Committ to house with a Line Of Credit as 2nd or not?

[jsahlbergMember]

House is valued at $92,763 on cyberhomes.com
1st mortage = $86,000
“2nd” is a Line of Credit for $21,000

Plenty of negative equity here so the big questions is could / should we argue that the LOC is not a house related payment and that the current owner should find a way to pay that off on his own?

If we do a Trust how do we protect the property from missing LOC payments.

My gut feeeling tells me to walk away from this one but am I overlooking something?

Thanks for any input you may have.

[mtnwizard49Member]

Argue all you want. The LOC is a 2nd. Always listen to your gut.

[rickParticipant]

I would think an LOC is seperate from the mortgage. If it is not, we will have to put a place on the proposal template for credit cards. If it is a HELOC I think it would be different. I think that is what Gary was saying.

[bill_gattenParticipant]

Your documentation manual has a HELOC FREEZE letter (although the banks ahave already done that for you for the time being).

bill

[cynthiaholidayMember]

Curious here what would happen on a PAC trust for the seller using the free and clear system over the three years?
Could the additional principal reduction work to offset any short sale?
in general I am listing some properties as a Realtor and will be buying some as a investor.

How could that work on an NEHT share equity of principal reduction?

[mtnwizard49Member]

Cynthia,

Don’t mean to be rude, but what are you talking about? Please provide a translator.

A PACTrust and an EHT are two different animals.

Please explain your post. Inquiring minds are dying to know.

[scott_l._moyesParticipant]

Just a guess here Gary but what she may be referring to is if you find a property that is in default. You may be able to negotiate a Loan Modification or Forebearance and use that extra amount to pay back the defiecency? Again this is just a guess because I don’t understand her statement either.

It might help to please claify your statement since Gary is our Certified Attack Member and will pounce on anything that he or others don’t seem to understand. But remember, his bark is worse than his bite and he only means well.

[scottMember]

@cynthiaholiday wrote:

Curious here what would happen on a PAC trust for the seller using the free and clear system over the three years?
Could the additional principal reduction work to offset any short sale?

Unless the encumbrance is large it might eliminate the need for a short sale in three years. If it doesn’t, make the trust longer. I understand the general concept of the Free and Clear system, but without numbers or the software I can only guess.

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