Deficiency ramification for 2nd home

[deneng]

I am 140k underwater on my 2nd home. Since i am in California and my 2nd home has an original purchase 1st loan only i assumed that i would be protected from any rammifications other then loosing my credit for 7 yrs. and my 2nd home if i allow foreclosure to happen. I have no hardship but i may someday if things change and i have to pay down the principal on my primary house in order to refinance that one again in a couple of years. Good credit. Never missed a payment. I am planning to try to negotiate a loan modification on the basis of if i don't get it modified now that when the arm is due to change in 5 yrs. from 5.5% now to a higher rate and i have negative 140k in equity i will have thrown away a lot of money . 2nd point i would make to countrywide is that the home needs about 20-25k in repairs to make as appealing to buyers as other homes in the neighborhood.
I am new to this forum . I just wanted to get some advice of weather a 2nd home has the same chances of getting modified as a first.

Orig. PP 725000
1st loan 580000 @ 5.5% for 7 yrs. (5 left}

[HopingtoFind]

The protection you're talking about is only for owner occupied homes, since you say this is your 2nd home, I am assuming you're not living there. That said in CA if lender chooses non-judicial foreclosure, which is the likely outcome they can't pursue a deficiency judgement.

As far as trying to modify, lenders have been modifying investment properties, but you have to have a hardship.

Also, keep in mind....since you're payments are interest only and your interest rate is pretty low, in most cases modification can actually make your payment go up, because at that point your payment would consist of interest + principal.

[deneng]

Thank you very much for replying. Actually it is my vacation home so i do live in it just not very much. When i signed my loan papers i signed an second home addemdum form. It is not a rental property. I have to spend at least 2 weeks in it every year.
The hardship is i have to work 60 hrs. a week to pay 2 mortgages. And the additional hardship is for the lender b/c buy the time they sell the house they will be out the 140k in equity loss now and an additional 70k in future equity loss ie: repair needs, future loss of equity, loss of mortgage payment, loss of atty fees and court documentation, payroll time involved in processing, taxes etc. I would not mind if they gave me a 15 or 30 yr fixed P&I loan.
If i walk away i can save 3500 a month including the taxes and insurance.
Thank you very much in answering ! I am curious of my chances of something pos. happening out of this before i spend money on lawyers fees.
I definitly have to change something or i will be in the poor house soon because i will waste 210k over the next 5 years and then be stuck with a loan that i can't refinance because there is no equity and even if i could the intrest rates in 5 years could very well be higher. So plese forgive me if i don't wait untill my financial situation is in ruins before i try to rectify the situation.

[deneng]

Is a vacation home concidered to be an investment property?
I would not mind a loan that is fixed with P&I as long as the payments are the same or lower. At least that way i would be paying down the principal.

[The Professor]

If you look closely at California Code of Civil Procedure Section 580b (see California Code Of Civil Procedure Section 580b - California Attorney Resources - California Laws), the key language is:

... or under a deed of trust or mortgage on a dwelling for
not more than four families given to a lender to secure repayment of
a loan which was in fact used to pay all or part of the purchase
price of that dwelling occupied, entirely or in part, by the
purchaser.

I would suggest that this second home rider may well be an effective admission that your loan qualifies for non-recourse treatment under CCP Section 580b because it is a "dwelling" that was "occupied ... in part, by the purchaser."

However, since there appears only to be a first loan on the property, the likely resolution will be a non-judicial foreclosure, bringing CCP Section 580d into play (see California Code Of Civil Procedure Section 580d - California Attorney Resources - California Laws ), effectively making the loan "non-recourse" when the non-judicial foreclosure is completed. There is probably zero possibility the lender would travel the judicial foreclosure route, given this situation.

Daniel

[deneng]

Well i have pulled the trigger. I paid 3500 dollars to a financial group on both my houses to have them modify the loan. I will least my reasons i have decided tahat might be my best option as explained by the financial group and and i would like to know others response to my choise since i have paid a total of 7000 for the 2 houses.

The financial group will collect all of the neccesary loan documents and send them off to have a loan audit.
The financial group says they always find loan violations in every loan during the audit uually 50 to 100.

After the loan has been audited it is sent to an attorney and he calls up the lender with the violations and presents them and then the loan is modified.
All of this is included in the price and there is a 100 % refund if the loan is not modified. They said there has only been 1 time that a loan was not modified.
They are aware that both houses are about 100k underwater , and that both homes are in areas hit with a 24% price reduction in the past year when the national average is 11%. I have no real immediate hardship ,but have a definite long term hardship because the homes are ARM after so many years of being temp. fixed. One home is a refi. They said it did not matter since it will have violations on it.

Thanks for your response..