Ist Mortgage Loan Modifications May Hit Road Block When Second Mortgages, HELOCs Are Involved

Dow Jones Newswires reports:

• Abu Hafizuddin inthe Village of Huntley, Ill., has applied to get his mortgage modified after missing payments. But more flexible terms may still not save him from foreclosure. The problem is that he's behind on another set of payments tied to his property: his home-equity loan.

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• Home-equity loans are a stumbling block in efforts to stall or prevent foreclosures, a crucial step in halting the downward spiral of the financial crisis. Loan modifications to prevent foreclosure require the cooperation of owners of the loans. Investors in home equity loans can have conflicting interests from those that hold the first or primary mortgage, so getting both sets of investors to agree on modifying loans is a challenge.

For more, see Home-Equity Loans Are Stumbling Block In Mtge Modifications.

See also:

• The Boston Globe: Mortgage practice hindering recovery (Piggyback loans pose big problem for housing sector),
• Bloomberg News: ‘Piggyback’ Mortgages May Cut Modifications, Fed Says.