Many homeowners took out second mortgages on their homes a few years back in efforts to help improve their cash flow and fight off the chances of missing a mortgage payment. As more homeowners now sink under their mortgages in a dying market, a new program has been developed to help second lien mortgage holders.
To The Rescue
As one of the largest mortgage lenders, Fannie Mae has implemented a program one year ago to help homeowners who are struggling under second mortgages. The Second Lien Modification Program (also called 2MP) allows for homeowners to modify or extinguish their second mortgage liens. Created by the U.S. Treasury, the program is essentially an admission by the lender that repayment is not likely and will clear their interests from the property.
The program works by having the lender file a lien waiver in order to forgive the homeowner of the second mortgage debt. However, not all homeowners will qualify. The borrower must first be in loan modification talks with their original mortgage loan before the lender can consider participating in the 2MP program. It is estimated that 50 percent of eligible homeowners have successfully participated in this program so far, which will continue through the end of 2012.