Should we or shouldn't we?

[lilune]

I was online looking at info about whether or not it would be in our best interest to use a company to negotiate down our credit card debt and stumbled onto this site. I feel like I have this huge heavy cloud hanging over my head with our 2nd mortgage and we really have no idea how to get out from under it. Now I see that there may possibly be a solution. Before I begin I want to apologize if I'm asking something that has been answered before. I've been reading nonstop and I think at this point I've read so much I'm even more confused.

Here are the basics:
1st mortgage: $85,000 with GMAC (we just refinanced this to a new 15 year mortgage to cut the payments by about $700 a month. We tried to combine both loans to refinance but we owe too much/value too low)
2nd mortgage: $191,000 with SunTrust (interest only/adjustable - 3.5%. We have been paying on this FOREVER and it has barely moved)
Home value: according to zillow our home is worth $232,000.

We live in Florida.

Please let me know if you need more information and thank you in advance for any advice.

[lilune]

I'm not sure if I made it clear in my posting. I'm questioning whether or not we should pursue trying to get a lower price on our 2nd mortgage.

[Cat Damiano]

I am not sure how you would go about doing that as there isn't a program that is able to reduce the principal balance on a second lien. There is only modification programs that work on making the payment itself more affordable, but the principal balance will still be there.

[lilune]

I think I've worded this very badly. I read the strategy for settling your 2nd loan and wondered if I was in a position to do this without losing my home.

[Cat Damiano]

Due to the fact that the first lien is much lower than the second lien and the value of the property makes them not significantly underwater, the second lien would stand to gain more by foreclosing then settling in this scenario.