I have a question about 2nd mortgages. When I bought my house, I did an 80 / 20 ARM loan upon advise of my real estate broker. I was told in 2 years when the ARM was due to adjust I could refinance them both into 1 fixed rate loan. Well, we all know what happened to house prices. No one will refinance me because the house I bought for $260,000 is only worth $175,000. One loan is $208,000 to one lender and one is $52,000 to the second lender.

Now the payments are going up and up and up.

My questions is... what would happen if I couldn't make the payment on the second mortgage but kept the first current. I know they can foreclose, but would they? Whatever the house sold for, they would have to pay the first mortgage off and the house is not even worth that amount...

I know that I would eventually have to pay it, but when the house prices go back up and all this lending stuff gets figured out, couldn't I just refinance it all back together?

With support for people in your situation (and there are many), being mandated by law, you may have some options for you. I would contact your lenders and see what can be arranged.