Homeowners who may have a second lien on their home loan have found that there are difficulties related to finding affordable solutions to their mortgage payment problems if only a primary modification is offered. For this reason, secondary home loan modifications have offered options for these homeowners to have a lower mortgage payment on their second home loan, which when used in tandem with a primary mortgage modification, is helping more homeowners find an affordable solution to their foreclosure prevention needs.
Obviously, there were problems with home loan modifications in cases where a second lien was present, but may not have been modified, which essentially negated any benefits from a primary home loan modification. However, there has been some concerns that servicers may have been hesitant to offer write-downs on second liens due to the fact that there are numerous institutions which have a great deal of capital and the second mortgages. As an example, the four largest commercial banks in America, which are Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo have billions invested in these second lien home loans, which may create conflict when offering write-downs.
There are reports which have indicated that about half of all homeowners in the Making Home Affordable Program have a second lien, and it important to address this issue as there is concern that servicers may feel that foreclosure is the best option when a homeowner becomes delinquent as they could stand to lose from both servicing the primary mortgage and owning the second lien.
However, options for homeowners who may have a second lien and are still facing difficulty with their mortgage payments may be available through the Second Lien Modification Program, as this offers homeowners the opportunity to, upon having a primary home loan modification, modify their second lien if their monthly payment is still too expensive. While this is not a guarantee for all homeowners, it’s hoped that the second lien modification program and solutions to second mortgages in general may help prevent more foreclosures in 2011 as, again, a vast number of homeowners seeking a home loan modification do have a second mortgage in place.
While there are still questions over whether servicers are looking out for their best interest or the interest of investors, homeowners are still bitter against some financial institutions as these banks have made it difficult for some to find the foreclosure prevention assistance they need. Issues like this are hoped to be addressed as, obviously, homeowners are still suffering from problems related to their mortgage or second mortgage thanks to factors like unemployment, and solutions are still needed in order for many to prevent the loss of their home. Yet, there is worry that some homeowners may face foreclosure if their second lien is not addressed, as this mortgage can cause a homeowner’s mortgage payment to be beyond their means even when assistance through a primary modification has been offered.