House with second mortgage - Posted by Kristen

Posted by Jim IL on January 17, 2001 at 23:04:11:

You have me confused here.
You are selling a home for less than what is owed on it?
An equity line is just that, a line of credit with the equity in the home as collateral.
If you get a buyer who is getting a new loan to buy the home, that equity line will have to be paid off in order for title to transfer.
Title is not clear when there are liens on a home, which this is.
I do not see any way a lender will convert this credit line to one that is unsecured.
However, the lender may be willing to transfer that equity line to another property for the sellers, provided there is equity enough in it.

You cannot just make this lien go away without paying it off or buying it from the lender.
I also cannot believe that you took the home “Subject to” with an equity line.
That in my mind is a dangerous game.
The seller could still use it if there is room left on it and bring a higher lien on the home after you have the deed.
The lender will not like the equity line being on a home that the seller does not own any longer and call it due.

Be careful here, you are on thin ice in my opinion.

Let us know what you do, I’m curious as to how you handle this.
Take care,
Jim IL

House with second mortgage - Posted by Kristen

Posted by Kristen on January 17, 2001 at 21:17:05:

I have a house that was deeded to me. It has a second mortgage(equity line). After I sell the house (I already have it advertised) it will sell short of paying off the equity line. I have a legal contract being written up that the original owners of the house will pay me every month and I will pay the equity line.

My question is , can’t the equity line just be used against the original owners once the house is sold, being that the first mortgage will be paid?? I mean why does it have to have a lean on the property and how do I get around that??

If I can’t get around it and sell the house, how do I explain it to the buyers??


Re: House with second mortgage - Posted by Jim Locker

Posted by Jim Locker on January 18, 2001 at 08:09:13:

Jim IL gave you the “straight skinny”. You are cruisin’ for a bruisin’.

You had better get that one straightened out.