PLEASE HELP! What are the consequences of taking out a second mortgage and not paying?

I hear of people who have equity built up in their homes, who take out second mortgages, to get their money out...and then just walk away (with their principle intact). How do they do it? Is their some kind of TRUST that they shift assets to, or corp formed....or are they just taking a chance? How could one protect themselves the best from allowing the bank to collect? THANKSPLEASE HELP! What are the consequences of taking out a second mortgage and not paying?
They are stealing money, they are the thieves here, not victims protecting themselves.





The only way to walk away from a second mortgage would be to declare bankruptcy and give up the house. If they keep the house they keep the mortgage.





A second mortgage is not going to be forgiven like a first, and the banks will use whatever means their state allows to recover their funds. The easiest is wage garnishment, at least they get paid faster.





As judgments get 10% by law, no matter what the interest rate promised was, this loan can get very expensive very quickly if anyone is scummy enough to try to steal it from the bank.PLEASE HELP! What are the consequences of taking out a second mortgage and not paying?
First of all, after the bank debacle of the past 3 years, this will not give you much. The total of mortgages is never as much as the present value of the house. Back in the day, the value of property was rising at unbelievable rates and banks gambled that property would keep increasing. Now, they are very conservative in granting mortgages -- even first mortgages. A second mortgage would leave you with only about 75% of the present value of the house so walking away would cost you. Your house is not worth anywhere near what you believe in their estimation. I took a home equity loan and all they would give is 62% of the value of the property -- I had no mortgage. It was more than enough for what I had to do but I sure can't walk away without taking a financial bath.
That is very unlikely (or illegal). A 2nd mortgage is a non-recourse loan, which means that even if someone forecloses on the property, you still owe any deficiency on the 2nd mortgage. And it is secured by the property, so you cannot sell or transfer the property to anyone with any sense, because it is not free and clear of liens (which are senior to any later deal you made).
uh...in most states, the second lien holder can forclose subject to the first lien. No one gets out intact.
Here is how it works.





You have a first mortage, and then a home equity loan is a second mortgage.





If you don't pay the second mortgage, the second mortgage can force a foreclosure process...they get paid second, but they can force the foreclosure.





Many people foolishly think that once a foreclosure sale happens, that is the end of it...not necessarily true...depends on if the foreclosure sale brings in enough money to pay off both mortgages along with foreclosure fees...if it does, all is well, if it doesn't, then the lender has the OPTION to seek a deficiency judgement against you, which if not paid, is renewable every 10 years for the rest of your life unless you file for bankruptcy..and a bankruptcy court is very unlikely to allow it just because someone got greedy...that is reserved for truly deserving people.





Bad move all around.