By Admin on Feb 27, 2009 in Renting & Real Estate
Todd S asked:
2 mortgages on the primary home that will remain in good standing (no late payments). The 2nd mortgage is with the same lender as the investment house. If the investment house forecloses with negative equity, will the first home be in jeopardy?
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2 mortgages on the primary home that will remain in good standing (no late payments). The 2nd mortgage is with the same lender as the investment house. If the investment house forecloses with negative equity, will the first home be in jeopardy?
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Talk to the lender. Also talk to a lawyer. If you can transfer the second home to a business that you own before it goes into foreclosure, it may not count against you. The business will have to be incorporated.
Chillin K | Mar 2, 2009 | Reply
Even if you transfer the ownership of the 2nd home to a business, the loan is still in your personal name and it cannot be transferred.
A foreclosure of the 2nd property has no relation to the loan on the 1st. The two loans are secured by two different properties, and the lender can only go after the security used for the loan.
The big issue is if your state has what they call a “deficiency law”. If your state has such a law, they may come after you for the difference between the loan value and the sale of the property after forclosure. Usually if the difference is so large there’s no practical way for them to get it, they do not pursue it. Some states like CA do not have a deficiency law, so they cannot sue you for the difference.
Realtor in CA | Mar 4, 2009 | Reply