What happens if I foreclose on my mortgage? Will they audit the file if I went stated income?

Question

Also I have a first mortgage and also an equity line. I still have money on the equity line. If i spend that before I foreclose will I become liable for that money?

Answer 1

After the home is foreclosed, they will sell at auction, any money will be used to pay the loans, you will then be responsible for any that is still owed, plus interest, so yes you are liable for all that has not been paid off.

Answer 2

what happens when the first note/lender forecloses and takes back the property?

all other notes are terminated so the equity line looses any rights to the property but still holds you liable for the equity line which becomes due and owing upon the foreclosure of the first note

now with the first note, they sell the place at auction, all proceeds from the auction go toward the first note, if their is monies still owed they can take action toward attaching judgment to any other assets you may have etc, another house, bank accounts, cars, anything tangible, this also goes for the equity line as well

now if for some reason they would forgive the difference between the sale and the first note, that difference is 1099 short to you meaning IRS will considered the difference income for the year and you must pay taxes that year

Answer 3

In all probability the file has already been audited and yes, if you pull funds on the equity line you are still liable for it. Each lmortgage is two things, a note and a lien. If the first forecloses you may still bel iable on the note for the equity line.

Answer 4

Foreclose is not something the mortgage holder can do. Foreclosure is something the lender does to the mortgage holder, for default of payment. Yes you will still owe the money you borrow in the equity line. You expect free money?

Answer 5

depends .. I will consult with a foreclosure attorney as it might have legal consequences

Answer 6

Of course you will. If you are in foreclosure, your HELOC may be shut down.