Posted on: 30th Aug, 2008 04:17 pm
My husband and I purchased our home about 2 years ago before the market took a huge flop. We purchased it for $288,000 with 20% down and ended up taking out a home equity line of credit for $34,000 (STUPID). Now we are selling our house and it only appraises at $265,000 which is our asking price. Well after the commissions and closing cost are all paid it leaves us in the hole of about $26,000 with our HELOC. After speaking to that lender they can work out the figures with our realtor and 1st lender to come up with a short sale. I am assuming that what amount is left due will be charged off. Will this look bad on us and our credit? Or will we be ok since it was the housing market that fell through not us. We both have excellent credit and have never been late on a payment.
Welcome Erin,
You mean the lender who has offered Heloc would talk to the realtor and the first lender? Ok that's fine then. Through negotiation, they'll be able to figure out what amount is left to be paid to the second lender after the first will be paid off through a short sale. This is possible as they have an idea about the prices at which homes are selling near your house.
If the short sale isn't able to provide enough proceeds, the first lender will get paid first and any remaining unpaid debt will have to be paid by you unless the first forgives the debt or issues a charge-off . Only after the first lender is satisfied, the second lender can get his dues.
You mean the lender who has offered Heloc would talk to the realtor and the first lender? Ok that's fine then. Through negotiation, they'll be able to figure out what amount is left to be paid to the second lender after the first will be paid off through a short sale. This is possible as they have an idea about the prices at which homes are selling near your house.
If the short sale isn't able to provide enough proceeds, the first lender will get paid first and any remaining unpaid debt will have to be paid by you unless the first forgives the debt or issues a charge-off . Only after the first lender is satisfied, the second lender can get his dues.
Hi erin,
Your second lender should issue a notice regarding the charge-off if at all he considers the debt as uncollectible. Its better that you don't assume the debt has been charged-off.
Moreover, what I'm concerned about is, whether the first lender would come after you for the deficiency even though the second may charge-off any unpaid debt on your Heloc. By the way, in which state is your property located? Depending upon the state, you may not have to pay deficiency as per the anti-deficiency laws which apply in case of purchase loans.
To know more about what happens after second mtg charge-off , refer to the information available on this topic.
Good luck
Your second lender should issue a notice regarding the charge-off if at all he considers the debt as uncollectible. Its better that you don't assume the debt has been charged-off.
Moreover, what I'm concerned about is, whether the first lender would come after you for the deficiency even though the second may charge-off any unpaid debt on your Heloc. By the way, in which state is your property located? Depending upon the state, you may not have to pay deficiency as per the anti-deficiency laws which apply in case of purchase loans.
To know more about what happens after second mtg charge-off , refer to the information available on this topic.
Good luck