Jul 27 2011
Home Owners Are Now Able To Reduce That Second Mortgage
Among the best kept secrets of the existing economic crisis in The U.S. would be that a great deal of people are effectively negotiating balance reductions of up to 85-90% on their 2nd mortgages or home equity lines of credit
Effective settlement of a 2nd lien loan can often mean the difference between success or failure when it comes to heading off foreclosure of a home. Any time a house is lost to foreclosure, the second lien is usually still viewed as a loan deficiency that can be collected upon, even in so-called “non-recourse” states. The negotiation strategy can be used to handle such deficiencies without any legal action.
Thomas Friedman of the New York Times:
“The total number of underwater homeowners in America, with first and second mortgages, is a stunning 22.7 percent. In Nevada alone, 63 percent of all mortgaged properties are worth less than the owners paid; in Arizona 50 percent, Florida 46 percent, Michigan 36 percent and California 31 percent.”
An article titled, “Second-Mortgage Misery” had this to say:
“Almost 40% of homeowners who took out second mortgages-extracting cash from their residences to cover everything from vacations to medical bills-are underwater on their loans, more than twice the rate of owners who didn’t take out such loans.
For anybody who is challenged by financial difficulties relating to mortgage payments, you’re not alone! Over the past 24 months, countless Americans have defaulted on their 2nd mortgages or HELOCs. Triggers for default include things like losing business income in the tough economy, extended periods of unemployment, medical crises, adjustable first mortgages, and astronomical credit card annual percentage rates. Psychologically, it’s also particularly challenging to be in a negative cashflow predicament and continue paying a second mortgage on a house that is at risk of foreclosure anyway.
Many people believe that a second mortgage will just “go away” if their home is sold in a “short sale” transaction or foreclosed on by the first mortgage company. After all, a mortgage is backed by property, and when the property is gone, no more liability, right? Not so fast. Nearly all 2nd mortgages or home equity lines of credit (HELOCs) are recourse loans, meaning that a deficiency liability remains even after the property is sold or reclaimed by the bank in foreclosure. You are still responsible for these deficiencies, and unresolved mortgages will continue to be a legal and credit risk for years to come.
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Second Mortgage Settlement, Reduce Second Mortgage
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