Los Angeles Second Mortgage Lawyers
A second mortgage, home equity loan, or home equity line of credit takes advantage of the equity you’ve built up in your home by allowing you to borrow against that equity at favorable interest rates compared to other forms of borrowing. You could use the money you borrow to pay off high-interest credit cards or finance home improvement projects or repairs that will enhance the value of the home, and the interest you pay on the second mortgage might even be tax-deductible.
A second mortgage might seem like a good idea at the time, but just like first mortgages, second mortgages are secured by your most valuable possession – your home. If your financial fortunes take a turn and you can’t keep up with your mortgage payments, your home is at risk of foreclosure. Wadhwani & Shanfeld can help. Our Board-Certified bankruptcy specialists help homeowners in Los Angeles protect their homes from foreclosure through Chapter 13 bankruptcy protections and debt settlement, up to and including getting rid of second mortgages entirely.
If you have already received a notice of default on your mortgage, you must act very swiftly to save your home. Whether you are in default now or are struggling to keep up with your mortgage payments and want to take steps to prevent the bank from taking your home, Wadhwani & Shanfeld can explore your options with you and get you the right help you need. Contact our Los Angeles second mortgage settlement lawyers right away to talk with an attorney now and understand the options avaiable to you to keep you in your home.
Getting Rid of a Second Mortgage Through Debt Settlement
Debt settlement is a process of negotiation where the creditor agrees to accept less than the total amount owed in satisfaction of the total debt. In this case, we would negotiate an agreement with the holder of your second mortgage to accept a lump sum partial payment of the outstanding balance. In return, they would reconvey the deed of trust (lien) to you and fully release any claim they may have on the property.
If your home lacks the equity to pay off both your first and second mortgage lenders, the second holder may be amendable to a settlement because they know they may get little or nothing if the senior lien holder forecloses or if you file for bankruptcy. These facts give you leverage to negotiate a favorable debt settlement on your second mortgage, which might ease your financial burden enough to keep you safe from foreclosure without having to declare bankruptcy. It’s worthwhile to discuss debt settlement as you explore your options with your bankruptcy attorney. Generally, the lower the equity available for the second lien holder, the higher the likelihood they may be willing to accept a lump sum settlement.
Removing a Second Mortgage in a Chapter 13 Bankruptcy (Lien Stripping)
In Chapter 13, unsecured debts can be adjusted so you only pay what you can afford, which is often just a very small amount; in some cases, unsecured debts won’t have to be repaid at all and can be eliminated (discharged) at the end of your Chapter 13 bankruptcy. This process can be applied to a second mortgage on your home provided the proper steps are taken in your bankruptcy case.
Typically, a home mortgage is a secured debt; the obligation to pay is “secured” by the home itself, and if you don’t make your payments on time and in full, the bank can foreclose, meaning they’ll take your home from you and sell it to pay off what you owe.
A second mortgage is a secured debt just like a first mortgage is. However, the situation is different if you already owe more on your first mortgage than your home is worth. This is known as being “underwater” or “upside down” on your mortgage, or having “negative equity” in your home. In this case, the holder of the second mortgage can be considered an unsecured creditor, since if the senior lien holder foreclosed on the property, they would keep all the proceeds and the junior lien holder would get nothing. The second mortgage is essentially “stripped away” in Chapter 13.
Meanwhile, you can roll any missed mortgage payments on your first mortgage into your Chapter 13 plan, taking you out of default and preventing the bank from starting a foreclosure or stopping any foreclosure proceedings that are already underway. All of this occurs under bankruptcy’s “automatic stay,” which puts a halt to all collection activity while you work on a plan to deal with all of your debt in a manner you can afford.
Reorganizing on a Second Mortgage Through Chapter 13
Sometimes neither debt settlement or lien-stripping is an option for a second mortgage. If that’s the case, you can still force your second mortgage lender into a reorganization to pay back the arrears over time. This will allow you to stop a foreclosure proceeding and pay back the arrears at your pace.
Contact Our Los Angeles Second Mortgage Lawyers Today
Many homeowners who purchased a second mortgage on their home later find they cannot afford their payments and worry they are in danger of losing their home to foreclosure. Before that happens, reach out to the Los Angeles second mortgage settlement lawyers of Wadhwani & Shanfeld to explore your options. Call now to speak to a lawyer now and get started today getting the help you need.
