Q: I own a home free and clear, valued at $210,000 down from about $250,000. I also own a second home, on which I owe $280,000. This home has a current value of $399,000, down from $460,000.

I sell heavy construction equipment on commission and business has been absolutely dead the past 2 years.

My second home mortgage is with one of the big box lenders, and they won’t work with me. The won’t give me a personal contact or tell me who owns the loan or help me work out a plan to stay current.

I was going to suggest a loan restructure with forbearance or low payments for a short period of time to weather the economic downturn. I have lost 73 percent of my normal annual income. I have the second home for sale “by owner” but there’s no one even looking.

In essence I have a gun (equity) with no bullets (cash). Can you help?

A: Some lenders are working to restructure second home loans and others are not. Since you have a lot of equity in both of your homes, you need to do everything you can to continue making those payments. Otherwise, you could lose one or both of your homes and that would be extremely unfortunate.

The Making Home Affordable (HAMP) programs are for primary residences only.
Can you move into your second home as your primary residence? Can you rent out your primary home for a year? That might give you more options, as well as bring in additional income. Can you rent your second home?

Since you have equity in the property, you might qualify for a refinance, if you have the income to support that. It sounds like that might be tough, given your income reduction. Plus, you’d have to have your home off the market for six months to qualify for a refinance.

Can you borrow enough funds to make it work, even temporarily? Can your spouse or partner get a job to help bring in more income temporarily in order to tide you over in these tough times?

If there are no lookers for homes where your second home is located, are there buyers looking where your primary home is? If you sell that home and use the money to pay down or pay off the lender on the second home, you might be able to save that home and the equity you have built up in these properties.

You might want to schedule an appointment with a HUD-certified housing counselor at Credability.org (formerly CCCS of Greater Atlanta) to go over all of these options, and perhaps a few others. And, finally, talk to a good mortgage broker. Make sure he or she is a person you can trust. Based on the amount of equity you have on your properties, you may find a lender that is willing to refinance the loan on your second home. Based on where current interest rates are, you might be able to get your loan payments reduced substantially if the interest rate on your home is much higher.

However, if your interest rate is rather low on your second home loan, the real issue to get you out of the hole you are in is to get the economy going for your income to stabilize at the level that would be more normal for you.

Let me know what happens.