A Previous Owner Took Out A $50,000 HELOC Without Telling Anyone. The Current Owner Found Out While Trying To Refinance

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When a homeowner bought their new home in December 2023, they thought the hard part was over. Weeks later, they learned that someone had opened a $50,000 home equity line of credit on their property, and it wasn’t them.

The homeowner only found out about the fraudulent HELOC when trying to refinance. The title company flagged the lien during the process. “I was completely unaware of it until I was trying to refinance last week and the title company flagged it,” the homeowner wrote on Reddit recently.

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The lender listed on the documents was PNC Bank. When contacted, PNC reportedly refused to share details, saying it wasn’t the homeowner’s loan.

Eventually, they discovered who took out the loan: the previous owner. “We learned that the person who opened the HELOC is the previous owner of the home as his name was on all of the docs.”

The homeowner hired a real estate attorney and was told it may require a “quiet title action,” a legal process to remove the lien. The catch? It could take six to 12 months and cost up to $15,000.

“I hate it here,” they added after sharing the news.

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Reddit homeowners chimed in with legal advice and personal stories. One commenter said, “This is exactly what title insurance is for.” Many said that the delay between the sale closing and the official recording of the deed may have allowed the previous owner to sneak in the HELOC. The title was recorded on Jan. 9, 2024. The HELOC was opened after that, suggesting the bank may have made a major error.

“If the deed of trust for the HELOC is clearly recorded well after the deed transferring title, it quickly becomes indefensible to not release the HELOC deed of trust,” one commenter wrote.

Still, others noted that banks don’t always do their homework. “PNC not catching this before releasing the funds to the HELOC client is a major f***up,” another said.

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Some recommended filing police reports, contacting the Consumer Financial Protection Bureau, and notifying state regulators.