Legal Question in Real Estate Law in California
I live in CA. I purchased an owner occupied property with an 80/15. The 15 was a purchase money HELOC for $63K. 6 months later I refinanced the HELOC for a better rate with another bank. I never took cash out. I paid the 2nd down from $63K to $24K. The 1st foreclosed on the property a few months ago. Since I refinanced the 2nd is it recourse and they can come after me?
3 Answers from Attorneys
Yes. The holder of the second (HELOC) has become an unsecured general creditor of yours due to the foreclosure of the collateral through no fault of its own, and may sue you as such.
Mr. Whipple is right. The refinanced HELOC is now the same as an unpaid credit card balance on an account where charging privileges have been cancelled.
You can't be a HELOC and a purchase money at the same time. A HELOC is a home equity line of credit, in which the borrower is not advanced a sum of money up front, but rather a line of credit for withdrawing money up to a fixed amount.
Not taking any money out by you is irrelevant. The original borrower was the homeowner, who had to take money out to get to 15.
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