Question: We currently have a loan for $244K and a second home equity line for $79K. Our condo is worth $150K and we owe $320K, but we don’t know wether in California we are liable for that 2nd loan since it’s a home equity line? I don’t want to end up owing Bank of America $79K when I’m going to loose my property and ruin my credit. What should I do? I’m still current with payments but I’m struggling and I can’t do a loan modification I tried.
Answer: – I would keep trying to work with your bank on the loan modification. There are several attorney’s out there that “GUARANTEE” there work when modifying loans so you may want to check into that as well. It’s hard to believe sometimes, but they really do want you to stay, the challenge has always been jumping through all their hoops which an attorney can assist you with. Also you have a better chance since they know certain things to say that will increase your chances of a successful loan modification.
If a loan modification still doesn’t work, then you could try to do a short sale. Unfortunately with a short sale you would have to sell your home, but if you can’t make the mortgage, then you’re going to move anyway so might as well be a short sale then foreclosure on your credit. Regardless if you do a short sale or foreclosure, the bank still has the right to come after you for the deficient amount, but very rarely does this ever happen in California because of the laws there. And if you have an seasoned agent or investor working with you on the short sale, they can actually eliminate the possibility of a deficiency judgment altogether. So really all you have to be concerned with is a 1099 from the bank. They will write off the loan as a loss and 1099 you for the amount they lost. Whatever you do, don’t ever give up.