Learn How Homeowners Can Settle Or Reduce Their Second Mortgage

Among the best kept secrets of the existing economic crisis in The U.S. would be that many people are effectively negotiating balance savings of up to 85-90% on their second mortgages or home equity lines of credit (HELOCs).

Successful settlement of a second lien loan can often just mean the difference between success or failure when it comes to preventing foreclosure of a residence. After a house has already been lost to foreclosure, the second mortgage is sometimes still regarded as a loan deficiency that could be collected upon, even in so-called “non-recourse” locations. The settlement approach enables you to cure such deficiencies without any litigation efforts.

Columnist Thomas Friedman said in his New York Times article:

"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 suffering from financial hardships in connection with mortgage payments, you're not alone! Over the past 24 months, countless Americans have defaulted on their 2nd mortgages or HELOCs. Reasons for default include losing business income in the economic recession, long periods of unemployment, medical crises, adjustable first mortgages, and sky-high credit card annual percentage rates. Psychologically, it’s also tremendously challenging to be in a negative cash flow predicament and remain paying a second mortgage for a house that is vulnerable to foreclosure anyway.

Many consumers think that a second mortgage will most likely “disappear” if their property is sold in a “short sale” transaction or foreclosed on by the first mortgage lender. After all, a mortgage is backed by property, and as soon as the property is gone, no more liability, right? Not so fast. The majority of 2nd mortgages or home equity lines of credit (HELOCs) are recourse loans, meaning that a liability remains even after the property is sold or reclaimed by the bank in foreclosure. Consumers are still responsible for these deficiencies, and unresolved mortgages will continue to be a legal and credit risk for a long time.