So someone emailed me, who I will call Dale. Dale said, what is the way for me to walk away from a mortgage and a HELOC?

Hi Dale, thanks for the question. I was out of country on family vacation and didn't get to it as I only got back yesterday, Friday. (The New York Times has quoted me extensively and it's been royally crazy around here with people coming to the site, emailing and asking questions. What a way to get back from vacation.)

This whole mortgage walkway issue is not what it seems. There are websites that charge $1000 for simple advice that I give here for free. So let's get to it and this will help other folks in a similar situation who are thnking about walking away from their mortgage but have a HELOC or second mortgage of some kind.

With two mortgages (and a HELOC is a second mortgage) your options may be limited. The way to walk away from your mortgage varies.

Deed in lieu of foreclosure - you can't do a deed in lieu of foreclosure usually with two mortgages although if they are both serviced by the same lender I have seen it done.

Live rent-free - You could simply live rent free for awhile and save money and not pay your mortgages at all. This is a good option if you have already ruined your credit (it can always be fixed up later and isn't the end of the world anyway). And especially if you live in a state like California that is mainly non-recourse. See my list of mortgage non-recourse states

Keep in mind that the second mortgage holder usually won't foreclose and if there is an eventual foreclosure, the first mortgage holder will end up with the property back. That's generally how it works with today's no-equity situations and so many houses so deeply underwater.

Then the second mortgage holder can come after you in civil court under a breach of contract claim. They may have three or four years to do this as the statute of limitations can be four years in many states. See second mortgages and foreclosure for more.

So the other option is a mortgage short sale. A mortgage short sale involves you selling the property for less than the mortgages. Whatever the house sells for, the money that the buyer brings in pays the closing costs, realtor commissions, and some of the first mortgage and second mortgage. You don't get any of the money and the lenders agree to let the sale go through. See real estate short sales definition for more about short sales.

This short sale is generally kinder on your credit and may release you from future liability even on the second mortgage, so it is a good idea to pursue in many cases.

I hope this has helped.

And please watch my video on how to avoid foreclosure by doing a short sale even if you have a second mortgage foreclosure situation. The answers are here. I will never share your name or email with anyone.

And watch this video on short sales and foreclosures. This is a screen shot — just type in your email and I'll get you to the real video. Thank you.