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Short Sale vs. Foreclosure When You Have a HELOC in California

Thinking of “just walking away” from your Central Coast home?  Are you considering a short sale as well but don’t know if it is worth the hassle?  Do you have a HELOC on your Central Coast home?  Much has been written about California being an anti-deficiency state.  And it is true, in general, state law disfavors a homeowner being pursued by a mortgage lender after a foreclosure.  However, there are exceptions to this general rule.  Indeed, recently, I’ve met with two former homeowners who are still being pursued after foreclosureon HELOCs they had on their previous homes.  Both former homeowners were convinced that the collection agency was wrongfully pursuing them and that they had the right to “just walk away” without penalty, but right or wrong, they were still being pursued. 

What does that mean?  Every month their credit continued to be hit with a late or missing payment even though the foreclosure took place years ago.  And, they both now needed to research retaining counsel to argue their case with the lender, defend their credit, possibly negotiate a settlement, and/or file bankruptcy (if eligible) to extinguish the debt.  This is why it is critical for distressed Central Coast homeowners to get the proper legal and tax advice prior to deciding on a course of action.  One of the questions you should discuss with your attorney is whether the anti-deficiency statutes in California will protect you if you currently have a HELOC on your home. 

Just walking away may seem like the easiest way out, but it may in fact make things more complicated for you.  If you have a HELOC, I do believe a short sale is usually worth the hassle.  A short sale gives you the opportunity to negotiate with your lender up front – and, foreclosure is always there as an option, but a short sale isn’t.  In the end, at the very least I do believe that most distressed homeowners who qualify for a short sale can gain certainty from a short sale vs. a foreclosure.  Of course, each situation is unique, and all potential short sale sellers should meet with their attorney and discuss this and any other legal issues before beginning the process.    

If you are considering a short sale of your Orcutt CA, Nipomo CA, Arroyo Grande CA, or Pismo Beach CA home, you should seek out an experienced short sale agent to guide you through this process.  There are many pitfalls that can be avoided with the right upfront advice.  If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950. 

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California. 

*Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Tni LeBlanc and Mint Properties are not affiliated with the government.  A lender may refuse to change a loan.

Copyright © 2011 *Short Sale vs. Foreclosure When You Have a HELOC in California*

Santa Maria Real Estate Blog

In July 2006, Mint Properties opened an office in the Mission Creek Plaza on Santa Maria Way. Tni’s stated aim is to offer the highest quality representation and professional service to her clients. Independence affords her the ability to avoid a volume driven approach; the result is prompt, reliable, individualized service coupled with straightforward advice. Indeed, she brings the same level of professionalism to real estate as she did to the law.

#1 Agent in Number of Residential Sales Transactions (2016)
in Santa Maria (per CCRMLS)

$125 Million in Career Sales

REALTOR® of the Year (2014)
(voted by Santa Maria Association of REALTORS®)



Tni LeBlanc, REALTOR®, J.D.
Mint Properties
(805) 878-9879 (mobile/text)
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Lic #01871795





Certified Military Housing Specialist

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