There have been increasing issues that have arisen for homeowners in the housing market when it comes to getting help with their mortgage payment, but when homeowners have a second mortgage in place there are indications that more troubles have arisen and, when negative equity is a problem or simple foreclosure alternatives are sought out there have been some homeowners who have seen problems arise as a result of having a second lien. Homeowners do have the opportunity to modify their second mortgage with the federal Second Lien Modification Program, and there are some cases where a mortgage servicer might have a proprietary plan in place or a state housing agency could have assistance options available in cases where a second mortgage is causing the problem, but homeowners do need to realize that there may be issues that have to be addressed so that they can avoid setbacks related to trouble on their second mortgage.
As an example, homeowners who have seen negative equity arise and are in a position where they want to participate in a short sale could get their primary mortgage lender to agree to this particular action, but the second lien holder will have to also allow the action to take place or else a homeowner may find themselves in a position where after selling their home they still owe on their second mortgage. While this is not a new problem, homeowners who are looking into second lien modifications need to realize that if they plan to pursue certain actions like a short sale or deed in lieu of foreclosure program, problems may come about when dealing with a second mortgage holder, and of course this could follow a homeowner even if they feel they have found a solution to their problem.
There have been some cases, which were reported on in October as part of the recent Treasury HAMP data that indicate some homeowners are not only getting second lien modifications on their mortgage but some are having the terms of their home loan modified to a point where their second mortgage is extinguished entirely. Again though, this could be up to a second lien servicer or investor as to how much aid the homeowner will receive, but homeowners who do have a second lien modification in place have found that, when it comes to affordability, this additional step in the modification process can be helpful in some instances.
Obviously, the problem becomes tricky when underwater home loans are in place, as there are those who may be unable to get assistance when it comes to dealing with their negative equity on a second lien. New underwater refinancing programs have been helpful for some homeowners but these plans are not always beneficial when it comes to helping homeowner find more affordability on their second lien, as many programs are aimed at the primary mortgage a homeowner happens to be struggling with, so there may still be some payment problems for homeowners with a second mortgage as well.
Currently, homeowners do see some second lien servicers offer assistance or will allow a short sale to occur, and of course there is the popular second lien modification plan to homeowners may still take advantage of with various mortgage servicers, but when homeowners are facing problems with their home loan, with a second lien in place specifically, officials often point out that it will be necessary to explore assistance plans that will include this particular home loan so that homeowners may still be in a position to benefit from reduced payments or other aid available for those struggling with their mortgage.