Short sale with different lenders for 1st and equity, getting divorced?

Asked by Steve, California Wed Jan 28, 2009

My wife and I are getting seperated, and eventually divorced. We own a home in CA that won't sell for what we owe on it. We also have an equity line of credit on the house through a different lender than our 1st. If we do a short sale and are getting seperated/divorced how will that affect us?

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Brittany Sim…, , Columbus, OH
Wed Jan 28, 2009
Steve:

Unortunately, you will both be held liable for the debt. Even if a judge rules that one party is responsible for the mortgage, etc. If it is not refinanced, the debt belongs to both of you.

If your lenders agree to a short sale, you credit will not be impacted as greatly and you both should be free of the debt. Sometimes the lienholders will require a repayment plan of a portion of their losses before they agree to the short sale.
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