Posted on: 21st Mar, 2010 08:55 pm
bofa has accepted the short sale of my 2nd home but "may pursue a deficiency judgement". a small portion of the ss will go towards my second mortgage, the heloc. bofa states they will "release the lien and charge off the remaining debt" on my heloc. what is "charge off" and how does it affect my credit score? should i even agree to their terms or re-negotiate for debt forgiveness (unlikely on the 1st) or other terms for my heloc? is bofa starting to go after deficiencies even after short sale?? thanks for any advise.
Hi smagma,
If BofA charges off the HELOC, it means they will report the debt as their loss for accounting and tax reasons. They may send the debt to collections and a third party collection agency may come after you to collect the remaining balance on the loan.
The lenders often go after borrowers to collect the deficiency from the short sale. BofA too can come after you for the deficiency. However, in case of a deed in lieu, the lender is expected to forgive the deficiency. Thus, you should check out if you can qualify for a deed in lieu, rather than a short sale.
If BofA charges off the HELOC, it means they will report the debt as their loss for accounting and tax reasons. They may send the debt to collections and a third party collection agency may come after you to collect the remaining balance on the loan.
The lenders often go after borrowers to collect the deficiency from the short sale. BofA too can come after you for the deficiency. However, in case of a deed in lieu, the lender is expected to forgive the deficiency. Thus, you should check out if you can qualify for a deed in lieu, rather than a short sale.
Thanks Jenkin,
BofA is leaving the remaining HELOC debt as a "collectable balance". I now understand that means a debt collector. Is it better to hold off from signing the agreement and trying to "resolve" the debt? I actually already paid down the equity line about 50%.
My 2nd home is in AZ. It is an anti-deficiency state I just heard. Would you still suggest trying for the Deed in lieu.
Thanks Again!
BofA is leaving the remaining HELOC debt as a "collectable balance". I now understand that means a debt collector. Is it better to hold off from signing the agreement and trying to "resolve" the debt? I actually already paid down the equity line about 50%.
My 2nd home is in AZ. It is an anti-deficiency state I just heard. Would you still suggest trying for the Deed in lieu.
Thanks Again!
To smagma,
" BofA is leaving the remaining HELOC debt as a "collectable balance". I now understand that means a debt collector. Is it better to hold off from signing the agreement and trying to "resolve" the debt? I actually already paid down the equity line about 50%."
It seems that BofA wants to collect the remaining debt from you. This is why they have left the HELOC debt as “collectible balanceâ€. However, if they are ready to “resolve†the debt and forgive the remaining balance, you can sign the agreement.
Arizona is an anti-deficiency state. But the property is your second home, not your primary residence. Hence, the anti-deficiency statutes will not be applicable in this situation. In most of the cases, the lenders forgive the deficiency from a deed in lieu. So, I believe it is worth a try to talk to the lender regarding the deed in lieu before making a final decision.
" BofA is leaving the remaining HELOC debt as a "collectable balance". I now understand that means a debt collector. Is it better to hold off from signing the agreement and trying to "resolve" the debt? I actually already paid down the equity line about 50%."
It seems that BofA wants to collect the remaining debt from you. This is why they have left the HELOC debt as “collectible balanceâ€. However, if they are ready to “resolve†the debt and forgive the remaining balance, you can sign the agreement.
Arizona is an anti-deficiency state. But the property is your second home, not your primary residence. Hence, the anti-deficiency statutes will not be applicable in this situation. In most of the cases, the lenders forgive the deficiency from a deed in lieu. So, I believe it is worth a try to talk to the lender regarding the deed in lieu before making a final decision.
I went ahead with the short sale and BofA's recovery dept. called me about the remainder of debt on the HELOC. I offered a minimal amount since the loan was 45% of original amt. expecting them to come back with a counter offer. Bof A refused. I asked what they were expecting and to speak to a manager. left several messages and was never called back. They sent me to collections per my credit report. Now I get ot learn how to negotiate with a collections agency.