Ask The Experts: I'm Upside Down in My Mortgage

Q. Hi Carmen, Thank you for your very informative show. I have a question for you. I am a banker and was laid off few days ago. I am also a single mom, fully and financial responsible for my two daughters.

I am upside down in my mortgage by $150,000. If I do a short sale, I can only pay off my first mortgage of $417000 and my second has a balance of $140,000 and it is in a form of home equity line of credit. Am I going to be responsible for my second since it is a HELOC? My lender refuses to provide me with a clear answer.

If I find a job soon I can make my payment with no problem. But I contemplate on keeping my house since I know that I will not recover the real value anytime soon. I also need to keep my credit score as good as it is now if I what to work for a financial institution. This is my dilemma. I appreciate your assistance and feed back. -Anonymous

A. I love that you're thinking ahead several steps to try to protect your finances and daughters' futures. The answer to the HELOC question and the short sale is that if your lender accepts a short sale, which they would have to do before you can sell, they swallow the loss, HELOC included.

However, if you were to walk away from your home, in some states lenders can and do come after you for the difference, but thankfully, you're not going to do that, especially as it would ruin your credit and possibly your chances of getting a job in your field. If you can stay put and make those mortgage payments, whether you get a job soon or not (we hope for 'soon'!) continue to do so.

There is help out there for you to modify your mortgage so you don't have to foreclose. Head to or to see if you qualify for the loan modification/foreclosure prevention portion of the President's Making Home Affordable Plan. You do not have to be late on your payments but you do have to prove hardship, which you may be able to as you're unemployed. Good luck!


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Carmen Wong Ulrich is the host of On The Money