Question: Maybe I just didn’t find the answer. BUT, my husband and his daughter own a home in Atlanta which is underwater on an equity credit loan but no first mortgage. He also owns a home in Las Vegas. We just learned that she has not paid property taxes for six years and the house is to be sold for the taxes. If we stop paying the loan doesn’t the bank treat the loan as if it is a first mortgage and just foreclose on it?
Answer: – This is something you don’t want to take lightly… especially if there is equity in the home because you could lose the home for just the back taxes if the home is paid off. If the line of credit is attached to the home, many times the bank will forward money to pay the back taxes so they don’t lose their lien position or interest in the property. Georgia is a tax deed state with a 1 year redemption period. The penalty is 20%, meaning the homeowner has to pay an additional 20% to the investor who buys the deed for the back taxes. If nothing is done within the redemption period, the investor keeps the property. So depending on what the house is worth, if there is any equity, you might want to find a way to pay the property taxes unless your don’t want the property.