So, I'm having difficulties getting my ex-wife to agree to a short sale of the former marital home.I need to get her name removed from the HELOC, and my onlyoption at this point is to sell. Her name is NOT on the first mortgage, or the deed. Only the HELOC. I tried to give her the 3 options: Option 1: we do a short sale, I'm out of the house, she's off the HELOC, and we both take a 200-300 point hit on our credit reports(which can be rebuilt quickly). Option 2: we don't do a short sale, the regular sale of the house pays off the first mortgage and maybe (hopefully a little bit of the HELOC which means I continue to pay off the HELOC little by little, over time, and it stays on her credit for the entire time takes to pay off (at least 10 years) Option 3: I let the house go into foreclosure, and we all know how bad that can be. Her suggestion is to sell the house for whatever I can get for it, use the proceedings to pay off the first, and mybe a little of the HELOC, and then once the HELOC lender sees that there is no more collateral tied to the loan (i.e. the HOUSE) they will be forced to refinance it into a consumer loan thereby removing her name from the note in the process. My question is.. can that happen? Can the HELOC be converted into an unsecured debt?
I don't know why not, in theory, if your credit is good enough to get an unsecured loan that's as big as the remaining balance. (of course the chances of that are probably pretty slim if you're in the predicament that it sounds like you're in. But, backing up a bit, why do YOU need to get her name off the HELOC? (and why do you care more than she does?) It seems to me that SHE would want to work with you to get her name off (to avoid any problems down the line), but it sounds like she wants you to take all the lumps (e.g. you get the credit hit and she doesn't). I realize I don't know all the details, but, it seems like you went into the house together, you should come out of it together. For better or for worse (as they say). Bottom line, it sounds like someone's going to take some lumps so why should it just be you? Either way, in a couple of years, it won't make much difference, credit-wise.
You could just leave her name on if you can continue to make the payments. It won't impact her at all, and you don't have to sell or refi. As ccbob said, if she doesn't want her name off, why should you?
