Mortgage News Blog - Banks willing to settle consumer's second mortgage for pennies on the dollar.



Mortgage Underwater

Settlement of Second Mortgages and HELOCs
Without Bankruptcy

There is a “hidden” component to the real estate and financial crisis, and it gets very little attention by the media. We are referring to the problem with second mortgages on homes that have lost market value during the real estate crash. Banks are being allowed by the Treasury Department to keep large portfolios of second-lien mortgages on their books at values close to those before the bubble burst.

Some estimates indicate that up to 50% of at-risk properties include this type of loan, so it’s a huge problem. There are more than $1 trillion in outstanding second-mortgage loans, with more than 40% of that concentrated among the four largest lenders. With housing prices down more than 30% average since 2006, many of these second liens are either completely without equity as collateral, or very close to it. Today, the major banks are carrying these notes at 86-93% of book value, when some estimates indicate that they are actually worth only 40-60 cents on the dollar on average.

Many consumers are unaware that it’s often possible to settle with creditors on second mortgage obligations for greatly reduced principal balances. Why would a second lender agree to a settlement on a debt that is secured? Simple. Once the property drops in value below the level where even the first mortgage is under water, then the second lender is completely exposed and is very unlikely to recover anything by way of foreclosure. In that situation, a settlement for even 10-15% of the face value on the mortgage often makes sense for the lender.

If you feel that a second mortgage problem is your single biggest financial challenge, you are not alone. Feel free to get in touch with us for a free consultation. We can help you determine whether or not such an approach makes sense for your financial circumstances.

THE LAW OFFICES OF THE GA LAW GROUP - Senior Attorney George Elonge Akwo is a member of the California Bar Association and has been licensed to practice law since 1993. He has successfully practiced law for over 22 years being admitted to The State Bar of California in 1993.

Mr. Akwo maintains four offices serving his clients. He has is actively involved in the Real Estate market as an Attorney and Real Estate Broker, Negotiator and Litigator for borrowers rights with vast experience in the law affecting Real Estate and the public welfare. Being both an experienced Attorney and Real Estate Broker, George Elonge Akwo, Esq. is uniquely suited for solving the problems of his clients.

Education: Undergraduate at the University of Illinois, Chicago, Illinois and The Law School at UC Hastings College, San Francisco, CA.  Other Licenses and Qualifications: California Real Estate Broker, Qualified under the Nationwide Mortgage Licensing System (NMLS).

Meet the GA Law Group

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