Second Mortgage Modification/ Settlement

Modification of second mortgages, including a Home Equity Line of Credit (HELOC) is possible, but it is usually a different process than modifying a first mortgage. To accompany the HAMP program for first mortgages, the Federal Government created the 2MP program for second mortgages. Additionally, second lenders may choose to modify the loan “in house,” without relying on the government program.


To qualify for a second loan modification through the 2MP program, there are two major conditions that must be met:


  • The second loan must have been originated on or before January 1, 2009, and
  • The loan must be in second position to a first loan that has previously been modified under HAMP.


If these conditions are met, then your second loan is a candidate for modification, partial extinguishment, or full extinguishment. However, there are many required documents and applicable regulations to get through the program.


When attempting an “in house” modification of your second loan, your outcome will depend in large part on which lender your are working with and on your financial situation. Many lenders have a prepared packet for you to complete in order to apply for a modification of a second loan. Some lenders allow for permanent modification, others only allow a 1-2 year reduction in payments, and others will not entertain a modification.


Another approach is to settle the second loan at a reduced amount with a cash payment. If you have a lump sum amount of money that could be used to settle your second loan, we can discuss this option with you.


The Butler Law Office has over thirty three years of legal experience and can advise you about what may happen if you can no longer pay your second loan and the likelihood of a second loan modification.