We owned our house outright which I purchased 100% with Public Liability Compensation Funds. We since used this collateral to purchase a property for a business which has since failed. This business property has since been sold and all funds given to the bank but we have a short full and the bank will not refinance on our home as circumstances and income have changed. They are now talking foreclosure. Since our home was purchased with compensation monies, can the bank do this ?