1st Mortgage Paid = Safety ?

[Nancy]

We live in Florida and have three mortgages totaling around $196, 500 on our home. Our property value has TANKED! and is now registered with the county for a mere $106,000 from $225,000 two years ago. I have been told that as long as we pay the first mortgage, that we can not be forclosed on. Is this true? We are seriously considering foreclosure and bankruptcy as we see no reason to continue paying like this nor can we.

[Tbornetun]

Yes, the 2nd and 3rd mortgage holders can foreclose on you. It is just a matter of "will they?". If you want to keep the home, you will have to pay all three mortgage payments.

[Nancy]

Thanks, that blows my theory of only paying the first mortgage then, huh? Why bother.

We are willing to keep the house and work out modifications with all three lenders or at least the second and third and have heard some others have been very successful with doing this, including cutting a good portion off the prinicpal debt. I wonder how many here have done this successfully.

[Tbornetun]

It wouldn't hurt to try.

[Nancy]

Thanks.

[BobMango]

I would say it depends on the amount of the first mortgage compared to the value of the property. If there is no chance that the second or third position lenders can recoup any of their money by foreclosing then there is no reason for them to do so. The reason a lender forecloses is to protect whatever value there is in the property after a loan goes bad.

I have investment property with a first ($135K) and a second ($90K) and the property is worth about $120K right now. I quit paying the second in January of this year. The holder of the second was making a lot of noise, but once they determined there was nothing to gain by foreclosing they have basically quit bothering me. That is not to say that they don't want to collect or are abandoning their claim, but the threat of foreclosure is really not much of a threat in this case.

I'd say that if your home value is less than your first mortgage you stand a good chance that the 2nd and 3rd position lenders will not foreclose, at least until they think the property value has increased enough to make it worth the effort. In any case, I'd talk to the second and third position lenders and ask them to put the loans into forbearance while you work things out.

[Nancy]

The first mortgage is $48,500, the second is @ $90,000, the 3rd is @ $58,000 - according to the county appraiser's office (I spoke with them and had them come out last week) we have dropped in two years from $225,000 to $106,000. We have always, until last month, been on time with all payments, but have been told by everyone the companies will not work with you at all until you quit paying - which is one of the reasons why we have - the other is, we just don't have the money anymore. Total monthly payments including taxes, homeowner's insurance and the three mortgages are $2,600.00. We would consider refinancing longer term to lower the payments, but can't see refinancing $90,000 more than the home is worth.

Thanks for any thoughts

Nancy