Mary Salzer

  

That is a good thing, keep us posted, you lucked out as the purpose of that HELOC was known by Chase...you are extremely lucky and have an angel on your shoulder if they follow through as promised.

Please make sure that you are not exposed to them selling the credit for pennies on the dollar and then have some collection firm pursuing you for repayment, that is also a favorite trick, particularly on the Seconds these days. So have some sort of agreement in place that the debt is entirely forgiven as a result of the short sale agreement, and keep that commitment of forgiveness from Chase handy, as that maybe a problem regardless of the agreement (been there done that), I am offering this advice from experience with Chase and these very specific issues....

You need to make sure that the debt is forgiven, the problem is that the 1099 on it will not be pleasant and I suspect that this transaction is vulnerable to that issue. I am not a CPA or an attorney, but you do need to determine the tax implications of this situation as well.

Do keep us posted.