Foreclosure Auction for HELOC?

Question

Hello all,

So I found an upcoming foreclosure auction listed at a Firm's website and announced in a local paper.  Here is the strange part though, I searched the property records and the deed instrument number being auctioned appears to be associated with a HELOC (Home Equity Line of Credit) that is tied to the original mortgage.  I would think they are only selling rights to the HELOC; However, the language used suggests they are foreclosing on the property.  I am confused, so any insight or advice from the crowd is appreciated!

Andre B. · Answer

Thanks @Tom Gimer and @Wayne Brooks, your information has been very useful.  I know my way forward now.  Happy Thanksgiving!

Tom Gimer · Answer

Your initial post suggested the HELOC was foreclosing. My comment was that although these are usually subordinate liens, the HELOC could be in any lien position and you need to do the appropriate research.

Sometimes HELOCs are left open by accident... when they are paid to a $0 balance they are not closed unless the borrower expressly tells the bank to close the account. Then when the borrower takes another advance/draw, you've got a title problem.

Andre B. · Answer

@Wayne Brooks , that is what I was thinking.  Although, other posters here seem to suggest it could potentially be in first position.

Andre B. · Answer

You are correct @Wayne Brooks, I should have phrased my confusion differently.  I was surprised to see the HELOC potentially being in first position, rather than subordinate to the home mortgage which has a far more significant amount of money remaining on it.  However, I have not paid a title company to confirm this.  Anyone recommend a cheap, but thorough and fast title search company in my area or online?

Ron S. · Answer

Happens every day. The type of loan is irrelevant to a foreclosure.

Andre B. · Answer

Very interesting point @Tom Gimer, it may not be in second position.  It looks like I may need to pay a title company to do a thorough search for me and determine its position.  I am good at understanding the property records when things are a bit cleaner than this one.  Thanks for the help.

Tom Gimer · Answer

A HELOC is a mortgage like any other as far as being a security interest that can be foreclosed by the bank due to non-payment. These are often subordinate liens but yours is not necessarily in 2nd position... hence the need to do a thorough title search.