Yes, it is POSSIBLE - but it may not be EASY.
What banks are looking for in current economic times are borrowers with a strong credit history who can demonstrate that they are in a strong position to pay their loans.
The value of your collateral, while very important, is still only one piece of the puzzle. Lending (especially on a large scale) is largely a game of calculated risk. Even though you have a valuable home, you will not get a mortgage if the risk of default is too great.
Remember to put yourself in the shoes of the bank - you're asking to borrow a significant amount of money and your recent life events may suggest you would have difficulty making your payments on time. Even though your property is valuable, if the unthinkable were to happen (a foreclosure), it will still take several thousand dollars for the bank to repossess the home. Not to mention, the bank wouldn't gain possession of the home for about 6 to 9 months after the litigation and the redemption period are complete. Then tack on possibly several more months to actually sell the home. In the meantime, they're getting no income from the property and will have to pay taxes and the utility bills.
Nevertheless, I don't think you should be counted out. If you are serious about getting a Home Equity loan or a mortgage, your plan should be to convince the bank that this is a temporary bump in the road. You need to SHOW them HARD EVIDENCE that your finances are improving or will improve and that you've got a long term strategy to get this situation turned around.
Even loan officers are persons who understand that unfortunate things can happen, but you can't walk away from an appointment and leave them with the impression that you're going to continue "business as usual" with the status quo.
Good luck! I hope you find something suitable. :)
I'm a loan collections officer
I'm a law student