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Old 04-07-2016, 11:49 AM
 
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I need help: I sold my house through short sale with a small credit union in jan 2015...i recieved a letter stating my mortgage was satisfied. Then a couple of days ago, this same credit union called me and said i still owed 50,000.00 on my home equity load that was for that same property??????? can this be true? how do you sell a house without satisfying the home equity load? please help
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Old 04-10-2016, 07:07 AM
 
Location: Rural Michigan
6,343 posts, read 14,641,578 times
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Quote:
Originally Posted by marty1129 View Post
I need help: I sold my house through short sale with a small credit union in jan 2015...i recieved a letter stating my mortgage was satisfied. Then a couple of days ago, this same credit union called me and said i still owed 50,000.00 on my home equity load that was for that same property??????? can this be true? how do you sell a house without satisfying the home equity load? please help
a home equity loan is generally a 2nd mortgage & the lender can release their lien without forgiving the debt. Gather up your paperwork & call a lawyer.
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Old 04-10-2016, 12:51 PM
 
Location: Salem, OR
15,539 posts, read 40,308,808 times
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Originally Posted by Zippyman View Post
a home equity loan is generally a 2nd mortgage & the lender can release their lien without forgiving the debt. Gather up your paperwork & call a lawyer.
Agree. You should have had two satisfaction letters. One for the mortgage and the other for the HELOC as it is a separate loan from your mortgage.
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Old 05-19-2016, 10:05 AM
 
Location: Tampa
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And don't forget to check what the lender(s) submitted to your County about satisfaction of the loan. In my case, all the paperwork I received from them was forgiving the loan and the note (or something similar), but on the official paperwork with the County, it did not absolve me of the note.
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Old 05-19-2016, 11:12 AM
 
Location: Boise, ID
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Did you let your agent know that the 2nd existed so they could negotiate that as part of the short sale? If so, what does the agent have to say about the 2nd?


Did you receive a 1099C forgiveness of debt notice from the IRS? If you did, then that means the debt was written off and you no longer owe it. If you didn't, then it is possible you still owe it.
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Old 05-19-2016, 07:40 PM
 
536 posts, read 849,195 times
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Originally Posted by Lacerta View Post
Did you receive a 1099C forgiveness of debt notice from the IRS? If you did, then that means the debt was written off and you no longer owe it. If you didn't, then it is possible you still owe it.
This is a very gray area, that one might better discuss with their attorney or CPA.

It has previously been explained to me by both a bankruptcy attorney & a CPA at a foreclosure symposium that a 1099C does not necessarily indicate that the debt is forgiven, just that, for the time being, the note holder is writing it off as a loss on their taxes. It's their notice to the IRS that they're taking a deduction at this time.

But the note holder may still retain the option of amending a future tax return, & subsequently still seek a deficiency at a later date, depending on the foreclosure or short sale laws, & statute of limitations, in each individual state.

In short, a 1099C is more of a notice to the IRS from the note holder that they've given up on trying to collect a debt at this time.

But it's not necessarily a get out of jail free card to the debtor.

If the debtor was insolvent the year the note holder took the write off, the debtor was excused from taxation on that unearned income.

But if the note holder later decided to pursue the unpaid deficiency, & was subsequently successful in collecting, they would simply file an amendment to the earlier return.

A recent court case ruled that even if the bank gives the borrower a 1099, the bank can still can go back after the borrower for the remaining amount for up to three years, because both the bank and the borrower have up to three years to amend their IRS returns.
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