[Blessed Lady]

My husband and I own our own service business and business has slowed therefore making our income rather low right now. Our biggest expense is our house payments. In order to keep our business we need to lower our personal expenses. We currently have a first and second mortgage. My question is, if we talk to our first mortgage lender and get them to agree to do deed-in-lieu of foreclosure, do we have to get the second mortgage company that is a different company to agree to do this also? Or would the first mortgage company buy out the second mortgage to sell the property? I'm just not sure how this all works.Thanks for any advice you can give me.

[Courtney M.P.]

One of the companies would have to pay off the other mortgage, probably first paying off second as the first would be the larger debt in most cases. Both of the companies will have to agree to the terms as both have a lien on the property which provides a claim to the asset in the case of default on the loans. Check into refinancing options (especially if you have an ARM) you may be able to save a substantial amount on your monthly mortgage.

[milton k]

You would still owe the 2cd and they would either need to forgive it or reduce it enough for the first mortgage company to pay it but it’s unlikely. They would still be able to foreclose but they would have to pay the first off, this gives you some leverage for a reduced pay off. Tell them that you will default anyway if they don’t play ball and get nothing. Good luck.