Am I in trouble if the property my HELOC was for is not in my name and is now in default?
Well if by “trouble” you mean a foreclosure soon to be filed against you…then “Yes” is the answer. How exactly did the property get “out of your name” without a sale? If an actual sale took place the HELOC would have been paid off by the sale…and you’d be off the hook.
If you just signed a “Quit Claim Deed” over to someone giving your ownership rights to them without a formal sale and left mortgage(s) you’re responsible for still on the property…then you made a big mistake.
For one thing, there are “Due on Sale” clauses in every mortgage and HELOC which states if you sell OR transfer your ownership, the bank as the right to call their loan due and payable immediately. If you don’t have the money… they have the right to foreclose.
Secondly, as you have found out, leaving “others” to pay your mortgage obligations rarely works out. They never pay or pay late and your credit is ruined…or worse…the loan(s) go into default and you get a foreclosure on your record.
To solve this, get your ownership rights back the same way to gave them away…with a “Quit Claim Deed”…and start paying the mortgage on time…get it out of default. If you can’t afford the mortgage, then after you have your property rights back…sell the home and pay off the mortgage.
Good Luck
Author: The Mortgage Insider
Previous Post:« Which is better PMI or LPMI?
Next Post:» What would happen if we stopped paying the second mortgage?
Tagged with: Due on Sale • HELOC • Quit Claim Deed
"Our Online Quote Service Is A Guaranteed Way To Compare Mortgage Offers Quickly." - Rob K. Blake, The Mortgage Insider ...Click Here!
I have a HELOC that has not yet been accessed or used since opening a year ago. Can I ask another bank to purchase? Or can I ask current bank where HELOC is, to transfer line of credit to another bank?
john,
If your HELOC has never been used, simply ask the bank to cancel it. There may be a cancellation fee, especially for a HELOC that went unused, but it will be nominal. Then reapply to another bank.