How to Pay Off Second Mortgages at a Discounted Rate by Roy Oppenheim
By Oppenheim Law on Deficiency Judgments, Florida Law, Foreclosure, Real Estate & Roy Oppenheim
Hi, this is Foreclosure Defense Attorney and Legal Blogger, Roy Oppenheim from the trenches doing another segment on summer school. Today we’re going to talk about paying off second mortgages at a deeply discounted rate, basically what we would call the short payoff.
What we’re seeing is that the banks have come to the realization that virtually all the second mortgages, equity lines of credit, or whatever you want to call them, lines of credit, are basically so underwater that they are virtually, actually, unsecured debt. They’re no different than really, credit card obligations. And what’s interesting is because the banks have come to that realization, they’ve actually been hiring people from their credit card negotiations side of the bank and have been putting them into the negotiating side of negotiating the reduction of the obligations on these second mortgages. And what they’re doing is, when you fall into default, usually a period of anywhere between three and six months, just like a credit card obligation when you fall into default, you will start getting offers to pay the entire balance off at a deep discount.
After three months, you may get an offer of a discount of 30%, 40%, 50%. After six months, you’ll probably get an offer of about 70, maybe 75, 80%. We have been able to negotiate the payments, the short payoffs of second mortgages somewhere in the area of between 10 and 20, 25% and of course, that means you need to have those funds available, sometimes you need to borrow them from a friend. But it’s worth considering if in fact you’re going to want to stay in the house, and if in fact you want to possibly do a mortgage modification on your first mortgage. And so, we won’t talk about modifying first mortgages today, but what I want you all to focus on is that there is in fact principal reduction going on, on a very large scale basis right now, when it comes to second mortgages.
Roy Oppenheim, from the trenches, doing summer school on paying off, paying down second mortgages. Have a great summer.