Your house is morgaged you owe about 20000 but you have a home equity loan too you owe 35000 on that the house is collertal for both loans if you go to foreclosure and they take the house can the bank?

Answer 1

The question is a bit unclear, but typically a home equity loan has a second lien. If the home is foreclosed, the first dollars received will go to pay off the first mortgage; if more proceeds are received than are required to pay off the first mortgage, they will go to pay off the home equity loan, and the remainder (if any) will go to the former homeowner. If enough isn't generated by the sale to pay off both loans, all accrued interest, missed payments and fees the banks incurred to foreclose, etc., then the former owner (you) are still responsible for the deficiency, and they will seek to recover that.

The first mortgage holder is the one that gets to decide whether or not to foreclose, but the second lien holder (the home equity lender) usually has the option to pay off the first mortgage holder and step into its position (it may wish to do so if it fears the first mortgage holder selling the house for less than would be required to fully repay the second lien holder).