Home Loans and Support

Settle HELOC?

Discussion in 'Debt Settlement' started by jakester, Feb 16, 2012.

  1. jakester

    jakester LoanSafe Member

    I am seeking advice/perspective on settling or renegotiating my HELOC, but interested in thoughts on other prudent alternatives. I will be as concise as possible, but my situation is involved.

    Situation:
    - Georgia (deficiency state, non community property state)
    - Married
    - Staying on top of all payments for now, but savings continue to decline
    - Credit is fine currently

    Primary residence acquired pre-marriage, on my credit only:
    - value 250K per primary lender (per some FHA lookup tool?), I reasonably estimate 280K considering improvements and recent neighborhood sales
    - Primary mortgage ~230K
    - HELOC total ~100K some purchase money, most not

    Second home (investment) acquired after marriage
    - wife on mortgage, but I was "written on" later (does not show on my credit)
    - value probably 300 - 350K
    - mortgage bal 210K on 5-year baloon that expires March 2012
    - fairly comfortable that I have alternative for new balloon, but will probably start showing up on both our credit at that point

    Ideally we want to move to better school district, but I am hesitant to strategic default for fear of deficiency judgement and not knowing A) the odds of this and B) ability of judgment to come after liquid assets or the second home that we actually have equity in

    Reviewing posts here, particularly "Strategy for Settling Your Second", I am considering ceasing paying my heloc (right after I HARP my primary for good rate, and refi the 2nd home) in order to settle when they are primed to negotiate. The plan in this scenario is to rent this place out, and rent our residence assuming we won't be able to repurchase at that point.

    Questions/concerns:
    1- what are risks to ceasing heloc payments if lender doesn't start offering settlement negotiation? Do I still risk some court actions or judgments that will come after other assets?
    2- am I correct to count on NOT being able to get a mortgage on another primary residence (either selling the primary or renting it) after settling the heloc?
    3- when we refinance the investment property next month, does it matter if the new note is in both names. The question is coming from possible deficiency judgment and/or credit perspective

    Thanks in advance. I am grateful for the posts here that have given me hope for some alternatives other than contining to pay until my situation becomes dire.

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