The big news that we didn't get until early in 2012 was that our 2nd mortgage with a remaining balance of around $72,000 was officially charged off. Yes $72,000 of debt was just wiped away.

Now the weird thing was that we had no idea until I went and checked our credit reports in January (like I always do). I was worried about what our credit scores would be and I always check once yearly so that I'm on top of everything. When I got to the Citi line item it stated a zero balance and a note of a charge-off.

We never received any paperwork from Citi. NOT A SINGLE PIECE OF CORRESPONDENCE.
That debt would have been hanging on my conscience in perpetuity unless I had checked the credit reports. Why? Why would they not contact a customer and let them know that? "Yes we know you have no way of paying your 2nd mortgage, so to be nice guys, we will eat that debt." Wouldn't that be good PR? Isn't it my right as a customer to get some sort of letter or notice that I no longer owed $72,000? I thought that was bizarre.

Now obviously I am not at all ashamed that I had a huge debt charged off. Not in the least. If any one asks I will tell them all the details. I'm not a victim. I worked my ass off, as documented here, to get that debt charged off. I am not ashamed of the fact that our family income decreased dramatically since 2008. Times were good in 2006 when we took on that debt. Times changed and our mortgage had to change too. Our house price was grossly inflated when we bought it in 2006, but we didn't know it at the time.

Have we learned a lesson since then? Yes definitely. We are much more careful with our money. The most important lesson that I learned though is that a bank cannot push you around unless you let them. You can stand up for your family, your economic situation, and your home. Regardless of the amount of debt, you still own your home. The bank is a corporation and sometimes a bully, but you can work with them and hopefully find a new solution.

On another interesting note our credit scores have not seemed to suffer at all. Banks and credit card companies use the threat of a bad credit score to scare us into making all payments in a timely fashion. They try and strong arm their customers with that constant threat, but realize that it is just a threat. If I can have $72,000 charged off and not see so much as a ripple in my credit score, it is ONLY a threat. I've bought cars since then and still gotten a 0% interest rate.

I am not afraid to challenge any bank, credit card or utility company.