Results 1 to 4 of 4
  1. #1
    Join Date
    Mar 2009
    Posts
    15

    Default Foreclosure with HELOC

    My question involves a foreclosure in the State of: GA

    GA is a deficiency state.
    Our primary home will be in default in another 50 days and enter foreclosure. Our first is a Freddy Mac serviced by XXXXXXX for $67,000. Our 2nd is a $51,000 HELOC with XXXXXXX that was done last August or Sept. We had no clue when we took out the HELOC loan that we would be unable to sell the home. It has been on the market since last August. My husband is now unemployed. Most of the HELOC was not used for the primary home.

    We also have a fixer-upper we purchased 3.5 years ago in XXXXXXX. We bought it for future retirement and never rented it. It wasn't suppose to be a fixer-upper, but we had a lousy home inspector. Between the extensive repairs that are still left and the loss of value due to the market, there shouldn't be any equity in it. Paid $49,000 ... owe $42,100. We want to move into it since we can afford the payments.

    First Question: After foreclosure, will our second home be in jeopardy? Can they put a lien on it even though there is no equity and it is emcumbered with a 30-year loan?

    Second Question: XXXXXXX said they will charge off the loan. Are they likely to: (a) sue us for deficiency, (b) try to settle with us for a much smaller percentage of the amount, (c) sell the loan to a collection company, or (d) only send a 1099-C to IRS?

    Third Question: We really don't want to go through Bankruptcy, but our income will qualify for Chapter 7. If you do recommend bankruptcy, should we file before foreclosure or wait until it is done and XXXXXXX charges off? I believe we should be able to keep our home we are moving into as long as we still pay the mortgage ... is that correct? Georgia has a $20,000 exemption for bankruptcy, so I'm hoping we can apply that to our other home if needed and other items.

    Hope my questions aren't too many. Thank you so much for this forum.

  2. #2
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: Foreclosure with HELOC

    Quote Quoting need_help-GA
    View Post
    My question involves a foreclosure in the State of: GA

    GA is a deficiency state.
    Our primary home will be in default in another 50 days and enter foreclosure. Our first is a Freddy Mac serviced by XXXXXXX for $67,000. Our 2nd is a $51,000 HELOC with XXXXXXX that was done last August or Sept. We had no clue when we took out the HELOC loan that we would be unable to sell the home. It has been on the market since last August. My husband is now unemployed. Most of the HELOC was not used for the primary home.

    We also have a fixer-upper we purchased 3.5 years ago in XXXXXXX. We bought it for future retirement and never rented it. It wasn't suppose to be a fixer-upper, but we had a lousy home inspector. Between the extensive repairs that are still left and the loss of value due to the market, there shouldn't be any equity in it. Paid $49,000 ... owe $42,100. We want to move into it since we can afford the payments.

    First Question: After foreclosure, will our second home be in jeopardy? Can they put a lien on it even though there is no equity and it is emcumbered with a 30-year loan?

    Second Question: XXXXXXX said they will charge off the loan. Are they likely to: (a) sue us for deficiency, (b) try to settle with us for a much smaller percentage of the amount, (c) sell the loan to a collection company, or (d) only send a 1099-C to IRS?

    Third Question: We really don't want to go through Bankruptcy, but our income will qualify for Chapter 7. If you do recommend bankruptcy, should we file before foreclosure or wait until it is done and XXXXXXX charges off? I believe we should be able to keep our home we are moving into as long as we still pay the mortgage ... is that correct? Georgia has a $20,000 exemption for bankruptcy, so I'm hoping we can apply that to our other home if needed and other items.

    Hope my questions aren't too many. Thank you so much for this forum.
    I am sorry to hear of your problems.

    You are correct GA is a deficiency state. Meaning they can attatch a deficiency judgment to your other property.

    Since the home you are living in NOW is your primary home you should be fine with the 1099-C. You will be moving into your secondary home and that will become your primary down the line. If you do get a 1099-C on this home, just use IRS form 982 to squash the income problem.

    NOW is the time to file a bankruptcy. This way you can give the home back to the lender and you will be able to discharge any possible deficiency. This will also prevent a judgment being recorded against your second home.

    A charge off means that the loan was taken on the lenders taxes as a loss. It does NOT mean you no longer owe the money. The lender will still sue you for the charged off amount.

    Yes from what you said on here, you will be able to keep your other home that you will be moving into. If I was in your position I would RUN to a bankruptcy attorney and file a chapter 7. This site can put you in touch with one in your area.

  3. #3
    Join Date
    Mar 2009
    Posts
    15

    Default Re: Foreclosure with HELOC

    Thank you for your reply suggestion for doing Chapter 7 now.

    After reading about Chapter 7, it seems that GA can do a lookback of previous bank statements. We will show some large cash withdraws up until our statement for January transactions for various purposes such as paying cash for home improvements, etc. We won't have proof where the etc. money went.

    Knowing that, should we wait to file until just before the foreclosure sale to distance ourselves from our February statement (don't know if there are enough months to do that).

    Seems every state is different on how many bank statements they want. When we took out the HELOC and used the money, we had no clue we were going to foreclose or bankrupt.

  4. #4
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: Foreclosure with HELOC

    Quote Quoting need_help-GA
    View Post
    Thank you for your reply suggestion for doing Chapter 7 now.

    After reading about Chapter 7, it seems that GA can do a lookback of previous bank statements. We will show some large cash withdraws up until our statement for January transactions for various purposes such as paying cash for home improvements, etc. We won't have proof where the etc. money went.

    Knowing that, should we wait to file until just before the foreclosure sale to distance ourselves from our February statement (don't know if there are enough months to do that).

    Seems every state is different on how many bank statements they want. When we took out the HELOC and used the money, we had no clue we were going to foreclose or bankrupt.

    You should consult with a bankruptcy attorney now, do not wait. They can tell you when it is best to file. Since the money was used to improve a home and your situation changed in the last few months, I do not see any issues.

    1. Sponsored Links
       

Similar Threads

  1. Foreclosure: Will I Owe on a HELOC After Foreclosure
    By sally1976 in forum Real Estate Finance
    Replies: 2
    Last Post: 03-22-2011, 01:56 PM
  2. Foreclosure: Foreclosure, HELOC and Second Home
    By tmnf11 in forum Real Estate Finance
    Replies: 1
    Last Post: 03-12-2011, 07:24 AM
  3. Foreclosure: HELOC Suing Before Foreclosure
    By jewel170 in forum Real Estate Finance
    Replies: 1
    Last Post: 06-14-2010, 06:25 AM
  4. Foreclosure: HELOC Payments After Foreclosure
    By micrguy in forum Real Estate Finance
    Replies: 2
    Last Post: 08-07-2008, 05:53 AM
  5. Foreclosure: HELOC Foreclosure
    By Sloanhaus in forum Real Estate Finance
    Replies: 3
    Last Post: 07-08-2008, 05:37 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
 
Forum Sponsor
Real Estate Forms
Real estate forms and contracts, state specific, immediate download.




Untitled Document