Proverbs 22:7 – “The rich ruleth over the poor, and the borrower is servant to the lender“.

 

House Arrest: Unpaid Second Mortgages

House Arrest: Unpaid Second Mortgages. Law firms are pursuing property owners with threats for unpaid second mortgages.

 

Some people thought their mortgages were discharged in bankruptcy.

 

 

Others wanted to pay on their mortgages but couldn’t because there was no longer anywhere to send their payments. Their lenders disappeared during the mortgage crisis a few years back.

 

Filed bankruptcy years ago

Many property owners were under the impression that including the second mortgage in a bankruptcy they were no longer responsible for it.

 

They keep the first current, but stopped paying on the second.

 

 

In reality, the lender still has a lien against the property.

 

Mortgage debt (secured debt) generally is not dischargeable through bankruptcy.

 

You do not own the home free and clear. You are not off the hook for the mortgage.

 

 

“So, no payments? Whoever owns the mortgage has the right to foreclose unless you pay it off or negotiate an acceptable restructuring.

 

 

Lender no longer in business

As strange as it sounds, the fact that you could not keep payments on the second current does not mean that the money isn’t owed.

 

It is owed.

 

 

Today prices of real estate have recovered to pre-crash levels and in some instances, even higher. Whereas a second mortgage had little practical value years ago.

 

Assets of a defunct lender purchased for pennies on the dollar by debt buyers.

 

 

If $100,000 is owed, the debt buyer pays 4% to 10% of that amount. They get the opportunity to collect $100K.

 

Many describe this as legalized extortion.

 

 

Solutions

Contacting the customer service department of a title or escrow company.

 

Federal lending agencies, such as Fannie Mae and Freddie Mac, have information on lenders and their successors.

 

Create a special savings account and deposit each month the same amount you would have paid on the mortgage.

That way, when zombies show up, you have negotiating ability.

 

Immediately contact a real estate attorney. Do not do it on your own.