questions & answers

Question: I have a first and second mortgage on my home. The value has plummetted by 35% since I bought it 2 years ago. How can I submit for a loan modification program if I have 2 loans? My only other option is foreclosure. What happens if I have to default on the 2nd, but try to stay current on the 1st? I need help!

Answer:

Some banks are willing to work with a homeowner on a loan modification program. Some are not. The situtation is much more difficult if the two mortgages are held by separate banks.  In any event if you want to try, you would have to contact the banks loss mitigation departments and see if they are interested, and take it from there.

Regarding the viablity of a foreclosure: As a starting point, if your home is a single family residence (or two family dwelling) on less than 2.5 acres Arizona's anti-deficiency state may apply to loans / mortgages that are purchase money loans (with a few exceptions such as VA loans). If both your mortgages are purchase money mortgages, foreclosure may be a viable option as the banks would not be able to sue you for the deficiency. If however your second mortgage is an equity mortgage the anti-deficiency statute would not apply and the bank in second place could sue you for the deficiency after the first mortgage forecloses. Some mortgages (on a refinance) are a combination of equity and purchase money mortgages. These have to be analyzed to see if it retained its purchase money mortgage character. You may want to speak with an attorney to figure out the details of your specific situation.