Sample Hardship Letter: Principle Reductions: Wipe Out Your 2nd Mortgage with Bankruptcy
Millions of American homeowners are now upside-down on their home mortgage and they are looking for a way out. In some areas like the Inland Empire of California, local homeowners have seen values drop 30-50% and many are making a “business” decision to walk away without ever exploring ways to save their home. If you have decided to walk away from your home and think you have no other option but to bail on your upside-down house, you may want to read this.
Wouldn’t it be much easier to save your home if you only had a first mortgage and no other payments? What if you could effectively wipe out $50,000, $100,000 or $200,000 of what you owe on your mortgage? Also, if the market turns around, think of all the equity you could build back up years from now?
For homeowners who have taken out a second mortgage on their home, facing financial difficulties can be particularly challenging. In most cases, a second mortgage reduces your home equity to a very small margin leaving you vulnerable to the whims of your lenders. In cases where real estate values have declined, as we are seeing in most markets today, there are strategies that you can use to protect yourself from excessive debt. Current bankruptcy law allows judges to approve the loan modifications of the terms of certain debts, namely auto and student loans and second-home mortgages. In the case of second mortgages, if the value of the property falls below the loan amount, debtors potentially could reduce the balance of the loan to equal the current value of the property. Sample Hardship Letter
