Can I DIL on both mortgates when the 2nd is Up to Date?

gibbsm · Joined: 24 Jul 2007 Posts: 2 2.04 Dollars($)

I am at my wits end. My house has been on the market two weeks shy of six months. I have two mortgates, the first is in arrears and is in Loss Prevention with a hugh payment due in September, in the meantime I have to make astronomical monthly payments with an interest rate of 13+%. The second mortgage is up to date and it is auto deduction with a much smaller payment but is at 12%.

If I do a deed in lieu of Foreclosure on the 1st. How does that affect the second? Can I do a DIL on both even if the second is up to date in payments?

I've tried to refinance with not success for the past two years. Nowbecause I'm behind due to the high Interest Rate, my credit score is continuously being pulled down which is making it impossible to get refinanced.

What do you suggest I do?

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

carnahandavid · Joined: 21 Dec 2006 Posts: 239 58.40 Dollars($)

13% & 12% interest rates! I can imagine why it is becoming hard for you to continue the payments.

First of all as Miller mentioned 1st mortgage holder is not going to accept a deed in lieu of foreclosure as there exists a second mortgage. Other point is that as long as the second is current the second mortgage company won't be considering your request for a deed in lieu.

blue · Posted: Tue Jul 24, 2007 6:12 pm Post subject:

Hi Gibbsm,

Welcome to Mortgagefit discussion board.

It is quite true; subordinate liens are not wiped off in a dil of foreclosure. If the first note holder accepts the house he will be taking the house along with the second loan. He will only do so if there is enough equity in the house by which he would be able to pay off the second loan, recover his loan balance and make some amount of gain. All this doesn't seem to be a possibility for you. What all of it means is that you won't be able to give the house back to first loan provider.

Many government assistance programs are there which provide short term loans so that borrowers can recover out from defaults on their loans. You can contact some government agencies to know if you can get such loan.

Thanks
Blue

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hello Gibbsm,

To prevent your house from foreclosure, you can go for a short refinance loan the amount of which will perhaps be lesser than your outstanding first loan. With this short loan, you can actually refinance your first loan amount. Apart from helping you to keep your house, the lender may also find this option more cost effective than his expense in the foreclosure proceeding.

Guest 0.10 Dollars($)

Hi Gibbsm,

It is true that lenders do not generally accept a DIL if there is already a second lien placed against the same property. Even if the first lender accepts the DIL, he will take away your house along with the lien. Then it becomes his duty to pay off the second loan. Thus, you may lose the house in spite of your up-to-date payment on the second loan.

Caron

Hi Gibbsm,

Welcome to our forums.

Going for a deed in lieu will be affective only if the first lender is willing to take up the liability of paying off the second mortgage. And, if he doesn't, the second lender can take legal action against him because he deserves the outstanding balance of the loan he has offered.

To know more on How Deed-in-lieu on first mortgage affects the second, refer to discussions on this topic.

good luck to you.

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