Lenders of Second Mortgage Do Not Want You to Know This

Do you know the so-called secret behind the second mortgage?  Lenders are hiding the fact that you have much leverage on this kind of loan.  This is the dirty secret behind second mortgage that you need to know.  

The secret is that a second mortgage always falls behind the first mortgage.  So in case of foreclosure or short sale, the first mortgage must be satisfied in full first before the second mortgage can get a dime.  In most cases, the second mortgage will be sold off as a total loss and is wiped out.  

Capitalizing Your Leverage 

There are lots of homeowners who usually fall behind on their payments for the second mortgage.  If this is your case, you will naturally call your servicer and will tell him about the situation.  

You will be surprised that your second mortgage lender will quickly give you a loan modification offer.  This modification plan will lower your monthly payments so that you can keep up and allow you to remain current.  Unfortunately, most modification plans are not the best offers that you can get and they can not usually offer long term relief.  As a trouble homeowner, you might accept this plan gratefully and begin payments.  However, you don’t realize that you have just settled for less because you did not use your leverage on this type of loan. 

Second mortgage lenders have the capability to foreclosure on your property if payments are behind for over ninety days.  This is specifically written in the second mortgage contract that you have signed.  However, lenders of second mortgage will only foreclose your property if it has a sizeable equity and the proceeding would be economically sensible.  

If they foreclose your property, the lenders will have to pay the first mortgage and other costs associated with it.  In most cases, there will be nothing left for the second mortgage lender to make a profit.  Basically, the second mortgage will be left with no protection and collection is unenforceable just like credit card debts.  This is the reason why you can have much leverage on the lender with the second mortgage loan.  

What You Can Do 

Trends in the past 12 to 18 months show that lenders of second mortgage will only hold the loan if it is 6 months behind.  They will then treat this loan as a charge off.  It means the debt is already uncollectible.  Lenders usually sell this loan to a debt buyer.  If this happens, the second mortgage will not be attached to your home anymore.  What this means is that your home can not be foreclosed anymore.  

The loan will still show in your credit report until payment in full has been made.  But you can easily negotiate for a settlement or you can get an equity loan with a very low interest rate. 

You can enjoy plenty of leverage with a second mortgage.  Do not worry if you fall behind the payments because there are lots of options available for you.  You can easily settle or modify this loan to reduce the balance and keep the loan current. 

Article Tags: Second Mortgage, First Mortgage

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