Let’s see if you’re in this situation: your home is upside down in value and you’ve got a second mortgage. If that’s what you’re facing, you might be wondering about the issue of foreclosure — and you’re probably wondering if you can stop paying the second mortgage.
Well, the answer may not be what you want to hear. If your home is upside down, you can try not paying the second mortgage. The lender may not be able to file foreclosure because the first mortgage must be paid off first. However, there’s a catch. Depending on where you live and the type of loan, the balance may still need to be paid off even if you’re severely upside down and facing theoretical foreclosure. If you don’t pay the deficiency, a court may legally garnish your wages to pay it off. That’s probably the best-case scenario. In a worst-case scenario, the court can issue a second-mortgage charge-off. In that case, your debt may wind up with a collection agency — and that’s a situation you don’t want to face.
The best thing to do is to negotiate a settlement. It may be cumbersome and it may not provide the ideal results for you, but it’s better than facing a collection agency for that second mortgage.
The views published here are the opinions of the writer and are not a substitute for legal counsel.
Israel Gonzalez
Real Estate Broker-Hollister CA
831-636-8858
Click here to contact me by email
