If you don’t pay your home equity line of credit, your HELOC lender could force foreclosure proceedings. But, many HELOC lenders are reluctant to start the process and would rather work out a solution with borrowers.

The San Francisco Chronicle explains:

“…Most second trust holders are reluctant to institute foreclosure proceedings. There is an expense involved (such as advertising, auction and legal fees) that the HELOC bank may not want to spend if they believe the foreclosure sale will not generate any money for them.

You or your attorney may want to discuss the situation with the HELOC holder and see if you can work out some kind of amicable resolution.”

Because the HELOC is a second lien, it is second in position to collect any money from a foreclosure sale. HELOC lenders know that they will be paid after the lender for your original home loan recovers lost costs. In some states a HELOC loan becomes an unsecured lien against the recipient. However, even in these areas HELOC lenders are often willing to work with delinquent borrowers.

The bottom line: If you refuse to pay back your HELOC, the lender will eventually start foreclosure proceedings. But, many lenders are willing to help borrowers get back in good standing, particularly in today’s market. If your HELOC bills are past due, call your lender and see what can be done.

photo credit: TheTruthAbout…

See Also:

The HELCO Foreclosure Process

Answers to Common HELOC Questions

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