2nd Mortgage Loan Modification

Many people know that it is possible to get a loan modification under the Home Affordable Modification Program (HAMP) but what many people don't know is that it is also possible to get a 2nd mortgage modified and not just a 1st mortgage.

Some of the biggest lenders in the country who hold many of the 2nd mortgages have started sending letters to 2nd mortgage holders who are struggling with their payments as to what options they have. Just a few of the lenders who have started notifying their customers include Citigroup, JPMorgan, Chase and Wells Fargo.

The government's second-mortgage program, called 2MP, offers incentives to borrowers, mortgage servicers and investors to modify second mortgages. According to USA Today, here are some of the highlights of how it works:

• When a borrower's first loan is modified under the federal program, known as the Home Affordable Modification Program (HAMP), and the servicer of the second loan is also a participant in HAMP, that servicer must offer to modify the borrower's second lien.
• Servicers can stretch the term of the second loan to 40 years.
• Second-lien lenders must defer the payment of the same proportion of principal that was deferred or forgiven on the first loan.

In order to be eligible for a modification, the 2nd mortgage must have taken out on or before Jan. 1, 2009, to be eligible for the program and don't expect it to be an easy process. Because there are multiple parties involved (including the 1st lien holder) it is often more difficult than modifying a first mortgage. That said, the government estimates that the program will help up to 1.5 million homeowners who cannot afford their mortgage payments and if it helps this many people, I think the program will be considered a success.

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