Your lien holder in second position is a recourse loan. This means that the lender does have recourse to go after you if you do not pay them. For example, they can remove their interest on the property and go after you personally. The can either take that â€˜debtâ€™ which is a commodity and sell it to a collection agency or a vulture fund. The collector can take that â€˜debtâ€™ obligation to court in effort to get a deficiency judgment against you. With a deficiency judgment that debt obligation is a better commodity and can be sold or traded. Once the court issues a deficiency judgment against you the creditor will then be able to garnish wages, go after assets, place liens on property etc. There is also a statute of limitations that you may want to consider because many folks think that they do not have assets but in 5 years you might and guess who is there waiting for you?
This is the reason that bankruptcy is so common with regard to foreclosure and real estate in general. You might be able to negotiate a settlement with the lender. For example, I owe you $50k how about taking $15k and we call it a day? Good luck!
Hannah Fliegel, FICO pro
The Credit Repair Expert
Is this your primary residence? What other assets are you speaking of? Do you have equity in your home?
I think the information you provided is a little too vague to give an answer. Finance questions like these should go to your cpa or Real Estate attorney. There are several other options besides modification. I have a section on my website that lists all the options homeowners such as yourself have. Take a look at them and find which options you might consider for yourself then call your cpa for advice about your options... Many homeowners feel that modification or foreclosure are the only options but that usually is not the case. If you need a real estate professional in your area, I could help you find one. Or if you have other questions, you can email or call me . My phone number is on my website... Good Luck!