Can you stop paying your second mortgage?
Should you stop paying your second mortgage?
The prevailing theory is that if your home is worth less than what you owe on your 1st mortgage it is highly unlikely that the holder of your 2nd mortgage will bring a foreclosure action against you.
Well, although it may be rare, we did have a homeowner come into our office this year whose 2nd mortgage was being foreclosed although his home’s value was less than the amount owed on the 1st mortgage. Additionally, lenders can, and some will, “sue on the note” (bring an action against you to recover the money you promised to repay them) rather than bring a mortgage foreclosure action.
On the brighter side, we have seen 2nd mortgage payments reduced by as much as 80% a month. Also, some lenders are willing to accept as little as 10% of what is owed on the 2nd mortgage as full payment. Additionally, if bankruptcy is an option, you might be able to “strip off” a totally unsecured second mortgage by filing a chapter 13 bankruptcy (see filing bankruptcy to save home from foreclosure).
We are often asked about paying and not paying second mortgages. Our answer: We can not advise you without knowing your specific situation and considering the particular options available to you. So, make sure you are fully informed before making a final decision.
As always, The Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in Mineola, NY. You can Contact us at (516) 858-2620 to speak with an attorney.