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home equity line of credit

home equity line default

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Question:  I work for the bank that holds my home equity line. I do not want to default on it. (It is only a 10k heloc) Can I just continue to pay on it if my mortgage loan is defaulted on?

 

Answer:  You are free to continue to pay on it if you want. However, you have to realize that sooner or later, the bank in first position will foreclose on you.  And if there is no equity in the home, more than likely your 2nd will be wiped out, regardless if you made your payments or not.  To me, it doesn’t make sense to make payments on the 2nd if you are not making payments on the 1st mortgage.  In the end,  your bank will still want the $10k that you borrowed, which you can gladly workout some sort of settlement with them until it’s paid off.  Offer them payments over 10 years like you agreed on or give them $2000 upfront as a full payoff.  They’ll treat it just like any other defaulted loan even if you work there.  What you do want to try to avoid is a deficiency judgement.  You want to try and get a full satisfaction so they can’t file a judgment against you.

Used HELOC as down payment on house

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Question:  I bought a house in 2005. I got a mortgage on the house and put down 10%. The bank also gave me a heloc at the same time on the same home. I did not receive any of the $…the bank took as further down payment. Looking back it doesnt make sense that the bank did this. My mortgage broker was the one whom recommended. Was this legal?

Going through the short-sell process…full satisfaction or release of lien?

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Question:  I have a house that is currently going through the short-sell process. I have an approval letter for the first and the second. The second is stating “BAC Home Loans Servicing, LP and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above.” I live in CA and the second was an home equity line of credit (HELOC). We have already agreed to pay $2500 to the second and they have agreed, but they are still including this language in the short sale approval letter. What rights do they have to sue us later on?

Answer:  – It depends on what you agree to as part of the payoff. This is where you need to make sure you ADD to the payoff letter that the $2500 is for “full satisfaction” of the loan. See there are 2 types of payoffs. 1 is a “release of lien” which means you pay the mortgage company $2500 and they retain the right to still come after you for the deficient amount. The other payoff is a “satisfaction” which means “paid in full” – they give up their right to come after you for the deficient amount (which is called a deficiency judgment). All they can do is 1099 you for the amount lost of which you can file form 982 and in most cases claim insolvency and negate the 1099. If it was your personal residence, with Obama’s new laws in place, you may not have to pay anyway. So whatever you do, please please please get the satisfaction. Sometimes if they don’t agree to a satisfaction of loan, you’ll just have to pay a little extra more to get that piece of mind.

I have a mortgage and home equity line of credit I am in Florida. If my property is foreclosed upon what happens to the equity line of credit?

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Question: I have a mortgage and home equity line of credit on the same property with Countrywide. I am in Florida. If my property is foreclosed upon what happens to the home equity line of credit? Also am I held liable for taxes up to the foreclosed date?
Thanks

Answer: -If your home has a first and second with the same lender, Countrywide, it’s almost treated like it’s one loan. If they send it through foreclosure, they’ll probably start at just what’s owed on the first and hopefully get someone to bid on it…If no one bids then they’ll end up with the property. Then they’ll probably write off that 2nd in which they could file for a deficiency judgment but more than likely they will 1099 you for that amount they lost and you’ll have to pay taxes on it. As for the property taxes, they’ll have to pay those in order to sell it to an end buyer.

I own a home in Florida. We owned the home outright and then got an equity line of credit.

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Question: I own a home in Florida. We owned the home outright and then got a home equity line of credit. We have not made a payment in 2 years!! I heard they can not evict. Is this true? I call and email them all the time and they never respond.

Answer: -You haven’t made a payment in two years and you own the home outright beside a small line of credit…You are crazy for not making that payment unless the home is not worth what you owe on the home equity line of credit. No they can’t evict you…yet! Once they foreclose on the property they can evict you. I would try to get something worked out quickly especially if you have a great deal of equity in your home.