Most often the home was taken in a foreclosure in lieu of the loan. It would have been best if you had managed to see that this was done. There are unusual situations where this does not occur. Check with your former lender.
If you can get another loan, you are probably all right with the former loan. The foreclosure will affect your credit score so it will probably be hard to get another one....

Most often the home was taken in a foreclosure in lieu of the loan. It would have been best if you had managed to see that this was done. There are unusual situations where this does not occur. Check with your former lender.
If you can get another loan, you are probably all right with the former loan. The foreclosure will affect your credit score so it will probably be hard to get another one.

It will depend on a few factors. I disagree with Richard's answer. I happen to run an equity line of credit lending operation and service and foreclose (unfortunately) on many equity lines of credit.

THE most important thing is whether or not the home equity line of credit (often called a HELOC) was a PURCHASE MONEY LOAN. A purchase money loan is a loan in which you used to purchase a property. For example, if you bought...

It will depend on a few factors. I disagree with Richard's answer. I happen to run an equity line of credit lending operation and service and foreclose (unfortunately) on many equity lines of credit.

THE most important thing is whether or not the home equity line of credit (often called a HELOC) was a PURCHASE MONEY LOAN. A purchase money loan is a loan in which you used to purchase a property. For example, if you bought your home with a typical 80/20 loan combination such that the 1st was for 80% of the purchase price and the 2nd was for 20% of the purchase price, or some combination like that (e.g. 90/10, 70/30, 70/20, etc.). The key is, did you use the HELOC to purchase the home. IF you did, and presumably the HELOC is in 2nd position (meaning the foreclosing mortgage was senior to the HELOC) then the HELOC is wiped out at the foreclosure and the lender is not able to collect.

BUT....and this is important. IF you obtained the HELOC anytime after you bought the property, the lender may chose to sue you to collect the money. For example, lets say you obtained the HELOC 1 year after you bought the property and you obtained a $50,000 HELOC to add a room to your home. That is not a purchase money HELOC and the lender has the right to sue you to collect. If they sue you, they can obtain a judgement and then they have the same rights as any unsecured creditor. This means they could ask for a debtor exam and potentially levy your bank accounts, and even garnish your wages as long as they follow the legal system to do so.

Many lenders of non-purchase money HELOCs are selling their rights to hedge funds which will start suing to collect the money, so be careful.

If you are sued, or someone calls to collect and you are sure it is not a purchase money loan, your best bet is to try an settle as fast as possible for the least amount of money up front. I know for example, that we'd accept a small downpayment ($500 to $1,000) and a promissory note with very reasonable payments over a long period of time at a low interest rate.

The other thing that will matter is in which state your reside. In California, for example, there are anti-deficiency laws which means if the HELOC lender were to foreclose and then lose money, they cannot also sue you. But...if the 1st forecloses and wipes out the HELOC they can sue.

I highly doubt you will be able to get a new loan in this credit crunch enviroment unless you put at least 50% down on the property in which you are interested. But after 4 or 5 years or improving credit, and presuming our economy has exited the current credit crunch, you should be able to obtain a loan thru FHA.