Stuck

[howtofixthemess]

Hey everyone, I'm new here and I'm trying to get some ideas about my situation and where to go from here. I purchased a home and after seven years took a HELOC. I used part of the funds of the HELOC to purchase a second home in another state. I moved into the second home and soon put the first home on the market. That was a year ago. I tried to maintain the mortgage on my current home and both mortgages on the first for as long as I could but I'm now behind by three payments on the first house. The current home is not behind.

I got a letter from the bank stating that I was in default. I don't know where to go from here. I don't want to just go into foreclosure, the house is still listed on the market. I don't know how I can avoid it, though, I can't afford to pay the mortgages. One of my concerns is whether the bank can take action against my current home since part of the HELOC funds were used for this downpayment.

[BKParalegal]

How you spent the HELOC funds is irrelevant to the debt. You can call the first mortgage and asked about doing a forebearance, this will throw you over into Loss Mitigation and will slow down the foreclosure process, which will buy you more time to try and sell the house. At the same time, I would lower the price on the house to cover all the expenses in selling it, and see if you get a bite.

Good Luck

[fltoo]

This is a loan we lovingly call a "noose" loan, because it will strangle you more ever than not.
Water under the bridge but...
Just my very experienced opinion, but never, ever purchase another house until your old house is sold unless you plan to use it as a rental.

Even when the RE market is great, this is never a good idea.

[howtofixthemess]

How you spent the HELOC funds is irrelevant to the debt. You can call the first mortgage and asked about doing a forebearance, this will throw you over into Loss Mitigation and will slow down the foreclosure process, which will buy you more time to try and sell the house. At the same time, I would lower the price on the house to cover all the expenses in selling it, and see if you get a bite.

Good Luck

Thanks for the response and advice. Is there any way of knowing if/when the foreclosure process has started? Is there a specific notice that the bank will begin or has begun foreclosure? Is there any way of knowing what the time period is between when they start the process and when they actually take the house?

[howtofixthemess]

This is a loan we lovingly call a "noose" loan, because it will strangle you more ever than not.
Water under the bridge but...
Just my very experienced opinion, but never, ever purchase another house until your old house is sold unless you plan to use it as a rental.

Even when the RE market is great, this is never a good idea.

I was advised to do this by the mortgage broker. I guess we didn't think the house would take so long to sell.