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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] One more thought ... Posted by Troy on March 21, 2008 at 10:55 PM In Reply to: Re: Most Likely (read on) posted by k2163 on March 21, 2008 at 8:50 PM Ken, clearly the HELOC issue regarding purchase money/recourse/deficiencies is up for debate and it feels like its being figured out on the fly, but here a couple of my common sense thoughts: 1. Under 580b if a HELOC was used to purchase a home, then its considered purchase money. Seems simple enough. 2. If the HELOC is increased and/or was paid down and then re-drawn, then that money used was not to purchase the home (it's already been purchased) and therefore that money is no longer considered purchase money. Be nice if everything was that simple, but its probably not. I'll be tracking this one with you. It's going to be interesting to see how this pans out. Troy : You state: : "However, if the 2nd loan was a HELOC and the HELOC was paid down then any re-draw on the HELOC is considered to now be a recourse draw; it is no longer a non-recourse loan. Silly, but true." : I'm not trying to be rude but do you have an authoritative citation for that conclusion? I beleive you may be correct but all the cases I've read do not cover such a fact pattern and I've read most of the big cases. California just for clairification. : Cheers, : Ken : : Matt, most likely the 2nd that was wiped out can NOT pursue a deficiency judgement OR issue a 1099 to the borrower. It was purchase money and therefore w/out recourse. : : However, if the 2nd loan was a HELOC and the HELOC was paid down then any re-draw on the HELOC is considered to now be a recourse draw; it is no longer a non-recourse loan. Silly, but true. : : Troy : : : If the 1st and 2nd liens are California purchase money loans (different lenders) and the first forecloses and thereby wipes the 2nd, is the 2nd thereby prevented from seeking a deficiency judgment against the borrower after the FC because of the purchase money status of the loan? : : : Thanks, Matt Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : Ken, clearly the HELOC issue regarding purchase money/recourse/deficiencies is up for debate and it feels like its being figured out on the fly, but here a couple of my common sense thoughts: : 1. Under 580b if a HELOC was used to purchase a home, then its considered purchase money. Seems simple enough. : 2. If the HELOC is increased and/or was paid down and then re-drawn, then that money used was not to purchase the home (it's already been purchased) and therefore that money is no longer considered purchase money. : Be nice if everything was that simple, but its probably not. : I'll be tracking this one with you. It's going to be interesting to see how this pans out. : Troy : : You state: : : "However, if the 2nd loan was a HELOC and the HELOC was paid down then any re-draw on the HELOC is considered to now be a recourse draw; it is no longer a non-recourse loan. Silly, but true." : : I'm not trying to be rude but do you have an authoritative citation for that conclusion? I beleive you may be correct but all the cases I've read do not cover such a fact pattern and I've read most of the big cases. California just for clairification. : : Cheers, : : Ken : : : : Matt, most likely the 2nd that was wiped out can NOT pursue a deficiency judgement OR issue a 1099 to the borrower. It was purchase money and therefore w/out recourse. : : : However, if the 2nd loan was a HELOC and the HELOC was paid down then any re-draw on the HELOC is considered to now be a recourse draw; it is no longer a non-recourse loan. Silly, but true. : : : Troy : : : : If the 1st and 2nd liens are California purchase money loans (different lenders) and the first forecloses and thereby wipes the 2nd, is the 2nd thereby prevented from seeking a deficiency judgment against the borrower after the FC because of the purchase money status of the loan? : : : : Thanks, Matt [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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