[Cat Damiano]

dontwantthehouse,

They will not be able to approve a DIL with a HELOC on the property.........if there are other junior liens against the property such as a second mortgage, HELOC (equity line), mechanic's liens, or other loans or liens junior to the first mortgage, the lender will never take back a Deed in Lieu of foreclosure. He would never do this because he would be accepting the responsibility of paying off these liens before the property's title could be sold or transferred. The only viable alternative for the lender is to go through the foreclosure process and go to the foreclosure auction to buy the property with all the junior liens extinguished. When the auction is completed, the lender will get a title free and clear of junior liens and encumbrances.