Any advice with what to propose to the 2nd mortgage holder?

[Ineedhelp2]

Does anyone have any experience with dealing with 2nd mortgage holders who foreclose, but that there is not enough equity to repay them?

I'm in a situation where the 2nd is foreclosing, and with priciple, interest and penalties, I owe them $75,000, but if the were to sell the house today, after repaying the first, if they are lucky, they could end up with $25,000.

I think they want to try some kind of buy and hold strategy and take the house back, rent it out, and then hope the market rises so they can sell and recover.

They need to come up with $180k to take care of the first, plus this house needs at least 10k in repairs to make it nice enough to rent.

We really would like to stay. Unfortunately we do not have the funds to buy them out with a lump sum offer, so we would need to make a new deal.

I think they need to be realistic with the principle and adjust it, and they certainly should not expect the 14% terms we had when we first made this loan (private money) and when the house was worth almose $100k more than it is now.

I was thinking of offering them $60k with 6% interest, interest only for a year or two while we regroup and make repairs, and then amortize the balance over 5 or 6 more years, still at 6%.

They would be further ahead than if they took the house and rented it out, and would not have to risk their additional $180k and repairs costs.

Maybe this is too involved to get a response, but if anyone has waded through this and has any suggestions or advice, it would be appreciated.

[justbroke]

Does anyone have any experience with dealing with 2nd mortgage holders who foreclose, but that there is not enough equity to repay them?

I'm in a situation where the 2nd is foreclosing, and with priciple, interest and penalties, I owe them $75,000, but if the were to sell the house today, after repaying the first, if they are lucky, they could end up with $25,000.

Yeah, they'd see $25K is better than nothing.

They need to come up with $180k to take care of the first, plus this house needs at least 10k in repairs to make it nice enough to rent.

That's not how foreclosures work. They would hopefully sell the home at market value and the first lienholder would be paid from the proceeds.

We really would like to stay. Unfortunately we do not have the funds to buy them out with a lump sum offer, so we would need to make a new deal.

Should be interesting...

I think they need to be realistic with the principle and adjust it, and they certainly should not expect the 14% terms we had when we first made this loan (private money) and when the house was worth almose $100k more than it is now.

If you're already behind, and they are already in foreclosure, that means they believe they'll get something out of this. I don't think you're in the deal making position anymore. Besides, you may have purchased private mortgage insurance (PMI) or the lender has purchased it. For some reason, they think that foreclosing is the best thing for them.

Perhaps you can work out a modification with them, but I would be doing this just to make sure you try everything. Anything is worth a shot these days... you never know. However, the fact that a 2nd lienholder is suing for foreclosure... tends to tell me that they think there's more money in foreclosing, than writing it off and selling it to Junk Debt Buyer.

[Ineedhelp2]

No, they intend to pay off the first and take ownership if we don't come to an agreement.

Also, I think when they began this process they thought the house was worth more than it is.

[justbroke]

No, they intend to pay off the first and take ownership if we don't come to an agreement.

Also, I think when they began this process they thought the house was worth more than it is.

It's the lender's call.