Can a homeowner lose their house if they can’t pay their 2nd mortgage?

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I can pay my first, but my second is at 10.50% (purchase 2nd heloc – took it out same time took out the 1st when purchasing the house so it’s not a loan I got later to use as a cash for home improvement or whatever).

My credit is poor so I can’t qualify to refi. I don’t have the $ 1100/month to pay for the 2nd any more due to loss of income, with a balance of $ 109,800. Lender is BofA, and this is in CA. Any idea what will happen? Will they put me in foreclosure? It is an investment property so I don’t think I can qualify for any of the modification programs. Should I might as well stop paying the 1st too if not paying the 2nd results in foreclosure?
both the 1st and 2nd are with the same lender. Balance on first is 850K, 2nd is about 110K, and the house is worth about 800K today (was purchased for 1.2mil)

  1. Reply
    Steve D
    May 3, 2011 at 6:54 am

    Yes, the second can foreclose since they also have a lien on the property. Since it is an investment property, if both parties do not recoup their balances, they can come after you under recourse laws for payment of the balance.

  2. Reply
    May 3, 2011 at 7:35 am

    Sorry about your situation. A lot of people got caught in this bad lending practice and you apparently got put into a loan that you couldn’t afford. Yes the lender can call the loan even if it is a second mortgage. Try to negotiate with the lender or if at all possible sell the property. I don’t like to tell anyone to quit paying their mortgage because that results in some long lasting pain.

  3. Reply
    May 3, 2011 at 7:39 am

    the rule is, the 2nd note creditor [owner of the note] MUST pay off the first mortgage IF
    they wish to keep any security. IF they do not, their debt is erased! So, go to court
    when the foreclosure is to take place.

    stop paying the first only as a strategy……not good for ethics but it is a good strategy.

    Did you seek any partners?..
    or which city. Maybe you can sell part of the prop…….25-50% of it.

    think creatively; in 3-8 yrs, the value of the prop will be back to where it was 3 yrs ago.

    [what would happen if you rented out the house you are now in and
    moved into the house that is UNDER water? then you could get a new
    first at 4.5%]

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