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If you are struggling with the payments due on your mortgage, especially if your home is worth less than the total debt remaining, you are one of the millions of people across the country in need of a plan to resolve your debt and avoid foreclosure. When you are concerned about second mortgage payments in particular, you should know that you have options available to you. Second mortgage lenders are often willing to negotiate lump-sum payments of significantly less than the total amount due in order to avoid default and foreclosure. Depending on your circ*mstances, a mortgage settlement may be your best path forward.
With the help of a seasoned Southern California mortgage relief attorney, you may be able to secure a significant reduction in your second mortgage debt, including both interest and principal. The second mortgage settlement lawyers at Rounds & Sutter have spent years helping homeowners across Southern California reduce or eliminate their debt, protect their credit, and chart a path toward financial security.
What is a Second Mortgage?
Most home purchasers take out a mortgage when they buy their home. The mortgage is the loan used to buy the real estate, and it is secured by the property itself–if the borrower defaults, the bank can foreclose on the property and sell the home to recover the debt. After building some equity in their homes, many homeowners consider taking out a second loan secured by the house to complete home improvement projects, pay off medical debts, make other large purchases, or pay off other debts. Another loan secured by the house as collateral is known as a second mortgage.
Many homeowners obtain a second mortgage to complete renovations or other improvements on their home, which is intended to increase the value of the home and their equity ownership. When the home value does not increase, for example due to unexpected market drops, homeowners can suddenly find themselves with negative home equity (meaning they owe more than the market value of the home). If you have negative home equity, or if you are struggling with a variety of debts on top of your second mortgage, an experienced debt relief attorney can help you explore your options for relief.
What is Mortgage Settlement?
Second mortgage settlement operates much like a credit card debt settlement. Mortgage settlement is a process by which the lender agrees to accept an amount less than the total due on the loan in order to resolve the debt. Second mortgage lenders are typically averse to foreclosing on a home. They would much prefer negotiating a deal under which the borrower pays some amount back, allowing the lender to recoup some of their expenses.
Why Would Second Mortgage Lenders Settle for Less?
Second mortgage-holders are known as “junior lienholders.” A junior lienholder is someone who holds a debt that is “junior,” meaning behind in line, to another debt. In practice, if a second mortgage lender foreclosed on your home and went through with a foreclosure sale, the proceeds of the sale would first go to the “senior” lienholder, the first mortgage lender. The second mortgage lender would only be entitled to whatever is left after your first mortgage is paid.
For many borrowers struggling with mortgage payments, the amount they owe on their first mortgage exceeds the total value of the home. If the second mortgage holder foreclosed and sold the home, the entire sale proceeds would go to the first lender, leaving the second mortgage lender with nothing. That means that if your home is worth less than the outstanding debt on your first mortgage, you are actually in a strong position to negotiate a favorable settlement with your second mortgage lender. Second mortgage lenders can also be convinced to accept a settlement to avoid debtor bankruptcy, which has the potential to wipe their loan away entirely.
A savvy second mortgage settlement attorney can review your finances and debt and obtain an appraisal on the current value of your home in order to evaluate your leverage in debt settlement negotiations. With the help of a seasoned debt settlement lawyer, you may be able to avoid foreclosure and eliminate your second mortgage by paying back only a fraction of the total principal and interest. Eliminating your second mortgage can help you reorient your financial situation and get back to current on your other debt, including your first mortgage.
Compassionate Advice and Representation from Seasoned Southern California Debt Relief Attorneys
If you are struggling with multiple mortgages and other forms of debt, the debt relief attorneys at Rounds & Sutter can help you protect your home and explore your options for obtaining financial freedom. Contact Rounds & Sutter at our offices in Ventura, Santa Barbara, and Westlake Village for a free consultation, and put yourself on the road out of debt.
