How flexible are mortgage lenders on second properties?
September 24, 2009 6:09 PM   Subscribe

How flexible is a mortgage lender likely to be on the mortgage for a second home that looks like an investment property?

My wife and I live in a home that we purchased in a partnership with my father in law. Since the economy has tanked and taken housing values with it, we are upside down in the loan and would like to negotiate a lower payment until the economy picks back up.

Some details:
The mortgage lists my father in law as the primary owner. This property is the second home he owns but we are supposed to be making the mortgage payments. I was laid off in June and have been working on piecing together enough work to get us back on our feet.

So, how likely is the mortgage lender going to want to help us out in lowering our payments?
posted by anonymous to Work & Money (1 answer total)
It's not clear to me whether you and your wife are included on the mortgage agreement or not.

In general, it's going to be more difficult to get any kind of hardship relief where there are multiple owners and/or borrowers involved. Does the mortgage document in any way indemnify your father-in-law from liability for payment of the mortgage.

From a lender's point of view it's a PITA to foreclose on a property which has multiple owners. On the other hand, multiple people on the mortgage document usually gives the lender multiple people from whom payment can be sought. Were I the person considering your request, I'd probably be less inclined to look for ways to lower your payments than I would be to seek payment from anyone else who is jointly and severally liable with you - I'd rather have you owe them money than increase my institution's exposure with you.

Do look into whether you qualify for any hardship relief from the lender - this may not apply in your situation if any one of the owners or all of you together would be able to maintain the current payments.

You don't mention how ownership of the title is split or the amount of the mortgage. If you and your wife are minor stake holders, it might be a better option for your father-in-law to buy you out while prices are low and take full ownership of the property and responsibility for the mortgage.

Talk to a qualified financial advisor - you really can't afford not to get expert advice about this situation.
posted by Lolie at 7:55 PM on September 24, 2009

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