Posted on: 18th Feb, 2009 01:57 pm
My husband and I did 100% financing on our home back in May of 2006. (80/20) We are in a neg am ARM which adjusts in June this year. The first bank lowered the payments but on the neg am amount. We are willing and able to make the lowered payments to the first bank but combined with the 2nd it's not possible. We would like the 2nd mortgage debt forgiven but how and why would the bank do that? Otherwise we will have to go short sale. I think the 2nd has mortgage insurance? How can I find out and if that's the case, can the bank collect on that?
hi jakiriv!
welcome to forums!
you will have to negotiate with the second lender to check if they will forgive your debt or not. but chances are less that they would forgive the debt.
though you go for a short sale, the lender will ask you to pay the deficient amount resulting from the sale of the property. however, you may try the option of deed in lieu, wherein the deficient amount resulting from the sale of the property is forgiven.
as far as second mortgage insurance is concerned, you must be having documents related to that. you can check out those documents to get the information. if you have insurance for the second mortgage, the lender can get his dues from that as well.
feel free to ask if you have further queries.
sussane
welcome to forums!
you will have to negotiate with the second lender to check if they will forgive your debt or not. but chances are less that they would forgive the debt.
though you go for a short sale, the lender will ask you to pay the deficient amount resulting from the sale of the property. however, you may try the option of deed in lieu, wherein the deficient amount resulting from the sale of the property is forgiven.
as far as second mortgage insurance is concerned, you must be having documents related to that. you can check out those documents to get the information. if you have insurance for the second mortgage, the lender can get his dues from that as well.
feel free to ask if you have further queries.
sussane
80/20 loans were specifically designed to allow borrowers to avoid mortgage insurance, which was seen as a cost only and not tax deductible. lenders have since learned the folly of their ways (some of them, anyway).
if your 20% second mortgagee has mortgage insurance protecting its investment, then you were done a disservice when you obtained your loan. i am highly doubtful that's the case, however.
if you plan to sell, then clearly it's going to be a short sale. if your second mortgagee feels it appropriate to forgive the debt, they will. don't count on it, however. if there's a deficiency in the sale, they may well attempt to collect.
if your 20% second mortgagee has mortgage insurance protecting its investment, then you were done a disservice when you obtained your loan. i am highly doubtful that's the case, however.
if you plan to sell, then clearly it's going to be a short sale. if your second mortgagee feels it appropriate to forgive the debt, they will. don't count on it, however. if there's a deficiency in the sale, they may well attempt to collect.
thank you