Posted on: 17th Dec, 2009 08:41 am
I have a unique situation. I purchased a home with a 1st and a 2nd. However, the second is considered an Equity Loan however the entire amount was used at the time of purchase to secure the property. In other words, the full equity loan was needed in order to secure the property. I've had an attorney look at the documents and it is clear that even though this is technically an equity loan, the documents were written clearly to secure the property and is purchase money.
That said, I paid down some of the second/equity loan, with additional funds several months after I was in the property. I then used those funds that I paid down at a later date and brought the loan balance back to the original amount that was used to secure the property.
I'm currently in a short sale situation that is quickly turning in to a foreclosure. My attorney says the laws are unclear about this situation was to whether it would STILL be considered purchase money since I paid some of it down at a later date and drew it back, but felt like overall the law should protect me from deficiency since the original loan documents and loan was used to secure the property as purchase money.
I am seeking a second opinion on this situation to see if this is still considered purchaser money or if there is any case law that addresses this situation.
Thank you,
That said, I paid down some of the second/equity loan, with additional funds several months after I was in the property. I then used those funds that I paid down at a later date and brought the loan balance back to the original amount that was used to secure the property.
I'm currently in a short sale situation that is quickly turning in to a foreclosure. My attorney says the laws are unclear about this situation was to whether it would STILL be considered purchase money since I paid some of it down at a later date and drew it back, but felt like overall the law should protect me from deficiency since the original loan documents and loan was used to secure the property as purchase money.
I am seeking a second opinion on this situation to see if this is still considered purchaser money or if there is any case law that addresses this situation.
Thank you,
it was definitely a purchase money loan, according to what you've said, but i think you brought it into a gray area when you paid down on it. from that point onward, i have a feeling that it's all a matter of interpretation. have you had any discussions with the lender about this? you may want to do that, if you haven't already, and you may want to discover as many avenues as you are able to see if this question might be escalated (the lender's supervisory agency, for example) in the event you're not satisfied with answers you receive.