Bank Credit Equity Home Line

I'm looking to refinance my house and while the loan amount on my first mortgage is 800K, my house is appraised at $1M. However I also have a home equity line of credit for $100K. I'm only looking to refinance the first mortgage, however. Will the bank count the HELOC, in addition to the new first mortgage, when evaluating the refinancing of the first mortgage? Thanks.

They are likely to consider it when evaluating your ability to repay the debt (include it in your debt burden ratio). They will, however, be in a frist lien position by refinancing the $800M loan and the HELOC will be subordinate to their lein, so it is not included in a loan to value calculation for the 1st mortgage. It is likely that they will requre the HELOC lender to acknowledge and subordinate to their new loan. The HELOC lender may also have consent rights.

2008-11-29 22:08:17 by oizuki

Looking to pay of credit cards and other loans, consolidate holiday bills, or have the comfort of access to ready funds to pay for any major ...

I am going through a foreclosure and need to know if I am liable to pay back this second lien position, home equity line of credit. Also what are tax consequences for this foreclosure with the home equity line of credit?

I guess you did not like my first answer, so I'll answer again in a different way. I am assuming from your prior posts that this was taken out at the time you bought the property as a combo loan.

Purchase money loans are non-recourse in California.

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, as in California, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. This is uncommon in most other states where there is no "third party" that can execute the sale upon default by the borrower.

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out by specific rules. Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.

On the other hand, the judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. This is uncommon with most commercially available real estate loans (i.e. Citi Mortgage) in CA and most likely would be found when there is a private party lending the money to purchase or finance the real property. Generally, once the court declares a foreclosure, the property will be auctioned off to the highest bidder. Using this type of foreclosure process, lenders may seek a deficiency judgement in an attempt to recoup some of their losses. Under certain circumstances, the borrower may have up to one (1) year to redeem the property.

As a rule, borrowers facing foreclosure and/or a short sale should consult their attorney and tax professional for expert advice.


Edit:

If as stated below, it was done subsequent to the purchase, your liability here is more complex, and depends in part on which lien forecloses first.

If the senior LH (Lien Holder) forecloses first, it will wipe out any junior LH. Should the proceeds on the senior lien's FC fail to cover the amount due on the HELOC, the lender can come after you for the difference, up until the statute of limitations on the debt has run.

The issue is whether the lender actually will do so. If you lack assets, it is unlikely they'll be interested in spending money to get a judgment.

The other important point here is to remember the "one action" rule. If the junior LH is the one who forecloses first, then you will not have personal liability on the junior lien (even on a HELOC) -
the junior LH will have taken its single bite of the apple by foreclosing, and takes only what its "bite" ends up producing. The senior LH, however, is still intact.

Some people, if they simply cannot pay both mortgages anymore, refi or a sale won't work, then they do what they can to keep the 1st TD current. Letting the HELOC go into arrears may force the HELOC lender to make a choice. This may force the HELOC lender to foreclose - and thereby eliminate your largest potential source of liability.

What happens after that is the concern of the junior LH, who has to then monitor the 1st TD to protect its interest in the property. You will, of course, then be evicted by the new record owner - the junior LH - who then gets to decide how to handle the senior LH (pay them off, bid at the senior's FC sale, etc.).

This is not advice, seek the advice of an attorney.

2007-12-18 13:29:12 by lifeagent

Price: $9.95 $9.95

I just deposited a $25K check from a well-known brokerage firm into my checking account at a well-known bank. I want to use that money to pay off part of my home equity line of credit balance at the same bank. I did this three months ago and it wasn't a problem. Nothing has changed on my end but now they want to hold the check for 15 days so I can't pay off part of my balance. This means I have to pay an unneeded $150 to them for the interest on that amount I'm not able to pay off yet. I've always seen checks cashed in 24 hours these days. Is this 15 day hold on money they already have unreasonable and should it be reported to the Better Business Bureau? Thanks.

Some banks do that, check with a supervisor at the bank and if you do not get help then go to the BBB

2006-06-07 11:16:02 by this_one_dude

Price: $9.95 $9.95

I called to check on the status of my application and hear it is "temporarily approved pending two confirmations." These include making sure my house is not in a flood zone, and the value of the house. In order to do this, the application has to be assigned to someone, and that has not been done in over a week.

Since I am requesting under $500,000, the bank absorbs the costs associated with the confirmation of the value of the house.

How long does it normally take? I assume they checked my credit score already, the purpose is to consolidate debts and I am in the red. Could they reject the application on the basis of poor credit now?

call them. they could be waiting for an appraisal, there could be a snag or two on the credit report. being is debt is usually ok its if you are behind that matters. and yes if they just pulled the credit, it can still get rejected. the process usually takes a few weeks so relax

2006-10-07 10:20:08 by Pia

recently he got a letter from home equity line of credit bank's attorney saying that they are trying to collect debt and all that, he doesn't have the money any more so what happens, now, what are his option filing a bankruptcy or?

He would have to sell the house if he wants to dismiss this via a bankrupsy.

2008-07-28 19:09:35 by Rana