Refinance to avoid Cross Collateralization

[southernbelle]

I have a 2nd mortgage with a bal. of about 12k and was wondering if refinancing to avoid Cross Coll. would be worth the trouble. The other 2 loans I have with them are $4,500 and $3,000 and I will probably have to pay those back due to the Cross C. clause.

Is a refinance even worth the trouble and is there usually language in the mortgage paperwork to keep folks from doing this(I have the loan paperwork, but it's mostly Greek to me)?

[HHM]

What assets are subject to "cross collateralization"

[southernbelle]

The two loans - 1 signature loan and 1 credit card could be attached to the 2nd mortgage as per my understanding of the mortgage papers. I was just thinking if I refinanced the 2nd mortgage only, then the other 2 loans couldn't be "attached" to the mortgage.

I've heard of stories of people that had similar debts dismissed but then later found that the mortgage co wouldn't let them sell their homes until the amount of the dismissed notes were satisfied or at least that is what I am calling "cross collateralization". Am I right in thinking this?

[emoney]

Your understanding is generally correct, but each state have laws on this subject. I would get an attorney opinion on that subject in your real estate loan documents.
Why I say this some state outlaw this, but lenders still put that lanuage in their documents because most may not know the law in their state.
regards,
emoney