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Second Mortgage Underwater? Consider Settling

Second Mortgage Underwater? Consider Settling

For those who are struggling to keep up with their second (or subsequent) mortgage payments during these tough economic times, you aren’t alone. The economic downturn during the pandemic has left many Florida families underwater financially. However, facing potential foreclosure, credit dings, and stressful collection actions could potentially be avoided by convincing your mortgage provider to settle.

Reasons to Settle Your Second Mortgage

One reality about foreclosure you have to remember is that you will still owe the debt. And, even though your credit score may already have taken a hit, it will get harder when the process finishes. Further, you may even be vulnerable to the lender asking the court for a deficiency judgment. If granted, this allows the creditor who owns your debt to continue collection actions against you, including:

  • Garnishment of your wages
  • Intercepting your tax refunds
  • Putting liens against other property you own

One way to avoid the ramifications of defaulting on a second mortgage is to work with your lender to settle it. Not only can it bring the nightmare of default to an end, but you might end up holding on to your home in the process.

Methods for Settling a Second Mortgage in Florida

Similar to settling a credit card debt, a second mortgage settlement requires you to convince the lender to accept less money for the outstanding loan balance you owe. When considering this avenue of debt relief, it is crucial you speak with an experienced mortgage default attorney at Marc Brown, P.A., about the different options you could pursue to do so.

Generally, one of the following options would be suggested before considering bankruptcy:

Loan Modification

One of the most common methods for keeping one’s home and settling the debt owed on a second mortgage is to modify the loan. However, it may not suit your situation because payment amounts usually remain the same, though interest is typically lower. Still, it’s worth considering.

Short Sale

If you are willing to walk away from your home and are underwater for both your first and second mortgage, you may be able to convince the secondary loan holder to take less. The issue with short sales involving mortgages is that you will still owe the debt, but the lenders may be more willing to reduce what you owe since you are already underwater with your first mortgage. It’s a negative equity situation at this point. If they agree to take a lesser amount, you can proceed with a short sale to settle your primary loan.

Negotiating a Reduced Pay Off

There is hope for holding onto your home despite defaulting on a secondary mortgage. Because subsequent mortgages are unsecured debt, the lenders stand a chance of never recouping what you owe. Your filing for bankruptcy poses a significant risk to their interests, so they are more likely to negotiate a reduced settlement when seriously behind.

As you can see, while your options are limited once underwater on mortgage payments, it’s possible to get out from under this debt. To do so successfully requires sound legal advice regarding unsecured loan debt and your rights as the borrower. This is why your first step should be to hire a reputable foreclosure attorney to guide you through the process and maximize your savings.

Learn More About Available Options to Settle Your Second Mortgage

If you face potential foreclosure actions on your first mortgage or have fallen behind on your second, don’t lose hope in saving your home or financial well-being. There is hope during this challenging time in your life. At the law offices of Marc Brown, P.A., we represent individuals and families throughout South Florida who have been in your position. For over a decade, our firm has had great success in helping those struggling to afford their second mortgages to negotiate affordable settlements with their lenders.

Contact our foreclosure defense attorneys right away to schedule a consultation to discuss your current mortgage situation and get the peace of mind you deserve.