HELOC charge off + 1st Mortgage Short Sale=Chaos!

[beachymama]

I don't know what to do!

I have a first mortgage with a balance of $195K or so. I have a HELOC with a balance of $150K which was charged off in June 08. NARS is the collection agency.

The home has been for sale for 3 years. In May 2004, I paid $237K, financed $188K, neg am loan thus the $195K balance. HELOC added after appraisal of $416,500 in July 2005. I have not paid on this loan since December 2007. No lis pendens or nor any other action taken to start foreclosure. I do not live in the home. It is vacant.

I received several offers, this week one for $199K. I have been calling Indymac (my first) and it goes into a voice mail, no one ever calls me back. I faxed the contract and hardship info to all the fax numbers I can find for Indymac.

I call Chase (my HELOC), they say it has charged off the account. I know this, I call NARS and they want all my info, the same info that I would send to the lender (taxes, pay check, hardship letter, etc.)

I don't want to give them all this information! Do I have too??

Also, if I accept the short sale (and so does Chase/Indymac/NARS) and they send me a 1099, won't that become taxable and thus not dischargeable in a bankruptcy???

I think it is better for Indymac to foreclose right??? I don't want taxable income added, but it looks like it could be another year before Indymac forecloses??? What about a deed in lieu, will that give me taxable, non-dischargeable debt to the IRS??

I have not filed yet.

[HHM]

You are correct, bottom line, there is no benefit to you for doing a short sale and given the amount of deficiency you are facing, BK is your best option. The HELOC is basically being treated like an unsecured debt, but make no mistake, they still have their lien.

To do the short sale, BOTH the 1st and 2nd mortgage will have to agree to it, and given your circumstances, it is highly unlikely they will.

Stop stressing about the short sale and file the BK.

[hereforinfo]

I am almost starting to wonder since my house is gutted out and its only value is in the land if I might not get a 1099-C from both lenders and end up with a free house...LOL There is another lady on here that had that happen to her.

That happened to her because her total property (house and land) was worth less than the cost to foreclose.

They may not be in a hurry to foreclose on you, but they have no reason to ever remove the lien if you don't pay. Even if it costs them $12k to foreclose on you, they could still get something above that for the property.