QUESTION
I have an unsecured home equity loan on a house I do not own any longer. Can I be sued for by present home owner if I can not pay that loan?
Asked on Jan 20th, 2013 on Bankruptcy - New York
More details to this question:
Prior to sale of home I took out a home equity loan which did not show on title and was not paid off with sale of home. I continued to pay loan x 6-7 years but now unable to continue to pay loan due to disability.
2 ANSWERS
If you are personally signed on the note, you will continue to be liable until such time as the loan if fully satisfied. Therefore, if the current owner is forced to pay your debt to keep the house from being foreclosed, he/she could come after you for reimbursement.
Answered on Jan 21st, 2013 at 1:42 PM
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If the loan is "unsecured" and you (not the buyer) are the obligor on the loan, it is difficult to see how the buyer of the residence could have any potential liability for loan. It is not the buyer's debt, and it is not secured by the buyer's home. Given these "facts", the buyer should not have recourse against you, since he has no damages - to wit - no obligation to pay the loan (only you do).
On the other hand if the loan was secured, and it was not paid off at close, and the title company gave him a clean report, the buyer should be seeking recourse against his title insurer.
There is something wrong with this factual picture.
S' O'Keefe
Answered on Jan 21st, 2013 at 10:49 AM