Chances of HELOC Lienholder Coming After you Post-foreclosure
hi, i have an investment property in California that i used to live in and it's about to be foreclosed. (currently rental property)
the first mortgage is with Wells Fargo and after living there for 2 years, i also opened up a HELOC, also with Wells Fargo. based on my understanding, the HELOC would NOT be a purchase money loan since it was opened a couple of years later after the initial purchase, and i'm not sure i can prove that the money was used for that home's upgrades, etc. i called WF and the first mortgage has an investor behind it, and the HELOC is issued directly by WF.
i have 2 questions i was hoping somebody could help address or share their experiences: after the property forecloses, i'm sure that 1st mortgage would get most of the money back, but not all and therefore, the HELOC would get none. although the 1st lienholder can't come after me or force me to pay the lost difference, i understand that the HELOC lienholder can in California.
1. based on those folks here that have foreclosed, has the 2nd lienholder (heloc) try to come after you or if they sold the debt to a collection agency, has any agency come after you? in either case, what was your debt amount on your HELOC? mine is $97k and i don't know if that's enough for them to come after me.
2. if i eventually get a 1099 from WF, does that mean they have forgiven the debt? however, if they sold this to a collection agency AND issue a 1099, wouldn't i get double-dinged? (taxes, and then also have to pay collection agency.) OR can i assume that if i got a 1099, the debt was cancelled/written off and that the bank never sold it to a collection agency.
thanks for all of your help in advance. =)