Second Mortgage Settlement: How to Settle for Less

Debt,Settlement - Second Mortgage Settlement Attorneys Foreclosure Defense Group

Second Mortgage Settlement: How to Settle for Less

Second mortgages, as the name suggests, are essentially a second set of loans on top of your first mortgage. They often require a whole new appraisal of the property. The amount that you receive on a second mortgage is typically dependent on the equity you have on your home. Once a second mortgage rate is determined, the borrower can utilize the money for whatever purpose they need. Many tend to put it towards things like home renovations. Second mortgages are effective for many individuals especially when the interest rate and determined repayment schedule is lower in cost than refinancing your first mortgage loan. When determining whether to settle on a second mortgage, learn everything you need to know about second mortgage settlements first.

Why Do Lenders Settle Second Mortgages?

Lenders understand that most second mortgages aren’t attached to much equity often due to a decline in property value over time. When the value of a property is equal to or less than the amount left on the first mortgage, there is no real equity to hold on to making the second mortgage of little value. In order for the second mortgage to foreclose, they would have to pay off the first mortgage. This process would result in a loss of money and does not benefit the lender at all. In these circumstances, it’s common to see low-value second mortgage settlements.

Timeframe to Settle a Second Mortgage

Settling a mortgage cannot often be done in a short amount of time. Rather, they take time to process. This is because a loan needs to be considered non-performing for a long amount of time before the lender will think about a second mortgage settlement. Essentially, the longer that the loan has been in default of payment, the better the settlement offer will be. Lenders might send borrowers letters to settle, even when unsolicited. This opening offer can be further negotiated and come to an aggregable number.

How to Settle a Second Mortgage

The first step in a second mortgage settlement is by reaching out to the lender. Whether they made the first contact to you through an unsolicited offer letter or you are reaching out to them, you cannot start the settlement process without discussion with the lender. When you express an interest in paying your debt, the lender will often ask you various questions related to your tax assessment. If they make you an offer first, prepare a lower counteroffer.

By starting your offer low, you can expect that the lender will make a counteroffer. Keep in mind that most second mortgages tend to be settled anywhere between 5 percent and 20 percent of the loan balance. If the number countered isn’t ideal, don’t feel pressured to accept. When you make an agreeable offer, remember to put the terms in writing to solidify the deal. This can be done by requesting an agreement offer from your lender prior to paying your dues. Remember to hold your ground when settling on your second mortgage.

Schedule A Free Consultation for Second Mortgage Settlement Today

Second mortgage settlements can ease the financial burden that a person might be facing without much risk. By obtaining a second mortgage and ceasing to make payments after a long period of time, you can settle for a lower repayment amount. However, when it comes to second mortgage settlements, negotiation can often be futile. Lenders may take advantage of you if you don’t have formal knowledge about the negotiation process.

If you need advice negotiating and settling on your second mortgage, contact us at the Foreclosure Defense Group. Our team of dedicated foreclosure defense attorneys has been helping clients with all types of loan issues for a cumulative 50 years. No matter the loan issue, we can lead you down the right path. Contact us today for advice on your second mortgage settlement.

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