im about to default on my HELOC. can bank take my house from 2nd lien position?

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  • 6 months ago

    Of course. They would file for foreclosure. The 1st mortgage would step in usually, but either way, you are OUT.

    AND!!!!!!!!!! even if the 1st and 2nd doesn't come after you (very very unlikely that they would forgive the debt), the IRS WILL ALWAYS tax you as income on the banks loss.

    You cant' just walk away.

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  • Anonymous
    6 months ago

    LIONEL NATION!!

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  • 6 months ago

    They can if they move to foreclose and they notify the primary lender and the primary lender doesn't object. If the primary lender feels very confident that they will get all of their money when the second lender sells the property, they may not object. The lender on the HELOC may not get back all of their money, but it beats getting nothing. If you can't refinance to include both loans into one or there isn't enough equity to pay both off if you sold - which you should try to do is there is equity - then losing the house is likely.

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  • 6 months ago

    Of course, they have a lien. They would have to notify the 1st mortgage holder and make sure you either continue to pay that while foreclosure is happening, or if you stop the 1st mortgage holder would begin filing instead. Once the home is foreclosed the amount they get when it sells is paid first to the first mortgage holder, then the 2nd (Heloc) gets the rest.

    Source(s): Mortgage lender since 1986.
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  • 6 months ago

    As stated they would have to pay off the first mortgage. They will look at the overall value of the property versus what you owe.

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  • LILL
    Lv 7
    6 months ago

    They can force a sale (foreclosure) of the home. The proceeds of the sale would pay off the first lien holder and anything left would go to the seconds lien holder.

    They can also just sue you in court. If they win and obtain a judgment, they can have your wages garnished, levy bank accounts and basically go after any assets you may have.

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  • Anonymous
    6 months ago

    They would have to pay off the first lienholder but they could.

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