Can a HELOC or 2nd mortgage foreclose on my Property?
Before the real estate collapse in 2006, many homeowners took out 2nd mortgages or home equity lines of credit on their homes. Basically, if a homeonwer has equity in real property, lenders may be willing to give a line of credit based on that equity. However, that line of credit is secured by the property and in the event of a default, the lender can foreclose on the property.
Now, is it always in the best interests for the lender to do so? Nowadays no, but they can. It is not in their best interests to foreclose on property now, because homes are so upside down.
If the 2nd lender forecloses on the property that is underwater, the first lien holder gets the sale proceeds first in order to satisfy that lien. Many times, the 2nd lender is left with nothing bit has incurred the costs of moving forward with a foreclosure.
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Greg Gilbert
Keith Maynard
