I have been doing Glendale AZ Short Sales for quite some time and I am now just encountering sellers who have HELOC’s. Question: If their HELOC was used exclusively to make improvements on their primary residence and the seller can show receipts, will they still be liable for the full amount?
Has anyone had a seller with a HELOC that they were able to negotiate away?
I would appreciate any insight that you can offer.
Elise Fay
John Hall & Assoc.
{ 3 comments… read them below or add one }
Elsie,
I am not sure I understand what you are asking. Are you asking about whether they will be liable for the taxes? Or are you referring to the bank coming after the homeowner?
We currently process short sale in all 50 states and we are negotiating with all types of loans to walk away. The question is always, “At what amount?” If the loan has not been charged off then it should be a little easier to get the job done.
Regards,
Jonathan Katz
**Please feel free to contact me about our free short sale processing for sellers and buyers**
“Charged off”? As in the bank forgives it as a bad debt? Please explain what that means and at what point do they charge off? I really thought that didn’t happen for quite some time. Actually I never heard that terminology with something like a line of credit – only with unsecured debt like credit cards.
Deidre,
We deal with a great deal of loss mitigation which includes everything from loan modifications to short refinancing to deed-in-lieu of foreclosures and this comes up all the time. Especially these days. In many cases once the loan has become delinquent after a certain amount of time the debt is “charged off”. The debt is still owed and usually sent out to a collection company or in some cases the same lender has their own charge off department sometimes referred to as their “Recovery Department”. Usually this happens at a threshold and all investors have different time frames. In most cases this happens when the loan is 120 Days Due delinquent but can many times happen as little as of becoming 90 Days Due. This is also in part due to the negative equity found in the property.
This generally only happens with second mortgages.
We actually update information like this on our blog http://www.MLReport.com along with posting up other lender guidelines.. Feel free to sign up to our newsletter and get the updates straight to you e-mail.
Good luck and if you have any other questions please reach me at your convenience.
Take care.
Jonathan Katz