The Short Sale Myth
A H.E.L.O.C. is a typical second position lien and can be negotiated like a traditional second loan.
A HELOC (Home Equity Line Of Credit) is not comparable to a traditional closed end second position lien and must be negotiated differently with the bank. A HELOC is not just a note that is tied to a piece of collateral like a traditional mortgage.
It’s rare that an offer of $1000 to $5000, which is common to traditional second liens, will be accepted by the bank that holds the HELOC.
Unlike a traditional second position lien, a HELOC has revolving credit characteristics – like a credit card – and can legally seek to recover the deficiency of the principal balance even after a foreclosure sale.
As you may know, they can seek payment and obtain a judgment. This collection process may go on for up to 20 years.
When considering your short sale offer, a HELOC will consider the value of your offer against the amount they think they can reasonably collect from you over the next 20 years.
If you owe $80,000 on your HELOC and you offer them $1,000, they’re going to turn you down if they do happen to understand the power of their position. After all, they can practically guarantee that they will be able to get more than $1,000 by attaching a judgment to any properties you may purchase over the next 20 years!
To connect to a real estate agent who knows what loss severity is common for your closed end second, HELOC, or other junior liens as well as what they are and aren’t willing to tolerate, contact us at OCForeclosureOptions.com and we’ll connect you with an agent in your area with the right amount of knowledge, the right amount of experience and the right tools to get your short sale closed the right way.
