Can You Get Away With Not Paying a Second Mortgage?

Can You Get Away With Not Paying a Second Mortgage?

Many of the people who are in serious financial difficulty with their home loans have both a first and second mortgage. Faced with foreclosure and perhaps even bankruptcy, some may wonder “what if I just stop paying the second mortgage? What’s the worst they can do?”

Like a lot of attempts to game the system, this is a plan that sounds clever on the surface but in practice is a really bad idea. True, the holder of a second mortgage is in a subordinate position to the primary lender, and in a foreclosure, doesn’t get a dime until the primary lien is paid in full. But that doesn’t mean they don’t have options.

First, a little background. Second mortgages are a fairly common feature on home loans. Prior to the collapse of the credit markets, they were commonly used in lieu of down payments to enable buyers with minimal savings to buy a home – the primary loan would cover speedycashloan.net/loans/buy-now-pay-later-sites 80 percent of the purchase price, and a second mortgage would be taken out for 20 percent to cover the down payment on the first. (altro…)

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