Here’s an interesting court case from New York. A couple facing foreclosure says that they were looking for a home equity line of credit to remedy their financing troubles. An investment group said they could provide a HELOC. But, after the papers were signed, the couple learned that the documents were actually a purchase agreement for their property. The money they received was not a withdrawal, but their proceeds from the sale of their house.

Law.com reports:

“The Dizzazos claim they were “defrauded” into signing over ownership of the home where they still live to Oleg Sholomov. Their allegations are detailed in affidavits filed in connection with the foreclosure action and in papers filed in Dizzazzo v. Capital Gains Plus Inc., 523/08, a separate fraud action…

Palmieri pointed out that the Dizazzos stated in one part of their moving affidavit that they thought they were merely getting a mortgage and did not realize they were selling their home. But the judge said another section of the affidavit indicated that the possibility of a sale had been discussed earlier but not represented in the agreement.”

The case has some very unusual details and many HELOC borrowers will be interested in seeing how the Dizazzo’s complaints hold under scrutiny.

See Also:

Federal Truth in Lending Laws

HELOC Foreclosure

Tags | Heloc, heloc court cases, HELOC foreclosure, home equity line of credit