Equity Line of Credit and Foreclosure

September 30th, 2008 by Jarad

Question: I live in California; if my home goes to forclosure and I have a an equity line of credit, will the line of credit, $150,000 also be wiped out? The line of credit is secured by the property.

Answer: Yes, if the line of credit is secured by the property in foreclosure. Most homeowners have a home equity line of credit that takes a 2nd lien position on their home. If the home is foreclosed on by the 1st lien holder and no one bids at the auction, the 2nd is wiped out, and the bank has the option of issuing a 1099 to the homeowner or filing a deficiency judgment against them. In most deed states, including California, it’s very uncommon for the lender to file a deficiency judgment. If you know what you are doing, there are things you can do to prevent a deficiency judgment altogether so it’s never an issue.

Tags: , , , , ,

144 Responses to “Equity Line of Credit and Foreclosure”

  1. Miri Lester Says:

    Question If this is true, why did I just get a letter from my lender stating that they want payment in full in 10 days or they will come after me to recover the money from the line or credit and I will have to pay their and my attorney fees? I am in the same situation as the person who posted the original questions. I live in CA and my home is in foreclosure and I have a 260k line of credit secured by the property. My 1st mortgage and the line of credit are with Washington mutual. Was legislation passed recently to protect homeowners from lenders being able to come after them on equity lines?
    I look forward your response.
    Thank you

  2. Jarad Says:

    Answer: If the first lien holder forecloses on the property and no one else bids or the 2nd doesn’t protect their position by bidding, then all junior lien holders are wiped out. However, just because they are wiped out doesn’t mean they go away. They have 3 options at this point. They can do nothing, they can 1099 you for the loss, or they can file a deficiency judgment against you and request you pay them the amount they lost. It doesn’t matter what state you live in, all lenders can file a judgment against you if they want. Typically they do so more in mortgage states. Depending on the size of your 2nd mortgage, most homeowners are forced to file bankruptcy to eliminate the judgment if the lender decides to sue them. But more than likely you have nothing to worry about. Especially California. California is one of those states where it’s extremely rare they file judgments. I’ve even heard they can’t, but I don’t think that’s completely true.

  3. L. Colby Says:

    I live in california, I am living in my mothers house and was paying her mortgage..She does not live here..Recently the intrest rate has gone up every 3-4 months…bad loan on my mothers house…I took a line of equity out on the house 100,000.00 in order to help with repairing it in order to make it liveable..the house was in bad shape…Now I am getting transfered and am not able to pay the mortgage anymore….My mother has since got a new house and will be unable to pay it either…My question is if she short sales it or forcloses on it will the line of equity be washed….both loans are through the same lender just in different names….Help!!!

  4. jarads Says:

    If she tries to do a short sale on the property, the investor or buyer will discount the 2nd mortgage, pay off the loan and she will avoid a foreclosure on her credit. If the home is foreclosed on, the same thing will happen, but now she will have a foreclosure on her credit. In both cases, the lender may file a deficiency judgment against her for the 100,000 loss or they will 1099 her for the 100,000. Since 1099 is better than a deficiency judgment, a good short sale investor knows how to ask for the 1099 so you don’t have to worry about coming up with $100k. And once she is 1099, a good accountant may be able to help counteract that income with a particular form the IRS uses. So a short sale, by far, is the best way to go and yes in both cases, the lines of credit are either wiped out or paid off.

  5. J Drone Says:

    We owned a property in Virginia that we foreclosed. We had a line of creadit attached to the property. Are we liable to pay the line of credit? We have been receiving notices from the insurance company, and the mortgage company stating we owe the balance of the HELOC.

  6. Jarad Says:

    J Drone: Yes, you are always responsible to pay back the loans. However, if you don’t pay them back, they will either 1099 you and count the loss as income to you or they will file a judgment against you for the amount they lost. Most often it’s the 1099.

  7. Sally Says:

    Is it true that if you foreclose on the a home equity line first and they are paid off the bank can’t come after you for the first??

  8. Jarad Says:

    If the bank is “paid in full” they can’t come after you because the loan is “paid in full”. If any loans are not satisfied or paid in full, they can try to collect the debt that is owed to them.

  9. Donna Says:

    I have been laid off and have a first and 2nd (equity line of credit for 250K). With unemployment, i am able to cover the first, however, not the 2nd (wamu), can they foreclose on my house? since I am uanble to pay, what could happen? when I signed up for it they told me it was like a credit card. Please help!

  10. Jarad Says:

    Yes, wamu can foreclose, but since they are in 2nd position it may take them awhile to do so, especially if your home is not worth what it use to be. You may want to see if can modify the loan by asking wamu to lower the interest rate temporarily until your financial situation changes.

  11. Jose Says:

    Hello! I read the previous posts and they are great information. My question to you is what happens if you do get 1099??. I lost my home and now Bank of America bought up Countrywide and shows a HELOC that i owe them for 170k. from what i read it seems i should just let it ride?? i don’t understand. Please assist, Thank You

  12. Jarad Says:

    Depending on where you live, if you already lost your home to foreclosure you may still have a redemption period or waiting period in which you can redeem the property. Once the redemption period is over, the bank will decide to do one of three things. They will either do nothing (unfortunately we all wish this would happen but never does) or they will 1099 you for the difference and count it as income to you. So if they wrote off 170k, then you will have to pay taxes on 170k. Depending on your tax bracket or how many write offs you have, it could be anywhere from 10% up to 30%…Ouch! The IRS does provide a form that allows you to negate the whole amount if you qualify. I would talk to your accountant and see if you qualify to use form 982. The last thing they can do is file or sue for deficiency. Meaning they come after you for the full amount. When this happens most homeowners have no choice but to file bankruptcy which will get rid of it once and for all. Now depending on your states foreclosure procedures, your bank may be more or less inclined to choose one of these options over another.

  13. brian Says:

    I am considering foreclosure, I put down 103K down on my home with a purchase price of 326K, todays market value is 165K…thank you wall street, if i do get 1099’d by the bank after forclosure can’t I write off the loss of my down payment to negate this 1099? Also 5 months ago i took out my equity line of 80K and deposited in a relatives bank account how long should i wait to go into foreclosure so it does not appear as fraud.? Michigan resident

  14. Jarad Says:

    You should be able to write off the loss over time…talk to your accountant on that. Also if the bank does 1099 you, because it was your personal residence, you may be able to negate that anyway. Again talk to your accountant. What you don’t want to happen is for the bank to file a judgment against you for the 80k. So you may have to work out a settlement with them to satisfy that loan or take the risk of a judgment being filed.

  15. Mike Says:

    So I am looking at buying my grandparents house in Florida. They owe $50,000 on there mortgage and took out a line of credit ($150,000) through a different bank. Can I buy the first mortgage and get the house or will the line of credit not allow it to be sold (will they allow it and go after my grandparents)? My grandparents are already preparing to file for bankruptcy.

  16. Jarad Says:


    Depending on what the property is worth, you’d be better off trying to negotiate some pay off or short sale with the 2nd. More than likely they will come after your Grandparents with a judgment which is sounds like will force them into bankruptcy. If you can negotiate with the 2nd some sort of payoff for 5%- 10% of the loan, it would save your Grandparents the headache of foreclosure and bankruptcy on their credit. Then if they are 1099’d you should be able to get that negated as well.

  17. melanie hawkins Says:

    I live in New York and have a 1st mortgage at Wells Fargo that has recently been approved for modification and a home equity line of credit from Bank of America that is currently in default. the payments have not been made in over a year and i recieved a letter from their attorney stating that they were going to foreclose on my property if i did not bring the back payments up to date. they wanted a lumpsum to bring the account within 6mths of delinquency. needless to say i did not have the lumpsum and still dont since each month they have been tacking on more and more fees bringing the amount further and further out of reach.
    I recently contacted my first mortgage bank and requested my modification closing docs and they asked if i was selling my home since there was a request for a “payoff letter” on my home. I found out the it was Bank of America attorneys that was requesting the payoff.
    Question: can BoA foreclose? (The property was appraised recently for more than whats owed on the first and second). Also why did their attorney request a payoff letter? are they getting ready to send me foreclosure papers? Are they able to force the first into foreclosing as well?

  18. Jarad Says:

    The 2nd can foreclose on your home. It sounds like you are making payments or at least some payments to the first which is why they are not initiating foreclosure. Bank of America probably requested a payoff letter so they know how much you owe so they can begin the foreclosure process themselves. One option is to work out a modification or even a pay off with them if you want to keep your property. See if you can get them to accept less than what is owed on the property. What ever you do, you need to deal with the 2nd because they can and will foreclose.

  19. sharon Says:

    “Hello I live in California and I have a 1st and 2nd mortgage on my home with wells fargo I, also have a heloc with etrade bank I am on a foreberance with my 1st and 2nd lender that they just gave me but, my heloc they are auctioning my house they claim they have 1st position and will sale lmy house on the 7th of January I, contacted my primary lender and they told me that they are in 3rd place but, the heloc lender say’s they are in 1st place because there deed was recorded 1st by several months can my heloc take my house and since what I was told my primary lender who I have the 1st and 2nd with they tell me they have to go through them and pay them off first but, for me to keep my agreement with them what am I to do I, am scared please advise

  20. Jarad Says:

    You need to pull a title report and find out who is in first position. Regardless if your HELOC says they are in first position or third position, they can foreclose on your home. However, if the title report shows they are in third position, they may be more inclined to postpone the auction because they will realize they won’t be getting a dime and have an negative asset on hand. They may be more willing to work out some sort of deal with you, maybe even a long term pay off plan. If the title report does show your HELOC in first position (which does not make sense at all) then they would be more inclined to foreclose because everyone else gets wiped out and their may be a possibility of a buyer. It would be important to find out for sure because knowing which bank has seniority would give you leverage to negotiate something with the junior lien holders.

  21. Dominick Says:

    I live in New Jersey, and I have a first mortgage with Coldwell Banker and a HELOC with Wells Fargo. I am behind on the first mortgage and facing foreclosure on 250,000. My house would probably sell for 200-225K. My HELOC is for 60,000. I am current with them, but I want to know what would happen to the HELOC. Would I continue paying what I am paying now, would it increase dramatically or would they require a payoff? Thanks.

  22. Jarad Says:

    Well, more than likely it will be wiped out at the foreclosure auction. Although it gets wiped it, you are still responsible to pay the debt. You can continue to make payments to them until the debt is paid off or you can make arrangements to pay them a certain amount each month. But most homeowners work out some sort of payoff or settlement with the second for a fraction of the loan amount. This is usually obtained through a short sale transaction. If a short sale is not accepted and the second is wiped out, they will either 1099 you for the amount they lost or they will file a judgment against you in which you would be responsible to pay the full amount back. Most people in this situation have to file bankruptcy because they are not able to pay the debt back. So if you plan on letting the house go, you might as well try everything you can to avoid a judgment against you. You need to do all you can to get a short sale approved and negotiate a payoff with the first and second.

  23. k Says:

    What are my chances of settling a HELOC with etrade?

  24. Jarad Says:

    I would say your chances are very good right now. All lenders in 2nd position are very motivated right now to settle debts because home values have dipped so much and there is no equity in the property anymore…so they would rather have some money now rather than go through the expensive process of foreclosure and end up with nothing.

  25. Aracely Says:

    I brought my second home in 2008, paid my mortgage for my primary as well as my secound home. I moved out of my first home into my secound in 2009 and tried renting my secound home but never was able to I tried selling it but ended up getting it forclosed wil I be sent a 1099a or 1099c? I live in ca

  26. Elizabeth Says:

    Also live in California. We bought a house in 2004 for $470K. We put %5 down, 1st was 80% of purchase price and the remaining 15% was in the form of a HELOC. We never touched the HELOC for anything after the purchase. The bank foreclosed and the property just sold at auction a week ago for $315K. Is the HELOC wiped out even though the bank did not even get enough to cover the 1st?

  27. Peter Says:

    I have a home in Florida that is about to be foreclosed. 1st mortgage is with Chase $138,000 second was with WaMu which is now Chase $22,000 3rd is with previous owner $17,000. I had a cash buyer for a short sale but was declined because the previous owner would not sign off on it because they were not going to get anything. My question is what is going to happen to the second and third loans or more importantly to me. What time line am I looking at and is there anything I can do to prevent any bad stuff happening to me.

    Thank you

  28. Gabrielle Says:

    I’m trying to purchase a short sale with three liens. A first at 600,000, a second at 80,000 and a third HELOC at 117. The bank holding the first two loans accepted the offer, which is coincidently exactly what the house appraised for. The first and second have been zero’d out and forgiven. The bank holding the third in line HELOC, which I’m not giving the name of (although I should because they’re very inconsiderate) are holding the short sale hostage even though they are getting ten percent of the HELOC balance. We have offered 10,000,in addition to what the first bank is passing through (5,000). I thought they would rather finish a short sale than go into foreclosure. Nothing makes sense. Recently we offered them 15,000 on top of what the first bank is passing thru, bringing it 5,000 beyond what the house is appraising for, which means it’s not in the loan it’s out of my pocket. The retailer informed me the bank negotiator said if we give the bank 22,000 they’ll sign off today on the loan, otherwise, we’ll just have to wait. This is almost extortion, because it brings the price well over the appraisal. Is this all legal?

  29. Jarad Says:

    Gabrielle, these days a lot of things don’t make any sense. Here you are offering a lender, in 3rd position might I add, some money to satisfy a loan and they know full well that if it goes to foreclosure, they will get nothing…it makes no sense unless they feel very strongly that they will get MORE money when it forecloses. But it’s a little unrealistic these days. You have a couple options, one of which I don’t really encourage, unless there is no other option. That would be to tell the lender you just want them to release the lien so they can pursue the homeowner for the difference. See if they satisfy the loan, they give up that right…they can only 1099 the homeowner. When they release the lien the homeowner gets the short end of the stick if they decide to sue. However, if it forecloses, the 3rd can pursue them anyway and sue the homeowner for the deficient amount, so in this case you might try that if all else fails. The other option is to see if the agent will throw in some of his/her commission…how bad do they want to close this deal? I don’t know how close the auction is, but sometimes time plays an important role in creating urgency with lenders.

  30. AA Says:

    Can someone help? I just found that my lender foreclosed my condo and is now billing me for the line equity of $48,000. Is this normal? Also, i’m still getting property tax notices and HOA bills.

  31. Jarad Says:

    It depends on the lender…some will 1099 the homeowner, others will file a judgment. It’s normal to receive one of these. You will keep getting property tax notices until the county updates their records and you are no longer the owner on record.

  32. AA Says:

    Oh, and i’m also from California. Thanks.

  33. TJ Says:

    Hello Jarad!

    I live in CA..my investment home is going into forclosure but hasn’t been sold yet. We took out an equity line of 125,000. The equity line bank (wells fargo) charge-off the account. Can they sue us? and if they do…do we have to repay the equity? They also withdrew money out from my checking accountfrom wells fargo…is that legal? Can they withdraw money from my other banks or even my wages? Please help!!

  34. Debbie Says:

    I live in Arizona. My home was foreclosed by the 1st lien holder and went to auction. There was no outside bidder and the lender, Fannie Mae ended up with our home. We fought to get the home back and a relative purchased it from Fannie Mae and this relative is letting us pay them back. The agreement is to put our home in the name of our relative. BUT, We just got the quit cliam deed from Fannie Mae and it has our name on it. The problem is that we have a HELOC that was a line used to pay off debt (such as our automobiles). We have been paying our HELOC and have not had any communication either way about the foreclosure that took place. Do we have to record the quit claim in our name before we put it in our relatives name? When we do so will the HELOC automatically be re-attached? Is there any chance that this relative would have to pay off the HELOC before we could quit claim the property to our relative? Is there any way of quit claiming directly to the relative without putting it in our name first, even though my name is on the quit claim that hasn’t been recorded yet?

  35. LS Says:

    Hi Jarad,

    I live in California, we have a home that has an equity loan of about 20K. Both the mortgage and the equity loan were taken from Wamu now Chase. We are in the process of short selling the home, however the equity loan division approved the short sale but says they may pursue us for the amount we owe. So is it a better option if we foreclose instead? If the equity loan division forecloses our home, does this mean the mortgage division can pursue us for the money we owe? I had heard that if it is the same bank then neither can pursue us; however the two divisions say they are not the same thing. Could this be possible? We are trying to figure out whether short sale or foreclosure is a better option in terms of freeing from debt.

  36. LS Says:

    Sorry, I meant 200K, not 20. Thanks in advance for your help here.

  37. hurting Says:

    Hi, so i co-own a condo in N.C. the co-owner has taken out a home equity loan in her name only which i signed off on. she has stopped making payments to either loan. i have been advised to short sale the property but am wondering if it will effect my credit since the short sale will essentially be on her equity loan. please advise…

  38. David Says:

    Hi Jarad,

    Sorry to bother you, but as I’m only a recent law school graduate, I have no idea where to start in helping my parents out. It would be awesome if I could get your two cents on our situation and what steps would be good to take. I only found out about my parents’ situation after moving back home to study for the Bar. And now I feel like I’m such an awful son.

    Up until October 2008, my parents were well off and able to make timely payments on their $350K~ home mortgage (w/ WAMU – now Chase), $200K line of credit w/ CitiBank and $200K line of credit with Bank of America. However, due to bad investments and actual fraud by a now dissolved company, my parents lost everything and haven’t been able to make any payments since October 2008. Somehow, my parents have been able to continually push off the foreclosure sale dates because of some sort of litigation action against Chase concerning illegal interest charges over the past couple of years. It was a plan suggested by my an attorney that my parents hired. In any case, that action ended in favor for Chase. Currently, my parents are in the loan modification process with Chase.

    However, I’m wondering if there’s anything else that I could do. Because we literally have no other assets or money, we are penniless and broke. Do you think Chase, Bank of America and CitiBank would be willing to negotiate with me in forgiving a good majority of my parents’ debt obligations, perhaps even up to 90%? Otherwise, if my parents did choose to file for bankruptcy, these lenders wouldn’t be able to get anything from my parents. What do you think? Do I need to be a lawyer to do this? Also, if I were to do this, would I make a visit to the local branches of the lenders? Call the respective divisions? Or write letters?

    Sorry for the long inquiry. I’ve just never done this kind of work before and I really would like to help out my parents.

    Thanks Jarad. I hope to hear from you then.

  39. Jarad Says:

    It’s unfortunate… I hear about these cases almost everyday about bad investments, scams, fraud, you name it. And it’s sad this happens to good people. Yes there is always something you can do, whether or not the lenders cooperate is really up to them. You can try to negotiate with the 2 lenders who have the line’s of credit and see if they would be willing to accept a payoff. However, even if they were to accept a payoff of wiping out 90% of the loan balance, you would need to still come up with $40K. From what I understand you don’t have that. At this point, you might want to talk to your parents accountant or bankruptcy attorney. Sometimes the best option is to start over and that’s what bankruptcy is for.

  40. tony Says:

    My property is in Iowa and I have the same question. My first is with Wells and the HELOC is with US Bank. If Wells forecloses does US Bank either 1099 or file a judgement? Do they usually 1099? We have a short sale offer but US Bank wants me to agree to pay for the deficiency that I cannot.

  41. Jarad Says:

    Yes they will either 1099 or file a judgment. They almost always 1099. Of course US Bank wants you to pay the deficient amount… that doesn’t mean you have the ability to pay it. See if they will settle for something A LOT less. I’m talking pennies on the dollar. If you are deficient $50K, offer to pay them $3 -$5K. If you don’t have it, then there is not much you can do. More than likely they will just 1099 you anyway.

  42. aug Says:

    My condo (in California) foreclosed last December and I received a 1099 from my bank which I was able to write off on my taxes. I have an existing HELOC with Chase of $36K which was tied to the condo, and now they are asking for their money. Do I have to pay it back? Other than filing for bankruptcy is there another way around it?

  43. Jarad Says:

    Yes, you can settle with them. Tell them you’ll pay them $2000 to satisfy the debt. Usually they will even arrange a payoff over several months if you can’t afford a lump sum. Try to work with them as best as you can.

  44. aug Says:

    Thank you for the advice. Should I work with the recovery department, or would you suggest I try another? The recovery department can be a pain since they are getting commission off of the debt.

  45. Lea Says:

    I sold my California home as a short sale. My 1st and HELOC were both with Wamu (now Chase). The 1st & heloc were set up at original purchase, though I did refi both about a year later. Some of the heloc money was spent on renovating, some on other things. I lived in the home about 5 years.
    The first was settled, and shows up on my credit report as settled for less than owed. The HELOC showed up on my credit report as “charged off” by Chase, but now I am being contacted by a collection agency saying I owe the $77k for the HELOC to them. Yet, when I signed papers at closing there was no mention of me owing anything, and from what I have read, the HELOC would have had to agree in order for the 1st to approve the short sale. 1). Is that correct? 2). What are my options? (I have minimal assets, and a boatload of debt I am trying to get out from under. I do not want to file bankruptcy.) 3). Also, if I get a 1099 from Chase, can I offset the $80k I put down on the house originally as a loss against any forgiveness of debt? Thanks…

  46. Jarad Says:

    If the 2nd agreed to “release the lien” so the first could continue with the short sale, then the 2nd still obtains the right to file for a deficiency to collect the amount that was lost. Which sounds like what’s happening here. Really your only options are to work out some sort of payoff or file bankruptcy to get rid of it. Most of the time they will work with you to get something rather than nothing.

    Now… If the 2nd agreed to a full satisfaction, they wouldn’t be able to come after you for the deficient amount, rather they could only 1099 you for the amount they lost. Then come tax time, since this was your personal residence, you probably would have qualified under the Mortgage Forgiveness Debt Relief Act of 2007, to not pay taxes on what they 1099 you for.

    So I would go over your paperwork that you signed again just to make sure they haven’t given up their right to file a judgment against you.

    Hope this helps.

  47. Sandy Says:

    Ok so I’ll jump on the bandwagon. I have a home that I vacated about 2 years ago with the expectation of selling it but quickly learned that it’s not worth anything close to what I owe. I have a 97K 1st mortgage and a 22K Equity Line of Credit and the best I can figure that it might be worth 70K, if I’m lucky. I live in AZ and have a good job that allows me to maintain the payments as well as my current home expense. However it costs me 1k per month to maintain the original home when it’s not rented and about $300 when it is rented, all money I’ll never get back since it will never appreciate to a point where I’ll make money on the home. I’m lucky the figures are not that high, nothing like the previous homeowners above and both my loans are with the same lender (my personal credit union). Would it be prudent to do a short sale or push for foreclosure? Would that make sense? I think I read enough to know that the 22K would not be wiped out rather I’d receive a judgment or 1099 but this place is costing me so much to keep and then there are the repairs that add to the cost.

  48. Jarad Says:

    Typically short sales are approved because of a hardship and you are unable to pay anymore. In your case, where you are able to make payments on the property, it will be tougher to build your case, but these days anything is possible. It all depends on what the bank would be willing to accept. Not to mention that your credit will be ruined. If you are averaging $500 out of pocket each month, it would take 4 years to accumulate $22,000 if we were to use that number as the payoff amount you’d be responsible to pay. Your argument would be that this home does not appreciate to the amount you owe after 4 years. I personally would wait it out, and keep it rented if I had the means. The market will come back.

  49. lidiolga Says:

    I live in Miami.We were in an Special Community Auction for First Buyers and Big and Unique event where the Seller auctioned 20 houses for the Community and we got a High bidder in one of the houses which is in good condition and we got a Sales Contract , our title company immediately detected a second mortgage on the property for 100 k from another big national bank so we infered the House we brought was umproperly Forclosed and they auctioned the House in the wrong way, We thing they want We to reject or discontinue the Contract but we dont like until we get all the information and be informed about our rights in this case, they extended the Contract as per our request now we thing they do nothing or cannot nothing and they insinuate us to cancel the contract and they will back our money back the downpayment.
    we would aporeciate your suggestions
    thank you in advance

  50. Jarad Says:

    This is very common for first time investors when they invest at auctions… whether at the courthouse or not. The due diligence is ALWAYS the same and you should NEVER bid on a property until you are fully aware of all the liens/judgments against the property. Even if the company or attorney auctioning off the property says there are no liens, you always find out for yourself because they are not obligated to tell you. Run a title report before you bid at the auction and it will save you the headache you are going through now. Most of the time they will keep your deposit and is a very expensive lesson to learn. If you do get your money back, be grateful and next time run a title report before you bid at ANY auction no matter how good the deal sounds. Good luck and hope everything works out for you.

  51. Doug M Says:

    Hi, I just wanted to give a quick “thank you” to Jarad. The information you’ve posted is a great help and provides some useful insight into this whole process.

    As for me, I have a first (99K) with Chase, and a HELOC (130k) also with Chase. Thinking about walking away as many others have. The first is current but the second is 7 months past due. Just curious as to how long before they actually foreclose because if things work out, I can bring it current but that all hinges on the sale of another property in another country.

    Thanks again and Happy New Year!

  52. Jarad Says:

    Happy New Year to you too Doug. Right now it’s a guessing game as to when your bank will actually proceed with a foreclosure date. There are so many homes going into foreclosure that it could be 6 months to a couple years. Banks do not want any more houses. If you are current on the first, chances are they will try to work out something with you in the form of a loan modification or short payoff or really anything at this point so they can avoid foreclosure especially since you are making effort to stay current on the first.

  53. Cara Says:

    Hi Jarad, we short sold our home in CA in Oct 2009. The first was WF and the second was a National City HELOC for 120K. WF gave us a full settlement and the HELOC did a lien release only saying we were liable for the balance. They offerred a full settlement at the time for 20K, which would’ve been 12K out of pocket for us since they got 3K from the SS and the realtors would’ve put in a total of 5K. Our realtor talked us out of settling saying we could settle for pennies on the dollar after the sale. We are beginning to think it was a huge mistake not to settle!

    It’s been 14 months and we haven’t heard anything at all from our HELOC, no statements, bills, phone calls, nothing. It’s reported as charged off on our credit report. We received a 1099A last year (not the 1099C which is the cancellation of debt). Is this normal? Is this a good sign? We’re not sure what to make of this. Any insight??

  54. Jarad Says:

    I wouldn’t say it’s a mistake NOT to settle… it only guarantees you don’t get slapped with a judgment… hind sight is 20/20 right? Your Realtor is either a genius or he costed you alot more than $12K. By shear numbers he is betting they won’t file a judgment against you for the difference even though they have the right to because they released the lien. A 1099A is a sign, not good or bad, meaning they have wrote off the loan as an Acquisition or Abandonment of Asset (thats what the A stands for). However, it doesn’t mean you are free and clear from your obligations. It just means they have only accepted your piece of property which partially satisfys the debt. They still have the right to collect the difference. When that time is depends on your state and depends on when or if the bank decides it’s time to collect. Some states allow for a bank to take action up to 4 years after the event. If you have a good accountant, there are ways to negate this altogether, if you qualify, especially if it was your personal residence and you are considered insolvent meaning your liabilities exceed your assets.

  55. StressedOutnDepressed Says:

    First off, I want to thank you Jarad, the information you provided is so helpful.

    OK, here’s my story – my husband and I were making very good money for several years so we decided to purchase a very nice home in a upscale neighborhood for 1.8mm. At the time of our purchase, they also gave us a $269,000 line of credit. All with Wamu, now Chase. My husband’s business started to go downhill so we used the line of credit to sustain his business and also fix up the house, new backyard, patio, new paint in and out, new roof, etc. Then i was laid off in early 2009 and off work until Nov 2010. My husband’s income is 1/3 of what it was and I am making 1/2 of my previous income. This month, 1/11 is the first month we are not able to make the mortgage payment although I continue to make the payment on the line of credit. We have exhausted ALL of our savings except our IRA money. When i called Chase last month to ask them what can we do to work with them, I was told, they can’t work with us until we are deliquent. Jarad, I need some advice, we can’t afford the mortgage anymore, if i just send Chase 1/3 of my mortgage amount, will they still try to foreclose on us? We are considering cashing out our IRA and use it as a downpayment for a cheaper smaller house, something we can afford, will they consider that a fraud because we can’t pay Chase anymore? i just need someone with experience to give me some input. Anyone else who have similar experience?

  56. Jarad Says:

    StressedOutnDepressed… sorry to hear of your situation. This is happening all across the country and it’s unfortunate. In all cases yes, banks are more motivated when you miss payments and are more willing to “workout” something with you other than foreclosure. Most people pay the line of credit (because it’s much smaller) hoping the bank will see they are trying to make some sort of payment, however it doesn’t help. If you’re not paying the first, you might as well not pay the 2nd because they can still foreclose on you. The first is what is important because they are the senior lien holder. A lot of banks are now modifying loans and lowering interest rates to 1 or 2% just to keep homeowners in their homes. Trust me when I tell you that you’re not the only one who foresees a bad situation and “downgrades” before their credit is ruined. Last time I checked you can buy real estate whenever you want. You just have to deal with the consequences of foreclosure. They may come after you for a judgment. They may just file a 1099 . Worst case you may have to file bankruptcy to get rid of this and start over.

  57. David O Says:

    I have a property in Maryland with an 80/20 loan, my property got foreclosed but there was no bid on it. further investigation showed that the bank sold it to another bank so i don’t have an actual price on how much its been sold for and dont know what the deficiency is. The 20 part is a line of credit for 50,000 and the bank is not willing to negotiate they want their money in full or at an interest rate of 5% over couple of years and have threatened to garnish my wages. What choices do I have other than bankruptcy?

  58. Jarad Says:

    David O… Yeah that’s what they all say. Just tell them you’ve already talked to an attorney who has advised you to file bankruptcy. See if you file bankruptcy, it will wipe out any deficiency unless you file a workout. Most banks would rather get something instead of nothing. You just have to be strong and stick to your guns. They will threaten and scare you into believing they will file judgments, etc. You could hire a good attorney who will negotiate with them if you want and probably get a settlement of $5000 or less. Banks can’t play the game with those who know the game. So, work out a deal… they almost always do, especially if it’s a 2nd.

  59. Mari Says:

    Jared I am very impressed with your knowledge, thank you for helping us.

    I owned a home in FL, 1st mortage is 110K and I have a line of credit of 36K on it…

    I cannot afford the payments on the home insurances, they are over 6K a year between homeowners and flood. I was planning to stop making payments to WF who holds the mortgage but continue making payments to the equity line, I don’t know if this is the correct way to handle this…can you please give me some advise?

    The just/market value for 2010 is: 98,180 and sales comparison 116,600

    Thanks and have a nice day!

  60. Jarad Says:

    Mari, that won’t help you really. This actually happens a lot where homeowners will continue paying on the 2nd because the payment is usually smaller, however, really has no benefit because the first mortgage will still foreclose and the 2nd will be wiped out at the auction anyway. Then the 2nd will still 1099 you for the difference or try to seek deficiency. So it’s really up to you if you want to continue paying the mortgage(s) or not. If I was in a situation similar to this and had no other options, I personally would take the money for the 2nd mortgage and set it aside for later negotiations. Down the road, I would settle with them and I’d have money set aside to do it with.

  61. tony Says:

    Hi Jared,
    I wrote earlier regarding our home in Iowa awaiting foreclosure with Wells Fargo as the primary and the HELOC with US Bank. We are just waiting for the foreclosure to happen and we are hoping that US Bank HELOC will just 1099 us. The new development is that US Bank transferred the loan to a Debt Collection Service (Professional Bureau of Collections). Is this a sign that we will be stuck with this and that we will not receive a 1099 for this loan? Thanks for answering our question (and the questions of others). Our loan is 33k. I had offered 5k as settlement with US Bank but they countered with 8400 which I did not want to pay. Should I contact this new agency and offer another settlement? Or should I just ignore the calls and hope for the best? Thanks again.

  62. Jarad Says:

    Tony, this is a very common procedure with banks… they have 3rd party collection agencies that will try to collect from you. Some of these agencies are extremely difficult to work with and will threaten, use every scare tactic in the book. In some cases it gets very frustrating and requires the services of an attorney to get anything done. We’ve even had to call the bank and complain how unprofessional some of these collection services are. However, that being said, if you’re doing a short sale on the home, most 1st mortgages will only allow a certain amount to even go to the 2nd mortgage. Typically it’s $3K or less, which is 10% of the HELOC amount so US Bank should be happy with that. I wouldn’t offer more than 10%. It’s either that or nothing. I would try to negotiate with them for sure.

  63. Don Says:

    Hi Jared, thankyou for your knowledge & williness to answer all of our questions

    My situation is I have a home that was my principle residence for 8 years, 18 months ago I moved 700 miles away for a career change, after attemping to sell the home w/ no luck, we rented it for one year. Last October the renters moved out & the home has been sitting vacant since then. I finally received a offer which is $ 1400000 less than i owe on it. The first which is Citi Mortgage will be paid in full & they have accepted the offer. The second which is considered a line of credit is held by Wells Fargo. I spoke w/ their negotiator last week & they have given me two options 1) they will accept the short sale if I agree to deal w/ their recovery department after the closing of the home. She would not say what I could expect except 80% of the 1400000 would be a starting point in negoiations, also I do beleive in this case I would receive a 1099 on the amount that I negotiate down. In option 2)The bank wants a cash contribution at closing from me , the realtor or the buyers they dont care who. Also it is up to me as to what amount to offer, at that point she will go to her underwriting department & try to get it accepted, once that is done the case would be closed & I would receive a 1099 for the difference.

    As you can see neither option is very attractive, option 1 at least allows for bankruptcy in the event I cannot pay the amount they require, w/ the 2nd option a huge 1099 seems certain & at this point I am not sure if i qualify for the debt releif act of 2007. Your thoughts on my dilemna would be appreciated.

  64. Jarad Says:

    Don, you are right, no options are attractive when you owe more than what you are selling the house for. However, some options are by far better than others. I would take a 1099 any day over a possible judgment because of the debt relief act and because you can claim insolvency, however they are dreaming if they expect 80%. Normally it’s 10% max. or like you say, you would just file bankruptcy to wipe it out. 1.4M is no small chunk of change either. When dealing with those kind of numbers, you definitely want to get some advise from an attorney so you can weigh the different options.

  65. Rachel Says:

    Hi Jarad,

    This is a really helpful website, thank you for taking the time to answer questions.

    I had a property in CA that went into foreclosure last year after a very lengthy unsuccessful short sale attempt. I had a first and 2nd with Wells Fargo. The second was a HELOC that was used as purchase money for the home. After the foreclosure, they 1st was wiped out, but the 2nd was “charged-off”, as shown on my credit report with a balance of $85,500 remaining. I received 1099-C’s for both of the loans. I have already contacted a tax preparer to discuss my tax liability. Is there anything else that can happen? I am paranoid that a debt collector will come knocking on my door years from now. I just want this to be over…

    Thanks in advance for your help!

  66. Jarad Says:

    A 1099-c is a cancellation of debt or like you say a “charge off”. They wrote off the amount that was lost and issued you a 1099-c which will count as income to you. So they have given up their right to pursue any judgment. So you shouldn’t have any problems with debt collectors. Now, if it was your primary residence you may qualify for the Mortgage Forgiveness Debt Relief Act. Your accountant will help you in seeing if you qualify for that. Most homeowners do. In essence, if you qualify it makes it so all or part of the loan balance that was forgiven, be excluded from your income. So it basically wipes it out.

  67. Christina Says:

    My husband and I foreclosed in Ca a year ago, since then we had an amazing opportunity to buy another house through Seller Financing. We were just contacted by the previous lender, for a home equity line of credit on the foreclosed property, indicating we still needed to pay. It was 18,000, now 20,000. Do we still have to pay? Will they put a lien on the new property we just bought once they find out? Why won’t they just 1099 us?
    Thank you for your time,

  68. Shannon Says:

    I live in Arizona and just recently (this month) started receiving calls from a collection agency for a Chase second/HELOC for 72k. The bank charged this off back in March 2009. The property was foreclosed late 2009/early 2010. There’s been no communication from the bank since 2008. I’ve learned through your earlier posts that this doesn’t mean my ex and I aren’t still liable but I’m at a loss as to how this has happened and if there’s anyway around this? Neither of us have resided in the property since 2008. It’s an unpleasant reminder of a bad marriage that I thought was behind me and here I’m finding out I’m still tied to this guy because of this. I haven’t financed a new car (mine’s paid for), home, or toy. I have one credit card with a $250 limit so I don’t think it could have “flagged” me to them. Unfortunately due to an inheritance I was able to purchase a different foreclosure home that is solely in my name and free/clear. I have no means to pay this old loan back as I can only cover the bills I have and I am worried that they can now take or do something to my house? Is bankruptcy even an option or logical for this situation?

  69. Josh Says:

    After reading all these entries, I guess my situation isn’t as bad, but it’s still not pretty.

    I live in Las Vegas, NV. & my home was forclosed on and subsequently sold. The first and second mortgage were with Wells Fargo. The first, sent me a 1099-A which i’m not concerned with. The home was my primary residence and I was told that I qualify for the Mortgage Forgiveness Debt Relief Act.

    The second however, is $54,000 and they have a law office ready to sue me. I consulted a bankruptcy attorney and since I am now employed, I would only qualify for a chapter 13. The attorney ran the numbers and told me that I would end up paying almost the entire balance anyway.

    So is that just the end of the road? I’m going to have to pay this huge chunk of $$? I am employed but only make 55K/yr. This will be over my head for YEARS.

    Any suggestions would be helpful… Thank you so much for the forum and your time.


  70. Josh Says:

    Sorry about the double entry… Just left out the lovely detail that the law office trying to collect the debt already denied my settlement offer of 10K… they said their client wants 80%…

  71. Alexis Says:

    Hi I live in Arizona and I know that we are in an Anti-Deficiency state. The best thing we did was strategically default on our home. We bought it for 136 grand and last November it officially foreclosed. In February of this year it sold for 18 grand, but the banks were not willing to work with us and there you go, it sold for about 15% of what we took out the loan for.

    I called Bank of America to see how long they would be reporting our 80 / 20 loan – home equity line of credit for and they told me, either the debt had to be paid off or current, but it would still be open. It’s been a year since we’ve paid on that loan.

    I have been to these websites about the statue of limitations on debt and thought it would help some of you.

    As of yet, we have not received any 1099’s for any of the banks. And my BofA home equity line is still late / open for a year now. How long does it take for them to close it or will just be an outstanding debt forever?



    P.S for those worried about your credit score after foreclosing, my credit score is 630. We were able to rent a cheap apartment and since we weren’t paying on a house worth 18 grand that we owed 136 grand for, we were able to get out of credit card and school debt, which helped our credit score.

    Mind you, before this incident we were never late on bills, had really high credit scores, but we have cash in our pocket. Cash is king these days.

  72. Jarad Says:

    Depending on your state it could take up to 4 years for them to issue you a 1099-c.

  73. Jean Says:

    My house foreclosed in Georgia in Nov with Wells Fargo. I had a HELOC for the 2nd, also with Wells Fargo. I received a 1099A in January, but the Home Equity Department is still trying to collect. Can they still come after me for a deficency judgement?

  74. Vicki Says:

    My mother recently passed away, and I am executor of her estate.

    She Quit Claimed Upon Death her house to my sister and I. The Quit Claim Deed has not been recorded.

    The house appraised for approximately $130,00, and she has a first for approximately $99,000, and a second for approximately $29,000. Therefore, the house is close to upside down.

    I plan to meet with the bank holding the second to see if they will renegotiate it, or take a lower amount. (What do you think are the chances of this with a credit union?)

    I’ve talked with the bank holding the second. They are willing to transfer the loan over to me, if I decide to keep the house.

    My sister is not interested in keeping the house, and would Quit Claim it over to me if I decide to keep it and not give it back to the bank.

    Do you have any suggestions, or insight on how I should go about handling this?

  75. Bryan Says:

    My house was foreclosed about 4 years ago & i had an equity line of credit attached to the the deed of the housein California. It shows that the equity line of credit was discharged, but it is still on my record & they are giving me a hard time about removing it. Would i need to seek councel from an attorney. I have requested several times to remove it & they keep changing their stories. Do you happen to have any information on this. They have told me that a third party has this information, that i would have to go through them. Thank you very much for your time

  76. Jennifer Says:

    Hello. This is my situation. I currently have an investment property in FL. I owe 100K on the first and have a HELOC of 78K. I am one month behind on the 1st and two months behind on the 2nd. Not sure if it might be too early to tell.. but I am not sure if I should let the 1st foreclose so the 2nd can be wiped out? if I should try a shortsale? or if I should just seek a BK attorney and finish off both things?.. what do you suggest?

    Please help!

  77. John L. Says:

    My condo just been foreclosure in CA , the question I have I have equity line of credit around $9000.00 .Do I still have to pay that ?

    Please an answer.

  78. Jarad Says:

    A $9000 HELOC will most likely be written off and you’ll get a 1099. If not, they may ask you to settle for a smaller payoff amount (10%). They always start at 50% or more, but we can usually get them down to 10% or less.

  79. Barry Says:

    Hello. Im a Florida resident that had a rental property in Alabama (1st loan BOA/2nd Heloc Countrywide)that foreclosed after a few attempts at short sale. 1st loan I received a 1099. The Heloc went to collections ($44k). I have attempted to dispute the amount with the collections agency. Is it typical for them to either file judgement or should I get a real estate lawyer to negotiate the $44k down (I understand the collection company paid cents on the dollar for it.)
    Thanks in advance.

  80. Jarad Says:

    You’re exactly right, they’ve already made their money on the loan. And unfortunately, these banks treat you a lot different than if a 3rd party individual (like an investor or attorney) negotiates with them… We can usually get them for 10% or less and this happens but this is before the auction. We don’t handle many cases after the auction, however, for most people if they are issued a judgment after the sale, they file bankruptcy to get rid of it. But it might be worth hiring an attorney to negotiate something with collections and it’s always a good idea to let them know you’re planning on filing which puts them in a position to either make some money or get nothing at all.

  81. Al Davis Says:

    I have a 1st mortgage (Wells Fargo) on a rental property in Arizona (I live in Nevada). The mortgage is about $240K and the value is about $150K. There is NO 2nd mortgage. 1) If I foreclose, is it likely I will get a deficiency judgement or more will I more likely get a 1099-C? 2) And if I get a 1099-C for $90K, what can I do to reduce the actual tax liability? 3) or would it be best to pursue a Short Sale with my lender?
    Thank you

  82. Jarad Says:

    This is tricky Al. First off, Arizona is a Anti-Deficiency state which means that a lender cannot file a deficiency judgment against you, now here is where it gets tricky, as long as you meet certain criteria. Here are some of the criteria for Arizona’s Anti Deficiency Law according to states statues. The property has to be 2.5 acres or less, which 90% of homeowners would fall under. The decrease in value can’t be because of things you did to the property because of negligence. It also has to be a single family residence. You can google Arizona Revised Statutes, Title 33, Chapter 6.1, and look for the section that says “Action to recover balance after sale or foreclosure on property under trust deed”. I think this will help you answer your own question. If you property does not fit this criteria, a short sale is a way better option than foreclosure.

  83. Kimberly Says:

    You have given some great advice. Thank you for all your knowledge. I didn’t find anyone in just our situation and would like your opinion. Our first mortgage is 120 days in default. Fannie Mae is helping us refinance the 1st, but the real problem is our second equity-line-of-credit. We haven’t defaulted on it yet, because it is how we are paying for food, car insurance, power and other needed items. It’s about maxed out now. So I’m afraid we are close to defaulting on it too. Florida: 1st mortgage $48,000 due, equity line of credit: $80,000. Home is worth $120,000 to $150,000 depending on the time of day. I don’t want to loose the home. It’s centrally located and in a good school district.

    Would it be best to default on the second “line of credit”? or try to refinance the 80,000. If we refinance the 80,000 we can’t ford food, insurance and power. We are down less than $25,000 total household income from $55,000 a few years ago. Thanks to businesses not spending money because of our lovely economy.

  84. Jarad Says:

    Kimberly, I feel your pain… Given your situation, here is my opinion… Because you want to stay in your home, a short sale may not be the best option because in most cases you would need to move so the investor would make money selling to an end buyer. They also take a lot of time and the longer you stop making payments, the worse your credit gets. A better option, in my opinion, would be for someone (like us) to buy your note and basically wipe out your 2nd mortgage which would in tern create instant equity in your home so either (A) you could sell your home and walk away with a profit or (B) you could continue living there because you are not paying a 2nd mortgage payment anymore, therefore your monthly expenses are cheaper. We’ve been extremely successful right now because banks are in a position to negotiate. I would love to chat more about this with you.

  85. Jada Says:

    Hi. I own a primary resident in California. At the time of the purchase in 2006 I got a 2nd loan (HELOC) for my down payment on the house in the amount of $75K. I just spoke with the 2nd lender and it was recommended to me to file for bankruptcy instead of a foreclosure because my 2nd loan is consider a cash-out loan. I also spoke with a real estate lawyer and I was told that I don’t need to file bankruptcy because once I foreclose on the house the 2nd loan should dissolve as well. And if the 2nd lender come after me for the loan, as long as I can prove that I use the money to purchase the house (as down payment), I should be ok. Who should I believe? HELP!!!

  86. Jarad Says:

    Every state is different and has different laws when it comes to foreclosure. Bankruptcy should only be used if the protection is needed so if you need the protection now, then I would file. As for what will happen, depends on your states laws. If it were me, I would not file until I absolutely needed it. I would first try to figure out a solution to get out of my debt. This means finding someone that will buy my home on a short sale or buy the note at a discount. If you exhaust these options, then you have no choice but to let the home go to foreclosure. After foreclosure, the bank decides then if they are going to 1099 you or file a judgment against you. If they 1099 you, they will count it as income to you. However, with the new laws passed in 2007, the Mortgage Forgiveness Debt Relief Act, will usually counteract the 1099 and you walk away with a foreclosure on your credit. In the event they file judgment against you, which doesn’t happen very often, then you can file bankruptcy and wipe it out. Hopefully this makes sense. Good luck to you in finding a solution. I should probably let you know that we have a company in California that works with individuals to keep them in their homes. We basically do something similar to a short sale on the home which gets rid of the second mortgage and lowers your payments so you can stay put. This is just another option if you would like to stay in your home.

  87. Karl Says:

    The advice given on this page is incredible. My house has been in the process of short sale negotiations with the first/second/third for about a year. They could not come to an agreement and approve the buyers offer, so it was just “bought back” on the auction date which was this last Monday. Now Chase, who had a 2nd position 75k equity line that we used to buy the house originally is pursuing my wife and I for what they are calling a personal unsecured debt and requesting we pay the full amount. A collection agency has been contacting us each day since it went to auction. I have see the previous posts that state in a foreclosure situation the 2nd and 3rd will have a couple options. 1) 1099 us, but that should be protected by a current federal law if I am not mistaken, and 2) file a deficiency judgement, and from what I read these are almost never done in CA. If this was a “BANK BUY BACK” (whatever that means) and not a foreclosure, how does this situation change? Thanks so much for the info.

  88. Jarad Says:

    I would try to work out a settlement with the collection agency. Let them know you are considering bankruptcy and your attorney has advised you to include this loan in the bankruptcy to wipe it out completely and start over. Typically you can settle a note for .10 – .15 on the dollar. They are trained to “be tough” so don’t expect anything else. It’s unfortunate you have to deal with this, but it’s just part of the foreclosure process.

    We should probably mention that we also settle notes for homeowners. The only difference here is that we settle them before the foreclosure auction so you can stay in your home or create enough equity so you can sell it and walk away with a profit. Like in your situation, we could have taken your 75k note and settled it as low as .10 on the dollar and hopefully that would have been low enough to keep you in your home or a least it would have avoiding the collection agency coming after you and having to pull the bankruptcy card.

    Don’t give up. The bank has already made their money. Try to settle and be done with it.

    Here is more information on note settlements

  89. Joel McIntire Says:

    I have a line of credit of $125K. I didn’t realize it at the time, but it had a 10 year maturity. Call me stupid. The note has come due, but I’m still very underemployed and can’t pay it off. I’ve been working with WF home retention team, or whatever they call themselves, and just got a demand letter for the total balance, with the threat of foreclosure. As the 2nd lein-holder, can they do that? I still have equity in the home, but the market value has dropped about $250K. With equity remaining, can I still go BK and get rid of the 2nd? I am still current on the 1st. I/m about 2-3 months behind on the LOC, only because they keep telling me that the minimum payment is the full amount.

  90. Jarad Says:

    Joel, You need to read the article we wrote on buying notes. It is a great solution if you are upside down, current or not on your mortgage, and want to stay in your home. We have the ability to negotiate with your 2nd lien holder and completely wipe it out. This option is TONS better than a short sale or foreclosure because it doesn’t affect your credit like a short sale or foreclosure would.

  91. Jill Says:

    My now ex husband and I had to file bankruptcy in 2009 in order to keep our home. We have since divorced, and had to let the home go In to foreclosure. We had a 1st and a line of credit. The house auctioned off on October 18, 2011. My questions are, will they come after us for the line of credit, and if so is it true in the State of Arizona (county of Maricopa) do they have to let us know in writing within 90 days from the date of Auction that they are doing so? If the do not do anything in that 90 day’s they can do nothing? I was told this by an Attorney.

    Also, I live in another county and have my Father living with me and am going back to school in January. so my money is very tight only source of income right now is spousal support, can they put a hold on my spousal support and also can I file anything in the new county I live in if need be.

    I never get anything but regular looking bills showing late from them.

    Is there anything I can do to protect myself? Or do I have to do something with my ex husband Involved. I ask because I think we should be 50%, I am afraid to check in to anything as they may hold me liable for 100%, even if it is a small percentage of the entire amount.

    I have so many more questions but this is a start.

  92. Jill Says:

    I should have mentioned it was chapter 7.

  93. lily Says:

    my home was foreclosed in iowa july 2009, there was 2nd loan still open according to the bank people said. but my credit report said this account is charge off, I was thinking once foreclose, should wipe out all the loans, can you explain what is iowa’s law. thank you for your help!

  94. Jaisa Says:

    Hello, I have a home in California purchased in February 2004,in December 2007 I moved to Puerto Rico due to a job transfer. My first mortgage is with Bank Of America (145,000) and a home line of credit with Chase (175,000). I rented the property but the rent did not cover the entire mortgage payment, so I had to come up with an extra $600 every month. I paid on time during three 1/2 years the first and second (interest only to afford the pymt). Six months ago I stop making the payments since I could not longer afford it, before doing that I called the banks but neither one wanted to adjust rates because I was current. Today I found out while checking by credit report that Chase charged off the line of credit. At the present time I am working with a realtor to shortsale the house for $170,000. I have not purchased a home in PR, I am renting. What are my options?

    Thank you.

  95. Rob Says:

    I live in California but owned a rental in AZ that was foreclosed on. The 1st mortgage filed a 1099 on me over a year ago. Now the company that I had an Equity line of credit with is sending me collection letters. Can they come after me for that money? Is my only recourse bankruptcy?

  96. Shiva Says:

    Hello Jared,

    Wondering if you could help me out with a simple question. I had a home in CA that I was attempting to modify my loans after being laid off. During that process my 2nd mortgage, HELOC, was transferred to another loan company. (Both 1st & 2nd with BofA) The HELOC was paid off and had a zero balance and never used. After I was unable get the modification decided to do short sale, and that was unsuccessful, the home went into foreclosure. I am now trying to close my HELOC with the 2nd loan company, but they are stating that I must provide the closing cost fees to the county to get it closed out. If I had the money to pay the fees I would have paid the mortgages and not got into foreclosure. If BofA still owned the 2nd mortgage I don’t think they would be asking for closing cost fee to close out the acct. Let me know. Thanks

  97. Amy Says:

    I received a 1099-a form for my first mortgage on my house and also the equity line. When I received the 1099-A for the equity line the bank marked that the borrower is not personally liable for repayment of the debt. Before I received the 1099-A my account went to collections, I fought it, but started paying it back. I am now working with the bank and have been told that the bank made an error and wants to send me a revised 1099-A showing I am liable for repayment. What are my rights as of right now? I am in AZ and the house that foreclosed was in GA.

  98. Marie Says:


    We owned a property in Fl, relocated due to a job. The home in FL went into foreclosure which was just finalized a couple of months ago. The property had a first mortgage as well as the equity line both with Wells. The equity line was issued to us when we purchased the house in order to put the 20% down. I have seen where both reflect on my credit report; first as foreclosure and eqiuty line as charge off. I haven’t received a 1099. I do however have an attorney office which serves as the collection agency trying to collect on the equity line, he has mentioned the actions that could take place in order to receive repayment. Does this mean they are filing judgement against me or is he just trying to pressure? Should I wait this out or try and come to a settlement? If I do try and settle would my best option be to negotiate directly with the lender in order to clear charge off from my credit? What would be the percentage I should offer; also am I obligated to provide financial statements with an offer? Should I hire an attorney or do you think this is something I can accomplish on my own? I apologize for all the questions, but would like to go into these negotiations with some knowledge. Thank you very much in advance!

  99. Patty Says:

    Hi Jared-
    I live in NC and am trying to keep my home. I have a first with Wells Fargo (304,000) and second with State Employees Credit Union (47,000). Home worth 298,000 at this time. I am trying to get a modification from Wells and have not paid on the 2nd in 4 months. I am 2 months behind on the first.

    Do you the second will forclose? The home is not worth 351,000. I have heard that Credit Unions work a little different than Banks. Are they Different when it comes to forclosure?

    I plan to make a payment on the 1st so that I will not be 3 months behind. I do not want to lose my home!

  100. Jarad Says:

    Patty, unfortunately, Credit Unions are not that much different from a bank in terms of foreclosure. They will still foreclose on you if you don’t meet your obligations. They are definitely better to work with in terms of loan modifications because they are local so I would try to work something out with your credit union as well.

    However, in your situation there might be another option.

    This option basically wipes out the 2nd mortgage and keeps you in your home, which ultimately means your payment is lower and now at least you’re not upside down on your property. We’ve been using this strategy now for the past 3 years because it actually helps homeowners stay in their homes or be able to sell their home because they’re not upside down anymore. With that said, unfortunately this strategy only works on 2nd mortgages so we wouldn’t be able to change anything with your first mortgage. Hopefully you can get that modified and then we can wipe out your 2nd and you can stay in your home 🙂 Win Win for everyone. Much much better solution than even a short sale because you’d have to move and your credit would be affected for a few years.

    Here is a link with more details on settling your 2nd mortgage.

  101. jcolon Says:

    My partner recently passed away. House was paid in full then he took a Line Of Credit. Can I settle the Line of Credit? or does the house belong to the bank?

  102. Jarad Says:

    I’m sure that will all be figured out through probate. If your name was on the loan, then you’ll be responsible to pay off the LOC. Almost any loan can be settled, it just depends on the terms and the timing.

  103. Craig Frazier Says:

    I have a question, I have a line of credit that is in first position for 100k and a mortgage at 370k in second thinking of filing bk which ones can I get rid of?

  104. Jarad Says:

    You can get rid of all of them if you want which will require you to sell your home. When the home is sold, the money goes towards paying off the creditors. First to the first lien holder, then on to the second. When you file bankruptcy, if there is a shortage, meaning the second doesn’t get paid everything back that is owed, they can’t come after you for the deficient amount. If you are wanting to keep your home, then you’ll need to talk to your attorney. You may be able to settle your second mortgage for a much less amount and make payments for a specific amount of time until it’s paid. There are so many things to consider that without knowing all the details, it’s best to work with your attorney.

  105. Toni Says:

    I have a home that has been a rental for many years, the home itself is paid off, however I have a variable rate home equity line of credit on it for $131K. The current value of the home is $100K. My husband passed away 6 months ago and I want to short sale the home. We cashed out our 401K prior to his death, so now I am scared to short sale for fear they will come after the little bit of money I have in the bank for the difference. Any advise? Should I liquidate what little I have to avoid them from taking it? My HLOC is with Chase, how long do you think I have to sell before it goes into foreclosure and they will come after me?

  106. Jarad Says:

    So technically the home is not paid off because it’s being used as collateral for the HELOC. Now, first off, they can’t just take your money. There are processes that have to happen first. The only way they can force you to pay them more is with a judgment. Most people then file bankruptcy which eliminates the judgment. Most banks know this, so usually they will try to work something out with you first, before they go through the expense of filing a judgment against you.

    If you handle the short sale right, you shouldn’t have to worry about whatever money is in the bank because it will eliminate the deficiency judgment. At most all they can do is 1099 you. If you have a decent amount of money in the bank, yes, they will look at that in determining whether or not to approve the short sale. They will look at all your assets. When doing a short sale, banks want to see that you are having a financial hardship and can’t make payments, etc.

    If a short sale doesn’t work, here is another option. I don’t know what your payments are on the HELOC, but the rental market is good right now. You might try to do a lease option on the property. It might only be worth $100K, but in 5 years it might be worth $130K. There are a lot of people who can’t qualify for a loan, but are willing to lease a home with the option to purchase it at a later date for more just so they can call the home theirs. So you have an option for them to purchase the property at $131,000 in 3 years and then figure out how much you need to make the payments, taxes, insurance and maybe even a little extra for you each month. Have them put down a large down payment and you’re set. You get positive cash-flow each month, you won’t have to worry about repairs or bad tenants, and hopefully in the end, they buy the house. If not, you keep the $10,000 they put down and do it again.

  107. MNRealtor Says:

    Hello Jared,

    I had several bank accounts with a Credit Union. I had Fraud against my accounts and the bank would not take action (as far as I know) against the thief… instead they persecuted me and threatened to foreclose on my home. I had a 1st Mortgage around 350K and an equity line (now I am wondering if it was HELOC or 2nd Mtg)upto 128K. At the time of the threats, I had not made payments around 2K. I went to an attorney, SOS, etc.. and the bank refused to investigate the issue and started the foreclosure. I found out that the bank owned my home in April 2008 when I got a call from the jerk in the back office stating, “I am calling to find out when you are going to hand over the keys to OUR house”? (I owned more than one property and my bank statements went to my second home…) When I asked which home, they stated the address where my bank statements went which, I never collateralized. Ten minutes later I got a call stating my personal residence. I was evicted on April 30, 2008 and forced to “give” away several belongings, etc… I then received a letter from my 1st Mtg. in June of 2008 stating that I was being charged 7K for unoccupied insurance. I contacted the 1st and they had NO idea this had happened. I later learned after this contact that the equity line paid the 1st over 410K June 23, 2008. I also received a 1099A in Feb 2009 from the 1st for 379K. The question I have is didn’t the 2nd have to notify the 1st for the legal, foreclosure and, wouldn’t the first have to be paid the 350K which was the Mtg amount? Also, why did I receive the 1099 from the 1st and not the 2nd who said they had fee title in order to evict me? I been trying to make sense of this and now, because I insisted the 2nd clarify, they have “hand written” three 1099’s for 2008 in the fall of 2012. When I question the 1099’s they change the amount… BTW, my IRS transcripts do NOT reflect the credit union ever filing the 1099’s. Doesn’t this seem suspicious? Please help… I have been getting the run around for years and I want someone to be held responsible for the illegal filing and taking of my home. Thank you!

  108. Jarad Says:


    Yeah, you’ve got a lot of things going on here and I too would question the legitimacy of what has happened. If I were in your shoes, I would see out a good attorney and let them get to the bottom of it.

  109. Lorena Reyes Says:

    Hi, I live in the state of North Carolina and I got divorce 2 years ago. On the separation agreement with my ex, we agreed that I was going to keep paying for the mortgage, I been trying to refinance the house to take my ex name out and have the loan under my name only, but because of my income, I am having a really hard time getting approved. I been making all the mortgage payments on time, but I just find out that my ex didn’t pay a business line of credit for $50,000 that is under his name only. My concern is if the bank can put a lien on the house, considering that his name is still on the loan. Can I loss the house because of his debts? Please, any advise will be greatly appreciated.

  110. Jarad Says:


    As long as he didn’t use the house as collateral to secure the business line of credit, you should be ok.

  111. Caroline Says:

    I live in California, I have 2 loans, my first is through Wells Fargo/Wachovia/World Savings, my second is through a local credit union and is a heloc. The CU placed a notice of default on 10/23/13 and we are getting close to the notice of sale date (which I have not received as of yet). My 1st sends me a letter yesterday stating that they are foreclosing on me now as well. I have asked for both to produce the original copies of the loan documents, the application and who is my case worker. Neither one responded. Sent certified mail. Don’t they have to at least provide the case worker “single point of contact” and the loan documents upon request? Thanks

  112. Jane Ocassio Says:

    We foreclosed on the 2nd property, but used some of the credit line from our home (just modified) we know that wells fargo wrote off the $180.000 as a loss. Since our house value has gone up, they will most likely get that profit if we ever sell. What do you suggest we do at this point?
    Ohh we also have 4 children in college full time this year and can’t get any loans due to the 180K default.

  113. Jarad Says:

    Jane, I’m not 100% clear on what you are asking because I’m not sure I understand your situation.

  114. Adrian Says:

    I just got a statement for a Wells Fargo HELOC after 4 years of non-payment and zero correspondence from the bank. My condo is still underwater but I was able to get a remod on the 1st loan. The last payment I made to Wells Fargo was Jan 2010 and my credit report says it was “charged off”. Doesn’t the statue of limitations apply here? I’m in CA. Thank you for your help. Adrian

  115. Jarad Says:

    I believe the statue of limitations is 4 years but it’s not based on when you stopped making payments. It’s based on when it was foreclosed and charged off. The bank has 4 years from that point to decide if they are going to file a judgment or 1099.

  116. David Says:

    I had my house in Michigan foreclosed on in 2007 and had an equity line of $83M. I now live in Texas and haven’t received any correspondence until today. What are my options now and isn’t the Statute of Limitations expired?

  117. Jarad Says:

    Am I reading that right? $83M on an equity line? WOW! Never seen anything like that. Well if they are corresponding with you, they must feel like they have grounds to do so. In most states, lenders have 4 years to do something. If they don’t you are in the clear. It might have been in foreclosure in 2007 but may not have foreclosed until 2010.

  118. Bobby Says:


    I’m from Michigan but now live in California. In late 2011 PNC foreclosed my home and took it, leaving a $250K Citibank HELOC, in 2nd lien position, dangling.
    Citi sent the debt to 2 different collection agencies but they both apparently gave up when I asked, by letter, for the signed promissory note.

    My credit scores have rebound, but Citi continues to report the debt as charged off or bad debt & placed for collection & skip,depending on the bureau. In all three bureaux the account shows as closed, but with that big balance and, mainly, with monthly reports of KD – Key Derogatory status.

    What should I do, other than impossibly paying it off, to get rid of this deb and its stain in my credit report?


  119. Brad Says:

    I live in Arizona, Chase gave me a line of credit for $348,000 in 1st position. They increased it without my consent to $427000. I did access more in 2009 to $423000. Chase has refused to refinance me at a fixed 30 year rate for 3 years now. They are increasing my payment from $1000/month to $4000/month starting in July 2014. Chase refuses to refinance the loan since the home is only valued at about $325000-350000. Chase has a recorded deed for $348000 dated in 2004.
    What options do I have? The Equity Line has always been in 1st position, never a 2nd lien.
    I wanted to refinance on a 30 year but they have told me over the phone no for 3 consecutive years. I would qualify with income and credit but not LTV.
    Any help?

  120. Rhonda Says:

    Can a bank foreclose on a home equity line of credit simply because it matured and we don’t currently qualify to renew the loan ? Have never missed a payment and is current on both first and second? Credit scores are a tad too low for conventional refinance due to the revolving HELOC ($150,000) being maxed out. It’s an interest only loan and we have paid just the interest due for a couple of years due to our job situation. But we have always paid the required interest amount due and have never been late.

  121. Jarad Says:

    I suppose they can, but typically they try to work out a solution with the homeowner. They are taking a big risk foreclosing unless they feel like there is enough equity in the property to get their money back. Remember they have to pay off the first if they foreclose. Normally they will work with you, similar to a loan modification and extend the terms. You could also try to settle with them on a smaller amount. But usually they want it all upfront.

  122. Jhenifer Says:

    Hi, I have a Wells Fargo 1st & heloc. My husband became disabled due to accident 2 yrs ago, so with just my income, it caused me to become delinquent, due to hardship we were able to get our first mortage modified. However, in the middle of trying to settle our heloc. WF HELOC started foreclosing on us after discovering that they were first lien position per their title law firm. Now, that the first & second are switched and even tho they are both WF, they won’t communicate with each other. I want to keep the house but it is worth 330k and first 260k heloc is 100k. Reached out to heloc for a Mod but after 5 mths of sending docs over & over, they are not cooperating and want to foreclose. They tacked on so much fees that there is no way to reinstate. Should I apply for forbearance of hafa short sale at this point? Should I ask for copy of title exam to confirm? Any advice?

  123. Todd Says:

    We had a foreclosure a couple years back. We moved to our second home, and are still there. We have continued to pay on the HELOC from the first home, and are receiving 1098 Mortgage interest statements.

    Can I deduct the 1098 interest for the HELOC on my taxes?


  124. Nancy Says:

    I lost my home in Virginia to foreclosure in Nov 2009. I tried for 19 months to do a loan modification, which Countrywide said I qualified under hardship requirements. Then I tried to do short sale. Presented them with 5 contracts, two where for cash for $350,000 on a $419,000 loan. But bank would never except offer and close. I had a HELOC for $52,000 which is now reported as a write off. I made the last payment on HELOC in Jan. 2008. Is the HELOC past the SOL and what should I do about it. I am now 65yrs old and living from paycheck to paycheck. Do you have any advise for me?

  125. Jarad Says:

    Well at this point there is not a whole lot you can do. Because of your age and not making a ton of money, you might as well just sit back and hope you get a 1099. If you never get a 1099, then count yourself as one of the lucky ones. If for some reason they do file a judgment against you after all these years, you would probably be advised to file bankruptcy so they don’t garnish wages. But they may have looked at this option already and figured it’s not worth spending more money and attorney fees filing a judgment against you’d because they would lose even more if you bk. The statute of limitation is different in for every state. You’d need to check with a local title company or attorney in your area. I know it can be as long as 4-5 years after the foreclosure date.

  126. BobbyDuck Says:

    In late 2011 PNC foreclosed my home in Michigan and took it, leaving a $250K Citibank HELOC without resolution.
    Citi sent the debt to 2 different collection agencies but they both apparently gave up when I asked, by letter, for the signed promissory note.

    Three years later, Citi continues to report the debt as charged off or as bad debt / placed for collection, depending on the bureau. In all three bureaus the account shows as closed, but with that big $250K balance and, mainly, with monthly reports of KD – Key Derogatory status.

    Other than impossibly paying it off, what should I do to get rid of this debt and its stain in my credit report?

    Note: I now live in California.


  127. Kristy Says:

    Hi Jarad,
    I have found some of the answers very helpful. Although, I have an interesting situation where our California home was foreclosed almost 3 years ago. Our second mortgage was used to purchase our home, but they are showing it on our credit as home equity line of credit. We have tried correcting it with Popular mortgage ( the second), but they are unwilling to help us out. I was told they can’t attempt to collect after 3 years, but how long will this affect my credit? And is there any way to get them to show it as a second that was foreclosed in Nov. 2011 when the first was foreclosed?

  128. anthony Says:

    I live in the state of Oregon and in 2012 I foreclosed on my condo b/c when the housing market dropped, my property wasn’t nearly worth what I paid for it & I couldn’t afford the payment due to a job change. My 1st tried to settle with my 2nd, but they weren’t able to do it by the auction date. The property was not sold at auction and bank of America (my 1st mortgage) took over the property. I had a home equity line of credit for about 34,000 through Citibank at the time. That amount has since been sent to a creditor, and they keep calling me to pay off the amount, which I am unable to do and pay my student loans and current rent. They continue to add interest each month to it. It is now $40,000. In my credit report it says the same thing as my 1st mortgage that it went through foreclosure and then a collection chargeoff. The Derogatory condition and the amount due are still hurting my credit. What are my options? Will this line of credit go away? Do I have to file bankruptcy? Can I do anything about this creditor? Please help!!!

  129. Zach Says:

    Hi Jarad,
    I live in CA and had a forclosure of my primary home back in 2008. I got the 1099 from primary lender(GMAC) and couple of days back my HELOC bank called for an amount of 70K. All these time I thought I’m off the hook. What could be my options here? Can the back come 6 years after forclosure? Not sure it was a call from the bank or other collection agency.
    Thank you!

  130. Tony Says:

    I live in Florida ,I took out a HELOC on my parents property , but I’m not on the deed of the property. Can the bank foreclose on my parents property.

  131. Ava Says:

    My parents took out a HELOC on their home (which was free and clear) in order to build another home. They took out basically the max amount which was around $315k. My mom (my dad has since passed away) has been renting out the home and making interest only payments because the market crashed and it has been underwater since. The value is probably around $220-250k now and the loan becomes due in October of 2015. I am wondering what the possible scenarios are for either short-sale, foreclosure or if it is possible that the bank won’t foreclose and instead try to go after my my mother for the total loan amount due. She has a limited monthly income but does own her home free and clear. Any insight would be appreciated!

  132. Jarad Says:

    Well, possible solutions would be to refinance and lock in a good rate. Although this might be tough given that the value has dropped so much. She could do a short sale, however, with a home that is free and clear, the bank may want her to come up with some to settle it. She could foreclose on it and risk the possibility of a judgment, which is possible if the bank thinks she might have assets that will pay the difference of what the home sold for.

  133. William Smith Says:

    My line of credit matured on August 23, 2014. My line of credit was for 95k of which I used 61k. I have made all my payments on time. They said on Wednesday they would give me a loan but sent out a letter the next day saying they would deny my credit app. My mother signed with me and she has a good income stream and I have assets of about 20k but have not worked steadily until June in which I have been making pretty good money. My house is worth about 150k more or less. I do not know what to do at this point since I have not worked steadily in the past two years. My wife works and makes good money but she is not on the deed or line of credit. I am afraid I will lose my equity and I am 49 which is real scary to me to think I will lose everything not because I cannot pay but because I cannot get a loan. Is there someone that can help me stay in my home because I am afraid that they will come after my home soon if I cannot get a loan.

  134. Marcia Long Says:

    Hi Jarad,
    I am asking for my friends who live in NY. They have a first mortgage with OCWEN which was just restructured and is up-side down. Home value is now 550K. Ocwen mortgage is 630k.
    They have a HELOC that was with GMAC and was charged off in the amount of 125K. Last payment on the HELOC was April 2008. In july 2015 they were sued by junk debt buyer who is demanding payment in full. Two questions:
    1. Isn’t this loan past 6 year SOL in New York?
    2. If they get a judgement in favor by some chance, don’t they have to pay off 1st position in order to foreclose?

  135. Jarad Says:

    @Marcia – when you say charged off, do you know if they received a 1099a or 1099c. Was it satisfied or released? It sounds to me like it was released meaning they can come after you for the debt, but usually there is a time frame in which they have to do this. I don’t know NY law, but if it was written off already and if he has a legitimate claim, they could garnish wages. I was talk to a real estate attorney in your local area to see if this individual even has a legitimate claim.

  136. June Says:

    I’m curious if you can help me with this situation. My husband and his ex have a home in NY together that they both stopped payments on in 4/2008. The mortgage has been sold twice and is now with a collection company. There hasn’t been any foreclosure process whatsoever and (if I hadn’t requested we move) we would probably still be there 7 years later having not made any payments at all. What is the reason they have not proceeded with foreclosure? We hope to buy a home in the future and this is lingering on his credit and seems it will be there a very long time. Is it normal for a mortgage company to never file foreclosure? If so would he have the right to move back into the house should he so chooses? We are very confused with the situation and have heard a lot of conflicting information as far as this is concerned. Thank you for any help you can give.

  137. Jarad Says:

    @June – There are lots of reasons why they may not have started the foreclosure process. Usually it doesn’t take this long to go through the process. Had you been living there, it might be a different story. They are funny about letting homeowners stay in their homes. So, yea, I don’t know what to tell you. You could help the bank and try to get someone to make on offer on it (short sale) and try to speed up the process of getting that loan satisfied.

  138. LUIS FONTE Says:

    I live in Florida and my homestead property has first mortgage and a equity line of credit. my first mortgage was modify and current. my equity line of credit has not been pay in six years and has been sold or transfer from wells fargo two times. I just file chapter 7 bankruptcy and reaffirm my first mortgage only and including all my debts including the equity line of credit and my bankruptcy has been discharge. what happens now with my equity line of credit.

  139. Scott Harrison Says:

    I am in Alabama. My home was foreclosed on in February 2010. The original mortgage was through a credit union. I also had a HELOC through a commercial bank on this property for $25,000.This Heloc was in both my ex wifes name and mine. I went through a divorce and was ordered by the court that I would be responsible for paying this loan(not my ex). I have been paying just over the minimum payment, on time, since the divorce, only because that was all I can afford. Due to a recent job change, making considerably less money, and my ex wife with minimal income, can this HELOC be discharged due to the foreclosure, even though the foreclosure was back in 2010? Thanks

  140. Jarad Says:

    So if I understand correctly, this loan you are paying on is from a foreclosure back in 2010. The foreclosure must not have satisfied the loan so you are paying on it. The only way to “discharge” it would be to file bankruptcy. However, I’m not sure that would be the best solution either. I think a better solution would be to contact the bank and offer them a settlement or work out some sort of smaller payment you can afford. A lot of times in situations like this, especially if you’re income has changed dramatically, the bank is willing to work something out with you. Offer them a small amount of cash and settle with them. You may have to borrow the money, but might be worth it in the long run. Offer them 10% of the amount owed if they will settle. Sometimes they won’t settle with you either. Sometimes it takes 3rd party to do it. I think this would help you out a lot so you don’t have to go the route of BK.

  141. Gmc Says:

    Same thing here Jared. I have an old Washington mutual heloc that was sold to chase. In the mix of the collapse the original home was foreclosed back in 09 and Wamu was sold to Chase. Yet Chase does not know the original home was foreclosed. Got lost in the mix I guess. I’ve been making payments though allot of people tell me to stop paying. That this obviously fell thru the cracks. What do you think the options are

  142. Debbers Says:

    My condo was foreclosed in Jan. 2017 and sold at auction on June14, 2017. It is now Oct. 18 and I have not been served papers that they are suing for a deficiency judgment (+90 days past delivery of deed to new owner). Am I good to go? Also, for tax purposes, do I use my info from when the house was foreclosed or currently? Thanks for your help in advance.

  143. Jarad Says:

    @ Debbers – It really depends on your states deficiency judgment laws. Some states it’s 3 months in which they have to file, others it’s years. So get with your local attorney and find out if you’re in the clear. I’m not sure how to answer your tax question.

  144. Sissy Says:

    I had a house in Michigan that was foreclosed on in Dec.
    of 2017. There was a HELOC attached to and I was issued a 1099-A for the tax year 2017. The bank that issued the 1099-A is insisting that I am still liable for payment even though they took it as loss.
    Is that even possible…Or legal on their part?

Leave a Reply

Ask The Expert?

Have a question that hasn't been answered? Ask us a question by clicking here.

Search Blog

Featured Product

foreclosure home study course
"The Investors Complete Foreclosure Home Study Course - Only $47"

Discover a Proven System for Buying Real Estate Foreclosures 30%, 40%, and 50% Below Market Value. Generate Huge Returns Using This Step-by-Step Foreclosure System.

Learn More - Click Here

Build Your Wealth

See our investment properties

Looking for Great Returns and Positive Cashflow? Build your wealth by investing in real estate.

Check out our inventory! »

Free Foreclosure Reports

Affiliate Disclosure

We review products from time to time and receive compensation from the companies whose products we review. We review each product thoroughly and give high marks to only the very best. We are independently owned and the opinions expressed here are our own...

Comodo SSL