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

The Skinny on Countrywide's CEO

If you aren’t familiar with the story on the CEO of Countrywide, it’s okay, but interesting stuff. In addition to all of the other excitement going on in our housing market, Mozilo was slapped with charges for insider trading and civil fraud. Did he do it? I wasn’t there so I have no idea, but I can tell you that he did settle along with two other executives to shell out $67.5 billion dollars to the SEC.


His fine is now the largest ever paid out by a public company in regards to a SEC settlement. The total of $67.5 million will be returned to those who were harmed by the actions. This sort of makes it sound like he is guilty and admitting to something. The insider trading issue has always been about what happens behind the doors in the executive suite. Countrywide was like most lenders in that it was struggling under the weight of bad mortgage investments, and in the heat of the moment many executives cracked. It’s a high pressure industry, from which none of us are exempt. People deserve for their financial planners, investors and mortgage brokers to be honest with them, and under financial pressure it is never easy for anyone.

The best way to conduct business is openly and honestly. Believe me, I have made plenty of mistakes in this life, and I am not here to criticize Mozilo. None of us are exempt from being human, but the difference is when we choose right or wrong, and if we choose to make a change. Then, and only then have we really done our job.

-Mayer Dallal

What's Up With Short Sale Fraud?

It's simply criminal that second lien holders are asking for money outside of the closing in order to make up for some of the money they aren't getting.  Second lien holders usually get a specified amount that is negotiated out of the proceeds with the first mortgage holder.  However, the second lien holder is always last on the list to get the benefits of anything.

However, it doesn't mean that they should prompt actions that are illegal.  RESPA says it's illegal and so do I. I know how hard I work for my clients, and this just outrages me to no end.  The only thing we can do is work towards a better process and hold people accountable.  I know I do!

-Mayer Dallal