- 1). Make copies of the paperwork that you'll use to convince the servicer of your second mortgage loan that your gross monthly income has declined and your monthly debt obligations have risen, making it impossible for you to come up with your second mortgage payments. This paperwork includes copies of your two most recent paychecks (if you are still receiving them), your most recent federal income tax return, credit card statements and other loan statements.
- 2). Call the servicer of your second mortgage loan. Explain that your employer has recently cut your weekly hours, that you've lost your job or you've suffered a serious illness or injury that is keeping you from working. Tell your servicer that this financial hardship has made it impossible to make your payments on your second mortgage loan. Ask for a reduction in the loan's principal -- which would lower your monthly payments -- or an immediate payoff of your loan, which would erase the loan payment completely.
- 3). Compose a financial hardship letter. Basically, this means putting into writing the reasons why you can't afford the payment on your second mortgage loan. Also include in the letter that you are seeking to have the principal balance of your loan reduced or your entire loan paid off.
- 4). Send your servicer the paperwork you compiled in Step 1 and your financial hardship letter. Your lender will study this paperwork to determine if you qualify for either a payoff or a reduction.
- 5). Agree to the solution suggested by your loan servicer if it determines that your financial hardship does make it impossible for you to make your payments. Only in the rarest and most severe of financial hardships will your servicer approve an immediate payoff of your second loan. More commonly, your lender may reduce the principal balance of your loan, lower your loan's interest rate or lengthen the life of your loan. All of these options will lower your monthly payment.
Source...