Instead of owing just one mortgage debt, most American families actually have two mortgages. What happens if you are facing foreclosure – and it is the primary mortgage lender who will be paid off first? What about the second lender? 

For most people who have two mortgages, they actually consider not paying their second mortgage. How would this affect your finances? That is exactly what we will try to discover here. 

First, let’s look at the reasons why homeowners take on a second mortgage in the first place. Basically, it’s literally a second mortgage – a loan which is borrowed against the value of your home.  

In the event that you default on your home loan, it is the first mortgage which would be paid off first before any other funds go towards the second mortgage. The division between your first and second mortgage is usually on an 80/20 percent basis. 

This is a relatively common financial option taken by homeowners who would like to gain access to some extra cash. If you’re looking for money that you will allot for a home improvement project, debt consolidation, purchasing of additional homes, avoiding private mortgage insurance or creating a home equity line of credit – a second mortgage is definitely for you. 

What Happens If You Fail to Pay Off Your Second Mortgage 

If you are a homeowner who is facing serious financial difficulties, can you actually get away with not paying your second mortgage? Although it is true that the second mortgage lender is in a subordinate position to the primary lender, it does not mean that they cannot take action against you as a borrower if you fail to pay off your second mortgage. 

To have a deeper understanding of what exactly will happen, here’s a quick look at the risks that a second mortgage lender takes: 
- In the event of a foreclosure, it is the primary mortgage lender that would be paid off first. 
- Second mortgage lenders are ‘forced’ to apply a higher interest rate because they do handle a higher risk as compared to the primary mortgage lender. 

Should a homeowner refuse to pay off the second mortgage lender and prioritize the primary mortgage in the event of a foreclosure – it is simply delaying the inevitable. Let’s say that you already settled a deal with the primary mortgage lender and the foreclosure was put off. 

Once your primary mortgage is paid enough to get some equity on the property and you did not pay anything on your second mortgage, the lender will be the one to foreclose your home. 

Not paying off your second mortgage would also negatively affect your credit, not to mention the piles of additional charges and late fees that you will incur. 

Looking for a Solution 

So what are you supposed to do if you would like to prioritize your primary mortgage loan – but there’s still your second mortgage that you need to deal with? Some of your options include loan modification. You can specifically apply for the Home Affordable Modification Plan. Freddie Mac and Fannie Mae are now supporting refinancing of up to 125% of your current home value under HAMP, so it’s definitely something that you need to check if you qualify for. 

Not paying off your second mortgage loan may not necessarily be the best solution – but it is something that you can do only when the lender refuses to give you a loan modification or a refinancing plan. When taking this course of action, always seek legal advice from your lawyer.

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About the Author:
Rob K. Blake, mortgage expert and author, educates mortgage shoppers on finding local providers by state like Maryland Mortgage Brokers and Lenders and provides reviews of national companies like AmTrust Bank Mortgage.
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Bank of America announced that it will begin refinancing mortgages up to 105% of a home’s value. This is being implemented as part of the Home Affordable program. This program is aimed at helping the distressed homeowner avoid foreclosure and is loosely modeled after a program announced by the FDIC.

According to Bank of America it will offer short term trail loan modifications that may be later converted to permanent loan modifications. These modifications appear in to be in reality nothing more than repayment plans set up on a limited basis, possibly as short as 3 months.

Bank of America’s announcement comes as a result of the OCC and OTS Mortgage Metrics Report that identified that the vast majority of consumers that receive loan modifications do not have their payments decreased by more than 10%. This report also showed that some consumers are actually receiving loan modifications wherein their payments increase. This report should have not come as surprise to the administration or the banking industry.

However now that focus is being applied to this situation the administration is setting guidelines for loan modifications and Bank of America is following suit. While this will most likely set precedence for the banking industry and make an attempt at reversing the high rate of Mortgage modification failure, one needs to ask if even this is not just another method to cover up the problem, and if these new adjustments will be enough.

The key words of Bank of America’s modification plan are “short term loan modifications“, so some questions need to be asked:

Will these temporary adjustments be converted into long term modifications and even if they are will they be what are needed to rescue the homeowner who is facing foreclosure?
Will this possible ‘industry standard’ be good for the consumer?
Will a minor adjustment to the rate of failure for modifications be sufficient ammunition for the administration and banking industry to establish a set of guide laws?
If so what will these guide laws mean to the homeowner?
Will they be required to accept a set of “cookie cutter” modifications?
Or will they benefit from knowing exactly what they can expect from a banks loan modification?
Wouldn’t the homeowner have a better chance of being able to handle the mortgage adjustments if they were tailored to their particular needs?
Will these standards not cause main street America to fit into a very tight range of qualifications in order to save their home?
By establishing standards such as the ones being implemented temporarily by Bank of America and the FDIC are we not attempting to eliminate the very fiber of individualism that makes America what it is?
Would the nation as a whole not be better suited to a variety of options that would cover an array of financial capabilities, rather than just one?
Should the lenders have power over the homeowner, or should the home owner have power over the lender and mortgage modifications?

These points should be greatly considered before we allow a bank to establish a set of guidelines that may in the long run be detrimental to the health of America.

All we can do is wait to see what happens and hope that the distressed homeowner is truly the concern here, that the solutions will provide recovery from millions of foreclosures. Meanwhile there are still millions of America that are in need of immediate help with mortgage negotiations, if you are one of those distressed homeowners you should give great consideration to hiring a negotiation expert to assist you with your mortgage modifications. A reputable negotiation expert will be able to represent you in a way that will provide a solution that is catered to your personal situation. Given the current state of affairs with the mortgage modification industry you do not want to attempt to mitigate with your lender alone.

Discover how you can ethically modify your home mortgage loan and save as much as 47% off your current mortgage payment in as little as 60 days without refinancing? For your FREE CD, FREE e-book, and FREE coaching call with Mortgage Modification Expert and Business Man of the Year Billy Alvaro visit our website Saint Jude’s Mortgage Rescue

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About the Author:
Discover how you can ethically modify your home mortgage loan and save as much as 47% off your current mortgage payment in as little as 60 days without refinancing? For your FREE CD, FREE e-book, and FREE coaching call with Mortgage Modification Expert and Business Man of the Year Billy Alvaro visit www.RescuedBySaintJude.com Saint Jude’s Mortgage Rescue
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Homeowners everywhere are struggling to make their monthly mortgage payments and many are even facing foreclosure. Luckily, President Obamas $75 billion housing stimulus plan makes it easy for millions of people to get approved for a low interest, money saving, mortgage refinance. Here is what homeowners need to know about this housing stimulus plan from President Obama and how to take advantage of it to get a low interest rate mortgage through new refinancing options.

Many homeowners want to get a mortgage refinancing so that they can take advantage of the record low interest rates that are available. However, with the economy and housing market being in such bad shape, many people did not qualify for mortgage refinancing and were left struggling to make their monthly home loan payments. Many homes have been lost, and many more were expected to be, until Obama enacted his housing stimulus plan. This stimulus plan keeps interest rates low and provides cash incentives to mortgage lenders and banks who help struggling homeowners get a mortgage refinancing that saves them money, saves their home, or both. The cash incentives are only given to mortgage lenders and banks who follow the rules of Obamas stimulus plan and allow them to approve more homeowners in worse situations than ever before.

Many homeowners have been denied a mortgage refinance in the past due to no job, no home equity, bad credit, or other financial problems. Now though, things are different and nearly any homeowner is eligible to get approved for a low interest rate mortgage refinancing thanks to President Obamas housing stimulus plan. Banks and mortgage lenders are happy to help almost any homeowner get a better, more affordable mortgage because of the cash incentives they get from the stimulus plan. This stimulus plan was actually designed to be easy to take advantage of for struggling homeowners, and is already helping a lot of people.

Homeowners are encouraged to use this housing stimulus plan for themselves and get into a better, more affordable, monthly home loan payment. It has never been easier to get approved for a home loan refinance, regardless of financial problems. Homeowners should get in contact with a variety of mortgage lenders and banks to see and compare what new mortgage refinancing options they have thanks to the $75 billion housing stimulus plan.

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