Refinance misstep forfeits low HELOC rate

Is recourse possible against mortgage broker?

DEAR BENNY: A mortgage broker advised us several years ago to split our mortgage into a $400,000 mortgage and a $100,000 line of credit (we had $300,000 total available on the HELOC). A few months ago, we refinanced our $400,000 mortgage with our current lender. (Our house is assessed at $900,000.) We asked our lender if we could refinance our mortgage up to $500,000, pay down the $100,000 drawn on the HELOC, but still keep the HELOC with the HELOC lender open, and our lender said "yes."

We have now learned from our HELOC lender that our HELOC has been closed. Apparently, our lender was supposed to do paperwork with our HELOC lender to keep the HELOC open, but that was never done. Our former HELOC lender said it can’t reopen the HELOC because the "lien has been released," and that we just have to reapply for a new HELOC.