Posted on: 03rd Jun, 2009 10:39 am
Here's the story, it's all been heard before. Took out an 80/20 loan on a home in '06 at the top of the market so that we could keep our life savings fluid to start a new company. Well, we did it- however it is not profitable yet, so we are now on one income and depleting the remaining savings every month in order to pay the mtg. The homes value has dropped and now our first mortgage is underwater, and our 2nd mtg may as well be considered unsecured. I have called the mtg lender 3x with no luck. Finally, I rec'd a letter from them saying they are assigning us a counselor to see if we qualify for modification. We are current on both loans and have flawless credit (both scores over 790). The reality is our savings is almost dried up, and then what? What would happen if I stopped paying the 2nd mortgage? They wouldn't initiate foreclosure, because the homes value is less than the 1st mtg, so they would get nothing. But what else can the bank do? I need to know the worst case scenario. Is it even a possibility that they will temporarily let me stop paying the note and extend the terms? I hope that next year I will start seeing a paycheck and we'll be back on our feet again.
The best they can do is lower your interest rate which will lower your payments. You need to present a plan to the bank that is reasonable and one that you can actually follow through with.