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Help needed with Citi as Jr. Lien Holder

I started a short sale recently where Citi is the jr. lien holder. After a couple of weeks of no updates but numerous followup phone calls; I was told the balance was charged off. I was sent to the Recovery department who says that they cannot help me to release the lien because the chargeoff was issued by Fannie Mae and not Citi. Fannie is not allowing the lien to be released currently. I was given a case worker's number at Fannie. Fannie says that the servicer is responsible to complete this file. After 2 weeks of back and forth, neither Fannie nor Citi will take responsibility to instruct how the lien can be released. The first has an upcoming foreclosure date and we are in the midst of short sale approval.

Has anyone heard of Fannie writing off a jr. lien balance and not allowing the jr. lien to be released? If you experienced this, have you resolved this and how? I can't get Citi to move on this and Fannie is refusing to help because they say it's Citi's responsibility. The Recovery and Customer Service department cannot help because they are locked out of any assistance due to the chargeoff ordered by Fannie. Very confusing.

Tags: Citi, CitiMortgage, Fannie, May, Recovery, chargeoff, department

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Replies to This Discussion

Permalink Reply by Paddy Deighan, JD PhD on July 8, 2011 at 4:53am

I would recommend that you hire an attorney to contact the foreclosure defense attorney and advise them of the situation. It may lead to adjournment of the sale to give you more time. It will also give them ammunition to defend the foreclosure.

Another thing that an attorney can do is file a Motion (or proceeding if this was a non-judicial foreclosure) to remove the junior lien of record based upon the facts that you presented. This will cause Citi and/or Fannie to either respond and work toward a resolution or the judge will likely enter an order stripping the junior lien.

Another option is a Section 507 Motion in Chapter 13 bankruptcy. It would strip away the second lien in most cases.

I have never heard of a situation such as this and my educated guess is that someone at Citi or Fannie erroneously entered something in the computer.

Permalink Reply by Helena Kaucheck on July 8, 2011 at 12:58pm

Thank you so much Paddy. In dealing with this for the last month or more, it has become apparent that this is an unusual situation; and one that both Fannie and the servicer have no process in place to address correctly. I truly appreciate your guidance. It's amazing to me (after all these years of short sale ) that a keystroke can cause such havoc. Helena

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