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I have a first and 2nd mortgage on my condo. The First is a 5% adjustable tied to the Treasury index. It is due to adjust in October and the interest rate & payment should go down. The 2nd is a 7 1/2 % balloon payment. $ 80,000 due in October. I have asked to settle the 2nd at $ 30,000 and the bank said no they want to modify. However they want to modify at a higher payment which I can not afford. I am considering defaulting on the 2nd when it comes due in October but continue to pay the first mortgage. What are the possible consequences? Can the property go in forclosure if I am paying the first mortgage. The same bank has both loans.

3 Thoughts on What are the consequences of defaulting on a 2nd mortgage but not the first?
  1. Anji
    November 8, 2012 at 4:44 pm

    I am no expert but I would think if you default on either loan then you can be repossessed by the bank.

    Why not approach them and explain your circumstances perhaps there is a way round your problem, just maybe the payments could be lowered but the length of the loan adjusted accordingly. But, if I was you I would not deliberately default on either of the loans, this would be disastrous.

  2. Judy
    November 8, 2012 at 4:57 pm

    Yes they can foreclose if it’s a recourse loan.

  3. Landlord
    November 8, 2012 at 5:08 pm

    Yes, of course they will foreclose. You can’t keep the 80 grand and the house.

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