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  • October 31, 2008 at 11:13 AM #14334
    Kat
    Participant

    Hi everyone – I’ve been lurking here for several years. Rich and you all saved my husband and I from buying when we moved here in August 2006, and you have our eternal thanks!

    I have a question to ask in behalf of my sister. She and her ex-husband bought a house in Orange County several years ago, taking out both a mortgage and a HELOC from WaMu to finance it. The HELOC was only used to purchase the house. She was told by at least two professionals involved in the transaction (but not real estate attorneys) that if the HELOC was only used to purchase the house, then it was a non-recourse loan in CA. (If it was used for other purposes, it would be a recourse loan.)

    My sister subsequently went through a divorce and her ex stayed in the house, but the house was eventually foreclosed upon. The foreclosure was finished last February, but she just received a form letter from an out-of-state attorney in behalf of WaMu, saying that she was liable for the full amount of the HELOC, and they wanted to settle for 75% of the amount.

    She is terribly worried, and I told her I would ask here for advice:

    Is it true that her HELOC is non-recourse in CA?

    Thank you!

    October 31, 2008 at 12:15 PM #295709
    urbanrealtor
    Participant

    I AM NOT A LAWYER.

    That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.

    He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.

    You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.

    October 31, 2008 at 12:15 PM #296047
    urbanrealtor
    Participant

    I AM NOT A LAWYER.

    That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.

    He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.

    You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.

    October 31, 2008 at 12:15 PM #296069
    urbanrealtor
    Participant

    I AM NOT A LAWYER.

    That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.

    He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.

    You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.

    October 31, 2008 at 12:15 PM #296080
    urbanrealtor
    Participant

    I AM NOT A LAWYER.

    That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.

    He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.

    You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.

    October 31, 2008 at 12:15 PM #296121
    urbanrealtor
    Participant

    I AM NOT A LAWYER.

    That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.

    He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.

    You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.

    October 31, 2008 at 4:05 PM #296170
    seattle-relo
    Participant

    I have heard of this happening, in the cases that I heard about it’s just a tactic to to try to collect some funds. Your sister should contact a real estate lawyer to represent her and write the bank a letter. Good Luck!

    FYI – I’m not a lawyer either.

    October 31, 2008 at 4:05 PM #296211
    seattle-relo
    Participant

    I have heard of this happening, in the cases that I heard about it’s just a tactic to to try to collect some funds. Your sister should contact a real estate lawyer to represent her and write the bank a letter. Good Luck!

    FYI – I’m not a lawyer either.

    October 31, 2008 at 4:05 PM #296159
    seattle-relo
    Participant

    I have heard of this happening, in the cases that I heard about it’s just a tactic to to try to collect some funds. Your sister should contact a real estate lawyer to represent her and write the bank a letter. Good Luck!

    FYI – I’m not a lawyer either.

    October 31, 2008 at 4:05 PM #296137
    seattle-relo
    Participant

    I have heard of this happening, in the cases that I heard about it’s just a tactic to to try to collect some funds. Your sister should contact a real estate lawyer to represent her and write the bank a letter. Good Luck!

    FYI – I’m not a lawyer either.

    October 31, 2008 at 4:05 PM #295798
    seattle-relo
    Participant

    I have heard of this happening, in the cases that I heard about it’s just a tactic to to try to collect some funds. Your sister should contact a real estate lawyer to represent her and write the bank a letter. Good Luck!

    FYI – I’m not a lawyer either.

    October 31, 2008 at 4:25 PM #296142
    bubba99
    Participant

    The loan is not recourse, but that will not stop collection agencies from trying to collect, nor prevent “bad” marks on credit history.

    Non-recourse only means that there is not a tax bill, and no legal remedy for the lender to collect. But the debt is not forgiven.

    October 31, 2008 at 4:25 PM #296164
    bubba99
    Participant

    The loan is not recourse, but that will not stop collection agencies from trying to collect, nor prevent “bad” marks on credit history.

    Non-recourse only means that there is not a tax bill, and no legal remedy for the lender to collect. But the debt is not forgiven.

    October 31, 2008 at 4:25 PM #296175
    bubba99
    Participant

    The loan is not recourse, but that will not stop collection agencies from trying to collect, nor prevent “bad” marks on credit history.

    Non-recourse only means that there is not a tax bill, and no legal remedy for the lender to collect. But the debt is not forgiven.

    October 31, 2008 at 4:25 PM #295803
    bubba99
    Participant

    The loan is not recourse, but that will not stop collection agencies from trying to collect, nor prevent “bad” marks on credit history.

    Non-recourse only means that there is not a tax bill, and no legal remedy for the lender to collect. But the debt is not forgiven.

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