Can I negotiate with the second mortgage holder to release the lien on our home and convert our 2nd mortgage into an unsecured debt? 1 Answers as of August 09, 2011My home is underwater. We bought it for 345k and have 2 loans worth about 320k. I had a full market analysis done and we can put our home on the market for 279k. Our first mortgage is 275k and our second is 44k. My question is can I negotiate with the second mortgage holder to release the lien on our home and convert our 2nd mortgage into an unsecured debt? Technically speaking its an unsecured loan as it is. There is no equity in the home to cover the 2nd mortgage. This would allow us to possibly sell our home and satisfy both debts without ruining our credit and having to file foreclosure and bankrupcy.
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If the second has filed a client through the courts with the registry of deeds then it will be an uphill battle for them to agree to release the lien since this is a means for them to obtain some type of enforcement for the money that is owed to them. If you sell the house you must keep in mind that the 1st mortgage gets the pot them everyone else. If there is a lien on the property this can be worked out during the sale.
Answer Applies to: Massachusetts