Sub2 -What if seller has a HELoC? - Posted by Erick

import · March 29, 2003, 1:16pm

Posted by Erick on March 30, 2003 at 23:08:04:

That’s a good question.
If you’re doing the trust strategy, maybe the trustee would be the only one that is allowed to “unfreeze”??

import · March 29, 2003, 1:16pm

Posted by Erick on March 29, 2003 at 14:16:27:

Say you’re buying from a seller subject to but they also have a home equity line of credit with a sizable balance. So, I guess you would take both the 1st and this 2nd/HELoC subject to. However, couldn’t the seller use their HELoC credit card or checks and run the balance up?
Is there a way to “turn off” the HELoC or maybe convert it to a HELoan where the balance can’t be run up and only paid down?

Thanks.

import · March 29, 2003, 3:21pm

Freeze the HELOC - Posted by JoeB(Atlanta)

Posted by JoeB(Atlanta) on March 29, 2003 at 16:21:39:

Hi Erick, contrary to MrWi’s response, we have taken many HELOC’s subject-to and never had the bank call them due. To answer your question : we have the Seller write a letter to the bank, asking them to “freeze the line” so he can’t withdraw any additional funds, once we have the bank’s “its been frozen” response in writing, we go ahead with subject-to purchase.

Hope this helps, Joe Brillante

import · March 29, 2003, 2:04pm

Re: Sub2 -What if seller has a HELoC? - Posted by MrWi

Posted by MrWi on March 29, 2003 at 15:04:24:

If the bank finds out that you are now making the payments on the house because of your “subject to” transaction, they will call the loan due in a heartbeat!!! because of the heloc. YOU and THEY do not want that heloc in place for the reasons you previously stated. Can they refi and combine the two?

import · March 30, 2003, 12:35am

Re: Freeze the HELOC - Posted by LeonNC

Posted by LeonNC on March 30, 2003 at 01:35:42:

Hi Joe,

Can’t the seller just call the bank and “un-freeze” the line? Or once it’s frozen is it just closed out, sort of?

Leon

import · March 31, 2003, 2:56pm

Re: Freeze the HELOC - Posted by JoeB(Atlanta)

Posted by JoeB(Atlanta) on March 31, 2003 at 15:56:15:

Hi Leon, I had a ‘brain fart’…I should have said :
We have the Seller write a letter to the bank CLOSING the Line of Credit (HELOC) and we wait back for the bank to respond in writing, saying the HELOC is closed. A HELOC cannot be re-opened, you’d have to apply for and re-underwrite a whole new HELOC… so that’s our ‘fail safe’.

Hope that helped,
Joe Brillante