Does it matter what HELOC was used for?

[debee]

We used a heloc from '06 to buy a new residence in '07. We moved in for one year, then job transfer to new city. Used what was left of heloc to buy third home in '09. First two are upside down rentals that do not break even. The heloc and both mortgages are with USAA.

We want to give up the first two houses that are in another city and keep the one we live in now.

Does anyone know if it is a problem that the heloc from house #1 was used to buy house #3 and that ALL are debt is with USAA?

[biotechsolution]

that could be touchy with the heloc used to buy the 3rd home. If the 3rd mortgage and 1st mortgage heloc are with the same bank you may definitely have a problem.
It also is dependent on how much was used.

[debee]

thanks. the original heloc was taken out loooooong before we bought the 3rd house, but it is all with one bank. it's not like we took an advance off the heloc and then put it on the house in the same year even. we also took out 401k loans and had a small inheritance in the same time frame. the down payment on the 3rd house was only 15k. anyway, thanks for answering. it's overwhelming trying to figure out how things will look to a trustee. we know we had no bad intention, but that's not always what counts.

[tcreegan]

Hi debee,

I don't think you will have a problem w/ the BK trustee, rolling one house into another and leaving investment homes behind is not fraudulent. What I would be worried about is USAA getting their nose out of joint on the mortgage & HELOC getting discharged. They might not be OK with letting the last mortgage ride. (but then again, they might have no problem with it)

Good luck w/ your filing,

Tom in Colo

[debee]

Thanks, Tom. I find your posts (not just to me but to everyone) most helpful. Your input is appreciated.