I am concerned about a HELOC. I have a trustee sale schedule for my home for September. I refinanced my home on 2/2008 to get a fixed interest rate because I had an adjustable rate. US Bank did two loans. The first loan was a fixed interest rate for 30 yrs for $176,000 and the second a HELOC for $42,000. $32,000 of this HELOC was purchase money and $10,000 was kept in US Bank Credit Line account. At the beginning of 2010, I withdrown the $10,000 remaining on the HELOC trying to save two rental properties. It didn’t work. One of the rentals is going to foreclosure. We decided to move to the other rental and let our primary residence foreclose because of our financial situation. Now US Bank is telling us that even after foreclosure we will be liable for the HELOC. Is this true?

It is possible that your actions with your credit line could be construed as a recharacterization of the HELOC. It would require review of the documentation and subsequent communication to that lender from qualified counsel. With the understanding that $375 and 10 sheets of paper anyone can sue you, it is best that you get proactive with working with them before they in fact file an action against you. Even if it is argued and determined that you have deficiency protection the only arena available to have that conversation is in court. These costs are too high to risk ignoring and engaging in long dialogue with a lender playing collections. You need to seek counsel and take a direct approach with them. There are very clear arguments to be made that you should be protected from deficiency. Just don’t wait till the point in time when you have to argue it out in front of a judge.

Again, to be clear. If a homeowner does not meet the elements represented by ARS 33-729 and 33-814(g) they may be at risk for deficiency.

(This response is in no way legal advice nor should it be construed as such and represents the opinion of this poster only. )

I purchased a home in AZ in 2005 using a 1st mortgage for 162,000 and a Line of credit for 100,000. The total purchase price was 262,000. We needed both loans to purchase the home and both loans were processed through the same bank.

We were relocated by employer approximately 6 months later. We tried to sell the house for 6 months with no success. We ended up renting it out for a few years and paying the difference between the rent and the mortgage during that period.

Since then the house went up for short sale and 2 offers were left on the table due to the bank. The bank foreclosed in September 09. We received a 1099 from the first mortgage but the Credit Line continues to call us requesting that we pay them. They act like they have no idea that the house foreclosed.
We did make a large deposit into our credit line and a large withdrawal from the Credit Line a few years ago, in that order. We are unsure if they can sue us for the 100k default of the Credit Line.

What are your thoughts?

More people need the *right* answer to these questions.

Justin
.-= Justin´s last blog ..Maybe =-.

Folks, if you are facing foreclosure…make sure you have the right information before you make foolish decisions.
.-= Bubba´s last blog ..Reproductive Rights =-.