Statute of Limitations for HELOCs

Question: When we bought our Chandler home in 2006, we got a 30-year first mortgage with Bank of America, and a Wells Fargo $100,000 second mortgage home equity line of credit (“Wells Fargo HELOC”). We used this $100,000 for a swimming pool and for landscaping in our back yard. In 2011 we both lost our jobs and we had financial difficulties. Although we were able to keep our first Bank of America mortgage current, we stopped paying our Wells Fargo HELOC. Last week we received a letter from an attorney that our Wells Fargo HELOC balance is $160,000, and that this $160,000 balance is being accelerated to be owed by us now. This letter also said that, if we do not pay this $160,000 balance within 14 days, there will be a foreclosure of our home.  Can Wells Fargo still foreclose on our home now when we have not made any payments on the Wells Fargo HELOC since 2011? Isn’t there a statute of limitations?

Answer: There is a six-year statute of limitations that applies to a breach of a written contract, including a breach of a HELOC and any other loan secured by a mortgage on real property. A.R.S. §12-548. This six-year statute of limitation for your Wells Fargo HELOC, however, probably does not start to run until the full amount of your Wells Fargo HELOC is due. Most HELOCs are usually not due until 15 to 30 years after the HELOC is recorded against the home. You should review your 2006 Wells Fargo HELOC paperwork to determine when your Wells Fargo HELOC is due, probably no sooner than 2021 (15 years) or no later than 2036 (30 years). The six-year statute of limitations would not start until that time. Therefore, Wells Fargo probably has the right to accelerate now the $160,000 balance of the Wells Fargo HELOC, and institute foreclosure proceedings.