@djc225 wrote:
I will be looking for a new FHA mortgage in the next year or so. I just finished a modification on my current mortgage, the second mortgage on this house though was charged off. They have given me the opportunity to settle. I'm trying to decide if settling is the correct path for me, knowing that i'm hoping to get another mortgage in the next 12-18 months.
I spoke with one lender who told me that a settlement of a second morrgage is considered similar to a foreclosure and that would disqualify me for a new mortgage. Is this standard across the board or is this lender just being conservative?
They are offering a substantial settlement, but i dont want to take it if it will kill my chances for a future mortgage. Not sure what other options i have....
interested in hearing everyone's thoughts.
djc225, once the second mortgage became 120 days late, it is treated the same as a foreclosure anyway.
Some lenders will finance the borrower again - as quickly as one day out of foreclosure. You might not like the terms given, but with time between the f/c and the new mortgage you will eventually get terms you can live with on the new loan.
From your other post you are keeping this home/property and you are planning to buy another one soon.
You will have to take care of the outstanding debt (the second mortgage) so the clock can start ticking on the time necessary to get the new mortgage for the new place. Plus, even without the plan to finance another property, you want to take care of the existing second mortgage lien just to stop the interest and penalties from accruing. Once you settle on that second and get the release of the second from your existing property - then the lien can't be re-inserted. It is taken care of permanently. If you leave it for years, then you will have much more to pay.
Edit: your second mortgage lien is blocking any access to future equity.
