Can I Modify My Second Mortgage?

If you are like most American homeowners, you had to take out a first and a second mortgage in order to buy your home. Maybe you did this at the suggestion of your lender, who thought it would be a good idea to split the balance among two notes in order to avoid paying certain fees, such as private mortgage insurance (PMI). Or, maybe your credit was such that two loans was the only way you could make the purchase. It might even be that the appraisal did not come back at a high enough number for the lender to make the loan, so creative financing was used. And then there are those instances where a second mortgage was taken out after the fact, as part of a refinance or when you took out equity to pay off other debt or make a home repair. Whatever the reason or the timing for your second mortgage, if you are having a hard time making the payment then you are likely looking for answers on how to get both mortgage payments under control.

One thing you can do to try and get your mortgage balance reduced is to see if your lender will modify your mortgage loan. You can ask for this with the first mortgage, but what about your second mortgage? Is a mortgage modification available on a second mortgage? Most generally, the answer is “maybe”. As with most things, the answer depends on your particular circumstances. But here are some things to know about modifying a second mortgage:

•         If your first and second mortgage are held by the same lender, your chances at getting your second mortgage modified increase.

•         If the payments on your modified first mortgage are current you will have a greater chance at having a modification of your second mortgage approved.

Government programs that allowed for modifications of second mortgages have expired, but you can still ask your current lender to take a look at your second mortgage. It is also important to know that when you modify your first mortgage, you have to deal with your second mortgage even if it is not also being modified. This is because when a first mortgage is modified, it is released and then recorded again. But when the mortgage gest released, the second mortgage assumes the first position and most first mortgage holder lenders will not agree to a modification if they lose their position. A second mortgage holder can agree to subordinate its mortgage to your new first mortgage, but it does take some negotiating go get to this agreement. This can be one of the most sticky parts of any modification process, but with our help you can stay out of the briar patch.

If you have questions about modifying your first or second mortgage, call us today or reach us online at www.law-ri.com. We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.