Facing a foreclosure from one lender is bad enough. But if you have two mortgages on your home, the headache could be compounded. You will have to deal with two lenders and convince them to take up options that will be favorable to you.

Keep in mind that if the holder of the first mortgage decides to foreclose, then the holder of the second mortgage may be left holding an empty bag and then you have one tremendously angry enemy who may sue you for breach of contract or who may sell your loan for pennies on the dollar to a third party that will unleash that third party to hassle you for some return of his or her investment some time in the future. All of this could lead to a bad credit rating, possible law suit, phone calls from a creditor and even bankruptcy proceedings. It is pretty obvious that you want to do everything you can to avoid all of that.

So how do you get the lender of the second mortgage out of the picture? You give him one of two options. You offer to pay cash that will partially cover your outstanding loan or you sign a note promising to make payments over time. If the lender agrees to any one of the two, you want to be sure you get it in writing. You also want to make certain that the lender informs the credit organizations that you’ve settled on the debt. As a result, you’ve kept your good credit and you’ve avoided time in court and harassing from a creditor. And you’ve also freed yourself up to negotiate with the holder of the first mortgage who is probably contemplating the foreclosure to go with a short sale instead. It may be easier to convince him if the second lender is not in the picture. Because the first lender will get all of what is available in the short sale and will not have to share it with a second lender.

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