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HELOC

I had an investment property go into foreclosure 9/1/09 in Arizona, Maricopa county.

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Question: I had an investment property go into foreclosure 9/1/09 in Arizona, Maricopa county. The home has a first mortgage for 160k and purchase money HELOC for 20K. Neither loan was ever touched after the purchase. On Aug 17, 2009 Countrywide sent me a letter informing me the HELOC will have a new servicer Real Time Resolutions, INC.
On 9/5/09, I received what seems to be an attempt to collect from Real Time Resolutions, INC. it states I have, “30 days to dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.” The payoff they are requesting is $ 21,193.74 which I am assuming is the HELOC plus fees.

Is this allowed or legal, can a new servicer attempt to collect on the Heloc since the home has already gone into foreclosure? Should I meet with a lawyer or am I okay ignoring these letters?

Please advise and thanks for your time,

Aaliyah, Gilroy CA

Answer: -This is normal protical and yes since your loan was “sold” to a new servicer, they can try to collect the debt. So they will send you certified letters in the mail every month telling you how much you owe and that it’s an attemt to collect the debt. You don’t need to respond unless you are disputing the action and I’m sure they will try to call you every week and threaten you to pay…or else. By sending these letters, it gives them the right to proceed with foreclosure if they want. However, we all know they won’t unless there is substancial equity in the property. More than likely they will just write it off as a loss and 1099 you for the difference.

I have a home equity line of credit. I can’t afford to make the payments. Can the lender foreclose?

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Question: I have a home equity line of credit on my home in florida that I owe about $75,000 on. I owe about the same on my 1st mortgage that is with the same lender. If I can’t afford to make the payments on the line of credit but continue to make my 1st mortgage payments can the lender foreclose on my home?

Answer: – Yes, the 2nd can and most likely will foreclosure on your home, even if it’s the same lender because you are not meeting your obligation to them. It’s just a matter of time. You might try to do a Loan Modification especially if your 1st and 2nd mortgages are with the same lender

I own a home in Southern California. I bought the home using my VA benefits.

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Question: I own a home in Southern California. I bought the home using my VA benefits. I am 3 months behind in my mortgage. It doesn’t look like the mortgage co. (Countrywide) is going to modify the loan so that I may keep it, already contacted HUD and they sent a modification proposal to Countrywide 30 days ago but Countrywide has yet to receive it. My question is, I owe $64,000 on a Home Equity Line of Credit I got through Washington Mutual Bank on the house. If Countrywide forecloses, do I still owe the Equity Line of Credit? Will Washington Mutual come after me for the money? I owe $220,000 on the house, it was just appraised at $175,000. Thank you.

Answer: – California may be one of the few states where they don’t come after you for a deficiency judgment. If your home is foreclosed on, typically they will 1099 the borrower for the amount they lost. However, VA loans have special exceptions. With VA loans, I believe they may have the right to come after you for the deficiency judgment. You may want to check with an attorney in California on this, but it seems like that’s what I remember.

If my home goes into foreclosure what happens to my Home Equity Line of Credit?

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Question: I live in Idaho. If my home goes into foreclosure what happens to my Home Equity Line of Credit that is attached to the value of the property?

Answer: -Your home equity line of credit (HELOC) gets wiped out if no one bids. Then, typically your 2nd lien holder will 1099 you or file for a deficiency judgment. It’s more common to receive a 1099.

Equity Line of Credit and Foreclosure

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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.