With the value of my home dropping I hope to settle my second mortgage. Has anyone done this? ?

Question

I am in a situation in Michigan (house values are dropping at the rate of gravity!) where my income has dropped severely this year and I am trying to avoid foreclosure/bankruptcy. I have read that it is possible to settle with a second mortgage rather than foreclose but need some ideas on how to go about it. Any suggestions would be great!

I owe about 40k on the loan, would like to settle for 10k. Just pure guess have no idea if they would except the difference.

Thanks for the info, help!

Answer 1

can you work two jobs?

can you sell part of the house to an investor [25% or more]?

can you convert it to an assisted care facility?

Answer 2

highly unlikely you can "settle" your second for 25cents on the dollar. In fact, it is unlikely the lender will negotiate at all unless the house goes into foreclosure and then they will negotiate with the first mortgage holder. Perhaps you can refi for enough to pay off the second, but if you cannot, think about a second job, or even getting a temporary renter/border/roommate to tide you over until you get back on your feet.