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Home Owners Are Now Able To Reduce Their Second Mortgage
One of the best kept secrets of the existing economic crisis in America is the fact a great many people are effectively negotiating principle discounts of up to 85-90% on their second mortgages or home equity lines of credit (HELOCs).
Effective settlement of a second mortgage may mean the difference between failure or success in terms of avoiding foreclosure on a property. When a house has already been lost to foreclosure, the second lien is usually still viewed as a loan deficiency that may be collected upon, even in so-called “non-recourse” states. The negotiation methodology may be used to handle such deficiencies without any litigation efforts.
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.”
The following appeared in the Wall Street Journal article, “Second-Mortgage Misery”:
“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.
If you are having to deal with financial worries regarding mortgage payments, you are not alone! In the past 2 years, millions of Americans have defaulted on their second mortgages or HELOCs. Reasons for default include loss of business income in the down economy, extended periods of unemployment, health-related crises, adjustable first mortgages, and astronomical credit card interest rates. Psychologically, it’s also particularly challenging to be in a negative cash flow situation and continue paying a second mortgage for a house which is at risk of foreclosure anyway.
Many consumers believe that a second mortgage will “disappear” if their property is sold in a “short sale” transaction or foreclosed on by the first mortgage provider. After all, a mortgage is backed by property, and as soon as the property is gone, no more obligation, right? Not so fast. The majority of second mortgages or home equity lines of credit (HELOCs) are recourse loans, meaning that a deficiency liability remains even after the property is sold or taken back by the bank in foreclosure. You are still liable for these deficiencies, and unresolved mortgages will remain a legal and credit risk for many years.
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Second Mortgage Settlement, Settle Second Mortgage
