First things first... you need an attorney. But, it's likely you can settle the 2nd for a fraction of what's owed and clear it out. That appears to be common enough nowadays, as in most cases the 2nd gets nothing otherwise. There may well be tax implications on a unpaid recourse second mortgage debt... not entirely sure.
I would suspect you could accumulate enough cash during the "rent free" time of the walk-away to cover associated expenses from defaulting on the second. But get a lawyer, as every owner's circumstances and every mortgage is different.... more
If CITI is your second lender then please pray a lot as I am praying for the fate of one of my sellers. They are abnoxious and uncaring. I think they really are under a lot of water so they are not letting me close on my transactions for the second offer I have negotiated on this loan. Most seconds take $3000 from the first lenders, release the lien and call it a day but not CITI. Even though I am getting Citi $8000 on a $70,000 second mortgage, they want $15,000 even if I or anybody does not take anything home, they don't want to listen. The worst thing is they don't even care. The worst thing is that in NJ, they cannot recover anything from the seller, if the seller files for bankruptcy.... more
Please, I urge you to look for an agent very carefully. This agent if is not somebody who cares, can take you to the door of foreclosure and you would'nt even know what happened. There are some agents who are working this transactions in large volumes and may not give you their individual attention and there are some who are too big to take care of these measly shortsales. You want an agent with the right mix of experience and care. Many agents out there who are not detailed enough to handle this complication especially my friend if you have multiple mortgages with multiple lenders. If that is the case, the task is extremely daunting. Be careful. Good Luck.... more