Similar to a credit card settlement, settling a second mortgage involves an agreement that your mortgage holder will accept less money than you currently owe. In return for accepting a lump sum partial payment, the holder agrees to convey the deed of trust (lien) and to fully release any claim they may have against you for your debt. This agreement further bars the mortgagor from coming after you for the unpaid portion any time in the future.
Settling your second mortgage allows you to have the mortgage released for only a small portion of what you owe on your note. In order to increase your chances of successfully settling your second mortgage, it is in your best interest to hire an experienced Central Valley debt settlement attorney to fight for you.
Reasons Why a Lender Would Agree to Settle a Second Mortgage
There is no hiding the fact that lenders want to maximize the amount of profit they make on their loans. This is the reason why they charge interest on loans. Along the same lines, lenders offer mortgages backed by security in the home because in the event that you cannot pay, they can foreclose on the property. This security interest in the home is enough protection to justify the large amount of money they are willing to lend for you to buy a house. A lender will generally only agree to settle for less than the full amount owed on a mortgage if there is an even worse alternative.
Less or Negative Equity
One reason a lender will accept less than the full amount owed on a loan is if the home is “underwater” or has “negative equity.” This means that the fair market value of the property (what a reasonable buyer would be willing to buy it for) is less than the full amount owed on the house (the balances). In other words, the house is worth less than you still owe on it. In such a case, the lender may risk losing its security interest if the first mortgage lender forecloses.
How Do I Know if a Second Mortgage Settlement Is Right for Me?
If you currently have negative equity in your home and are delinquent on your second mortgage, then settlement might be a good option for you. However, several other factors, depending on the specific facts of your situation, may impact your ability to successfully settle your second mortgage. As such, it is best to consult with an experienced Central Valley debt settlement attorney to guide you as to what avenue is appropriate for you.
Call an Experienced Central Valley Debt Settlement Attorney
If you or someone you know is has accrued significant debt during the COVID-19 crisis, or for any other reason, you may be able to reduce or erase your debt, including your second mortgage, by negotiating your debt with your creditors.
To do so successfully, it is your best interest to consult with an experienced attorney who can advise you of your legal rights and options.
For more information or to schedule a complimentary consultation with Central Valley debt settlement attorney Gurjit Srai, please call (209) 395-0761 or (559) 449-1447, or complete our online form.