I’m Going to Stop Paying My First Mortgage. Should I Stop Paying the Second as Well? – Joe

“Dear Steve,

house is deeply underwater. bought a second home legitimately.

i plan on stop paying on the first home. but i have a second mortgage on the first home. should i keep paying it?

gmac owns first mortgage ditech owns the 2nd mortgagt on the first home.

i plan on stop paying on the first. but i have a second mortgage on the first home. should i keep paying it?

Joe”

Dear Joe,

I don’t see any reason you should keep paying it if you are going to let the house go into default. Both mortgages will chase you for the balances due anyway.

You might want to followup this strategic default with a bankruptcy to discharge that first mortgage. I think it would be a smart idea to click here to find a local bankruptcy attorney and go talk to them about your plan before you default.

Please update me on your progress by

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Steve Rhode
See also  Strategic Defaults: Morally Repugnant or Sensibly Prudent?

4 thoughts on “I’m Going to Stop Paying My First Mortgage. Should I Stop Paying the Second as Well? – Joe”

  1. Instead of just getting a home refinance on a 30 year loan, you should be trying to get yourself a 15 year mortgage instead. This is a simply amazing way for you to save some thousands of dollars in interest.

    Reply
  2. Instead of just getting a home refinance on a 30 year loan, you should be trying to get yourself a 15 year mortgage instead. This is a simply amazing way for you to save some thousands of dollars in interest.

    Reply
  3. Hi,

    Your best course of action depends on the state your home is in & if your 2nd mortgage was used to “Purchase” the home or if it was a HELOC aka a “Cash Out” loan.

    If you’re cool with letting the house foreclose and the 2nd mortgage loan was used to purchase the house & is in one of these Anti-Deficiency / Non-Recourse States don’t pay it anymore:

    Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, Washington

    If it’s not then you had better pay or come up with a settlement, because they can come after you for the difference they lost (if any?) on the foreclosure. (Kind of like a car repo.) In my experience the severity of recourse is usually based on ability to pay & size of the balance, etc…

    I work for a Real Estate attorney in CA that handles modifications & this is a top 10 question we get. I’ve been telling myself to start a forum, but Steve’s will suffice for now I suppose. Thanks Steve.

    Regards,
    Justin

    Reply
  4. Hi,

    Your best course of action depends on the state your home is in & if your 2nd mortgage was used to “Purchase” the home or if it was a HELOC aka a “Cash Out” loan.

    If you’re cool with letting the house foreclose and the 2nd mortgage loan was used to purchase the house & is in one of these Anti-Deficiency / Non-Recourse States don’t pay it anymore:

    Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, Washington

    If it’s not then you had better pay or come up with a settlement, because they can come after you for the difference they lost (if any?) on the foreclosure. (Kind of like a car repo.) In my experience the severity of recourse is usually based on ability to pay & size of the balance, etc…

    I work for a Real Estate attorney in CA that handles modifications & this is a top 10 question we get. I’ve been telling myself to start a forum, but Steve’s will suffice for now I suppose. Thanks Steve.

    Regards,
    Justin

    Reply

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