A HELOC is a typical second position lien.
A HELOC is not nearly comparable to a traditional second position lien. These must be dealt with differently than the traditional lien. A HELOC is not only a note attached to a piece of collateral like a traditional mortgage. It is rare that an offer between $1,000 and $5,000 would be accepted by a bank that holds the HELOC.
Unlike any second position liens, a HELOC has revolving credit characteristics, like a credit card. They can also seek to recover deficiency of principal balance even after a foreclosure sale, though the process may go on for as long as 20 years.
If the client owes $80,000 on their HELOC, and offers $1,000 to the bank, they will be turned down. Since they can almost guarantee that they can get more than $1,000 from the client.
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