Is there equity? THE FDIC came out with guidance they want the lenders to work on with borrowers that have maturing or ballooning HELOCs. If you have equity, sell it. Obviously you can't refinance it due to the foreclosure. If you don't have equity, call the lender's bluff, which is what it is IF, you can demonstrate and document that you do not have the income to service the debt or refinance or pay it off.
There is no lender that is going to help you with a fresh foreclosure.
I'd start with a complaint to the CFPB. I'd then file a complaint with the FDIC. Who is the bank?... more
The buyer's lender will want to have all liens against the property cleared. Frankly, no lender is going to extend a loan on a house with a lien (secured or unsecured) on title. Furthermore, it is unlikely the title company will insure the lender's policy without clearing the lien(s).