Second mortgages became quite common right before the recession and foreclosure crisis hit. Until then, such loans were not considered overly risky by either borrowers or lenders. As mortgage trouble has continued to plague the economy for the last few years many people are not only in debt with their first mortgage, but also their second mortgage.
The Home Affordable Modification Program is part of the government’s initiative to help struggling homeowners resolve mortgage debt through loan modifications. Many people have been able to lower their monthly payments and avoid foreclosure as part of this program. Now that second mortgages have also become problematic, the HAMP has earmarked close to $3 billion of the available $30 billion to help homeowners modify their second liens.
The Second Lien Modification Program (2MP) works in conjunction with HAMP to provide help for sinking second mortgage liens. Homeowners who have had their first mortgage successfully modified through HAMP may now also apply to relieve their second liens through the 2MP. To date, Bank of America has reported 62% of eligible second liens have been modified in 2MP and 71% of eligible Wells Fargo second lien holders have also received help.