Hi! I have a 295K first loan with GreenTree plus a 44K HELOC with San Diego County Credit Union on a primary residence property in Oceanside, CA.
Me and my ex-husband divorced late last year and I tried to keep the house. My salary is not enough to cover the mortgage and other living expenses, so by 6/1 I will be three months behind payments. According to the GreenTree agent who has been working with me, at 3 months behind payments they start foreclosure procedures. I started HAMP procedures with GreenTree as advised by the HUD counselor I procured, even though my heart was already set at getting out of the house and starting a new life in a small place of my own. GreenTree has had all my HAMP forms for 6 weeks now but no-one has been even assigned to look over my case yet.
Knowing that financially it would be best (in the short and long term) for me to move out of the house and live somewhere I can comfortably afford, I put down a deposit on a 1BR apartment and am scheduled to move in mid June. So I am letting the house go, but I want to do it the best way possible, that will have the least future impact on my life. Here is my question: because I have these two loans (the first was refinanced once, originally was 279K then went up to 295K), I am concerned what tax and deficiency consequences can arise if I short sale or if I foreclose. I've read that the 2nd mortgage lender can sue for breach of contract after a short sale fails to fulfill that 2nd loan. I guess that could also be true in the case of foreclosure. How common is that to happen?
I understand that CA has protection for deficiency judgements on the first loan, but what about the 2nd, the HELOC? Which would be the safest way of leaving the house to avoid later complications with the tax man and potential Credit Union law suits, a short sale or foreclosure?
Thank you and I'm so glad I found this site!