10-17-12: Latest word on the street, 2nd mortgages are back in action and their write off rates are http://www.washingtonpost.com/realestate/second-mortgages-rebound-as-banks-confidence-in-housing-market-seems-to-grow/2012/10/11/4e5f3de8-1164-11e2-ba83-a7a396e6b2a7_story.html
I first reported this in an earlier blog post – I haven’t found any update data, but still found it interesting.
More than 1/3 of all loans in the foreclosure process now have other junior liens (2nd mortgages).
Some lenders of 2nd mortgages are slow to cut deal because the loans are often current. But when they do cut deals, they ask the borrower to agree to pay it back later – which still make the debt repayable.
Note: Isn’t it peculiar that many of the first lienholders agree to forgive debt and the debt is not considered income (at least not until 2013 or thereabouts) for Federal Income Tax purposes, yet 2nd lienholders (with alot smaller balances) are trying to ensure they get paid back on a debt that was pretty risky to begin with?
Over 40% of the $1 trillion in outstanding 2nd mortgages are held by the nation’s largest 4 banks: Bank of America; Wells Fargo; J.P. Morgan Chase, and Citigroup.
Note: I was disappointed that the author didn’t explore or expose more to the 2nd mortgages than meets the eye – For instance, some 2nd lienholders may be holding out or more in private mortgage insurance payoff than what they would get as a payoff – but that’s just a guess….;)
Souce: WSJ, 11-27/28-2010, Page A5
References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.