Are Second Mortgages Important?

Sound like a crazy question? Well, inquiring minds want to know, because there has been some contention over what happens in a foreclosure, or even in the case of a home mortgage modification. It is better not to have a second mortgage if you can avoid it, and cash is king, but let’s face it so many people have them; it used to be the thing to do. So, with that being said here is why I am even mentioning it.


The ruling as of now is that the first lien holder takes priority, which is why they are in first place. The second lien holder not so much; they get whatever is left. This is why so many companies have gone sour on the second mortgage programs, requiring hefty credit scores and reserves in order to grant them. I can’t say I blame them; you can only lose so many times before the game changes and you have to be strategic.

However, there are some that want a second mortgage to be wiped out completely before a modification is ever done. Is this right or wrong? The challenge is the settlement form, and being 100% truthful when we fill it out. Should the second lien holder be listed or not? This is something that many people differ on, but if there is a second lien on the home why wouldn’t it be listed? Banks are getting enough gifting of people’s money that it’s time for it to end.

The new settlements will ensure that mortgage servicers are being held to a higher standard, but it’s still unclear as to how this will all go down. A lot of it is really confusing, and once it is done we still may not understand it. The idea is to create guidelines for banks, not to give them special permissions.

Either the second will be completely wiped out so that a modification can be done on the first, or whether or not a second should be listed on a foreclosure. The facts are that the largest banks hold more than half of those second liens out there. What does that tell you?

-Mayer Dallal