After Foreclosure or Short Sale
Second mortgages and home equity lines of credit (junior liens or mortgages) can remain as a liability after foreclosure has satisfied a first mortgage or after a short sale has occurred. If you no longer have the property, then junior mortgages can be discharged in a bankruptcy just like any other unsecured debt.
Stripping a Second Mortgage
If the property is underwater, junior liens can be stripped off during the course of a Chapter 13 bankruptcy potentially saving the property owner tens of thousands of dollars. Stripping a second mortgage or HELOC can be a valid reason for filing a Chapter 13 even in the case where there is little other debt, if the lien is substantial.
Settling a Second Mortgage or Home Equity Line
Second mortgages and Home Equity Lines can also be settled like any other debt. Sometimes we are able to settle (and thereby get rid of) the second mortgage even when the homeowner intends to keep the house and is current on first mortgage payments.
If the homeowner is in default on the first mortgage it may be even easier to get a good settlement on the second or equity line.
Loan modifications can also be obtained for second mortgages, though this is less common.
Contact us if you have a second mortgage and have fallen behind on the payments. We may be able to settle or strip your second mortgage.