Traditional home loan modifications have been able to offer homeowners a more affordable monthly mortgage payment in many cases, but second lien modification plans are also being implemented by servicers in order to reduce homeowner costs if a second mortgage is in place and causing a homeowner financial strain on their mortgage payment obligations.
The Second Lien Modification Program is an opportunity that some homeowners may be unaware of, but has been set in place within the Making Home Affordable Program as a way to assist homeowners who didn’t benefit from a traditional modification on their primary mortgage. Homeowners argued that a traditional modification, in cases where a second lien was in place, it was unhelpful as costs were still too high on their second lien.
There have been incentives offered to mortgage servicers to forgive principles or the entirety of a homeowner’s second lien, but it’s understandable that some of these programs had been unhelpful as financial institutions are typically unwilling to take the loss by forgiving a second mortgage or offering a principal reduction in certain cases.
However, homeowners who have a second mortgage that is causing financial strain are often prompted to contact their servicer to inquire about a primary home loan modification and, upon successfully qualifying for this program, these homeowners may also be offered a second mortgage modification on their second lien associated with the property.
The Second Lien Modification Program is no guaranteed to offer homeowners foreclosure prevention, as some have been unable to meet their payments even with modifications in place. However, homeowners who have not found the affordability they need in their home loan may have the opportunity for a modification on their second mortgage, which again, has helped homeowners in the past lower their monthly costs and avoid the loss of their home through foreclosure.