Home Selling in 91202>Question Details

Mo, Other/Just Looking in glendalia

I'm doing a short sale and I have an eloc loan after purchase. Do I have personal liability on the eloc?

Asked by Mo, glendalia Fri Aug 1, 2008

oustide of the collaterial (house)

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Demi Fox’s answer
make sure that if your lender agree to a short sale, to add a paragraph that stepulate that they will accept the pay off amount agreed for the short sale as a full payment and that they will not pursue you for the balance of the loan. Although the new law passed July 11th, 2011. I like to make sure that my sellers are safe and want to see such disclosures in my short sale approval letter.
You also want to make sure that the buyers have reserved to most likely cover about 10% of the loan amount (your second/HELOC)
Good Luck
Demi Fox & Associates
Real estate consultants and short sale specialists
Thousand Oaks CA
0 votes Thank Flag Link Mon Aug 8, 2011
The home equity line of credit (HELOC) uses the residence as collateral, so you will need to pay it off or negotiate with that lender. HELOCs are one of the things that cause problems in a short sale because in most cases it is cash loan, meaning that the proceeds from the loan are spent, so if there is foregivness it is treated as income.

Only purchase money or money used for re-habbing the property is part of the mortgage forgiveness act, (see link)
0 votes Thank Flag Link Sat Aug 2, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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