Question: I have a 1st and 2nd mortgage with one bank in Florida. Then another bank came and offered to pay my 2nd mortgage with that bank. My heloc was not closed with the first bank and i had an emergency got some money out of it. My 5 yr term with the 2nd bank expired. They have been calling me and offering 8% interest rate on my heloc. I have been negotiating for a lower interest. they wont approved. Bank is threatening to foreclose my property. Can they do it? Property value is way too low..there is no equity on the house in this current market. Please advise. Can the 2nd bank foreclose my property?
Answer: Absolutely, the 2nd mortgage can foreclose on your property. When you signed on the dotted lines for the HELOC, you gave them the right to force the sale of the property, which was collateral for the loan, in the event you did not keep up your end of the deal. Unfortunately, banks don’t like to negotiate with homeowners very much. They have this assumption that homeowners have no clue what they are doing. So they don’t give you very good deals that seem very reasonable based on current market conditions. Yet when a 3rd party (attorney or real estate investor) negotiates with them, the bank will usually lose more money because the offer is even lower then what the homeowner proposed. Bottom line, banks flat out don’t make sense.
So you best bet is to have someone else, like an attorney, negotiate the terms with them and try to get them to reason with you. Unfortunately, they cost money, but they should be able to help.
Another option is to have someone settle that 2nd mortgage and wipe it out completely…
Let the bank know you are interested in settling, tell them your home is upside down by $50,000 or whatever the amount is, there is a first mortgage in front of them and they will end up paying more than what the property is worth. Let them know your attorney has advised you to file bankruptcy but you don’t want to go that route. (This will just by you some time, they will eventually foreclose.) Then you or preferable someone else, needs to go settle that note for pennies and that way you don’t lose your home.
We settle 2nd mortgages and have been very successful in doing so for homeowners with large 2nds. The great part is that it doesn’t cost you anything upfront.
Good luck, hope everything works out for you.