Can I pull off a planned default?

RealTimeRefi · Joined: 21 Sep 2007 Posts: 1 1.71 Dollars($)

Can I actually plan my 2nd mortgage default? I can make my first mortgage payments fine, but our income has gone down substantially. Can I let the second go in default? The house is totally upside down, like 30% or more. Even the first is 10% + under water. The second would have to cough up the entire first, + fees only to get nothing back. Why would they do that in this liquidity crunch? Can I do this? Then I would offer 10 cents on the dollar and buy it out. What do you think?

livinginnky · Posted: Fri Sep 21, 2007 3:26 pm Post subject:

What do you mean plan?

It sounds like the 2nd lender would have nothing to gain with forcing the foreclosure but your still running a risk. If you can offer .10 on the dollar to buy it out, why would it be in foreclosure? I think the lender might see this as some kind of strong arm tactic and sue you. It's like extorting money from the 2nd lender. Not sure what laws there are for this and I definately would not recommend it.

Guest 0.10 Dollars($)

Well, not planned as in evil plan hatched to screw the man. I have an obvious monthly deficit that will affect my second mortgage. So I am proactively trying to see my options. Im very confident the 2nd wont foreclose, because there is nothing to foreclose on. In fact the 1st is underwater too. My thoughts are simply find a loan from family or friends and get the second out of my life if they will settle at some point in the future. So my theory that I can stay on good terms with my first and shine the second until we fix our situation is correct?

livinginnky · Posted: Sat Sep 22, 2007 12:19 pm Post subject:

I apologize, I did not understand fully.

Yes I would start now and try to be proactive. I would get a definate dollar amount that you can have before contacting the lender though.

2nd mortgage lenders are often willing to work out amazing deals because they stand to lose everything if they don't. Some times however they will wait it out until you are actually in default.

But again there is nothing wrong with being prepared. And I would call them as soon as you get some money together.

Good luck.

Guest 0.10 Dollars($)

Thank you for your advice. I am still going to meet with a real estate attorney to make sure my understandings are correct. If you have any other advice or evidence that this has worked in the past, please share it with me. There are going to be a lot more people in this same boat soon.

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi DAle,

I think when the lender will come to know that you cannot afford to make the payments, he will agree if you take a loan and pays off the second mortgage at a negotiated amount. He will accept the negotiated amount because he will feel that if there is foreclosure or deed in lieu, he might get less amount because of the fist mortgage which is always in primary position than the second and needs to be satisfied first.

evolovik26 · Posted: Wed Sep 26, 2007 8:39 am Post subject:

Hi
Second will not foreclose without the first mortgage permission and that is not going to happen while the first is paid on time. Unless both mortgages are owned by the same lender.
whether or not you going to be able to buyout your second at 10c on 1$ is a big maybee (most likely it will remain as a lean against your house)
Understand that if you do this you will most likely keep the house but your credit will be a thing of the past for many years to come and you will not be able to sell/refinance/buy property for a loooong time. You will also owe more for your house thaen its worth and will have to payoff both first and second when and if you sell the house.

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